Lincoln Electric was founded in 1895 founded by John C Lincoln in Cleveland, Ohio his company became a world leading in welding equipment and supplies. They had huge success in the USA with its own incentive system which followed high competitive on price, brand, preference, quality, customer services, and innovation, annual bonuses, few benefits, and guaranteed employment. LE success in the United States was through skilled personnel, training practices, and reward system. While analyzing the advantages and disadvantages of LE expanding into India, I believe the advantages outweigh the disadvantages.
Some of the benefits Lincoln will face in India is a strong and large growing market, lower costs, competitive pricing gives more advanced welding technologies to Indian customers, and market institutions in India are compatible with the incentive program Lincoln runs on. Disadvantages lincoln is inexperienced with working with labor unions in India, lack of knowledge of labor practice, possible rise in minimum wages, bonus system must be adjusted.
The choice to invest in a production facility in India should consider the costs and benefits.
LE should expand into India by investing in a major production facility there since the best way to enter India would be through joint ventures. ADDING let’s us understand why a company should expand internationally. ADDING would help LE decrease the cost for the same quality of product while producing more since labor in India is big and cheap. They would be differentiated from all other welding equipment in India because they have innovated technology. Manufacturing in India will empower lower costs, more competitive price of welding supplies and they will have a competitive advantage when Indian manufacturers begin requesting more refined welding technologies like computerization and welding robots.
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5 (204)
“ She followed all my directions. It was really easy to contact her and respond very fast as well. ”
The best way to normalize the risk would be through a joint venture with ESAB. Also, the economy is India just keeps growing so the risk would be normalized.
Over time India is projected to be one of the fastest growing economies in the world. In my opinion, LE should enter India through a joint venture with ESAB India a company that has a big presence and market share in India. This would help ensure success in the Indian market. Some of the pros that have to be taken into consideration are that it will help LE gain a presence in the market, they will already have knowledge of the Indian market so it cuts out investment costs. They will gain market presence and have leverage over their competencies. Also, they are not running a huge company risk since they will mostly be increasing their market share. It will also create a cheaper establishment and production cost. While encouraging a joint venture it delivers the likelihood of losing control of business activities and dependent on the other company while making decisions, is the best alternative provided because if they seek an acquisition it could prompt failure due to the capital-intensive nature of purchasing a firm outright.
The joint venture ought to consist on half/half between ESAB India and LE. ESAB has the market share and the presence in India that LE needs, however, ESAB does not have enough gains in the market and technology advancement. ESAB presence and market shares can prompt a huge gain for the two companies. LE could furnish with technological advancements missing. Expanding automated/robotic innovation to remain at the cutting edge of the business and gain a competitive advantage. New products utilized by ESAB will be constrained to the Indian market as it were.
LE firms-specific advantage consists of the technological advancement they are able to offer to other markets. LE could adapt its FSA to India by adding more technology which would offer new and additional services requesting for a products higher price. It will diversify the different wedging technologies established in India, creating innovation. Also, their innovative incentive system could promote a higher productivity which could create a new environment, allowing employees to improve and grow. Given the firm-specific advantage, LE should create and capture its value through adaptation, that It will give an understanding about CAGE and where it should expand abroad creating opportunities for LE. After conducting an analysis on LE going abroad to India, I concluded that the best way is through adaptation.
While deciding where going abroad LE should take into consideration CAGE framework that measures the cultural, administrative, geographic and economic distance between trading countries. If there are fewer CAGE differences between trading countries, it would be the best option to know where to expand. Even though there is more growth opportunity for an industry like welding in developing countries than in developed countries, it’s more successful to expand in developed countries. In developing countries, there is a higher demand for low-skilled labor like welding. Is least successful to expand into developing countries because there is poor international performances, cultural differences, and different learning skills, the incentive system by Lincoln may not be as successful and effective political stability, language barriers. Some countries where LE would be least successful are countries like Japan and Venezuela and most successful in certain Asian countries like Indonesia.
LE incentive pay- for- performance management practices is a very unique motivating force. Anyway, it may not work in every country because each culture and politics in each country is different, particularly in nations where work is government-controlled. Non-incentive activities must be set which will represent LE workers as a whole. One of LE main goals is innovation but in the case of expanding abroad, they have to learn how to adapt to each country’s culture, to be successful when going global. LE should modify the incentive system according to each countries condition and laws. They should have a set of rules and payments plus incentives. Paying workers the minimum wage and annual bonus while adding price work bonus as an incentive. The pay-for-performance incentive wouldn’t be suitable for LE because there’s a lot of labor working force in India, which will cause workers to want to produce more and they would have too much-wedging material. To conclude with, LE can have success in India if they join venture with ESAB and adapt to understand Indian market. The Indian Market is a growing economy which gives a lot of opportunities to grow, LE just needs to learn to take advantage of it.
Lincoln Electric, John S. Lincoln. (2022, Feb 24). Retrieved from https://paperap.com/lincoln-electric-john-s-lincoln/
