International Business Strategy of Lincoln Electric: A Detailed Report

This report analyzes the international business strategy of Lincoln Electric, focusing on factors contributing to its growth and prosperity. It examines the company's globalization strategies, including its expansion into China and the factors that influenced its success and failures in the late 1980s and early 1990s. The report delves into the incentive systems used by Lincoln Electric, comparing their effectiveness in the U.S. and China. It discusses the components of the incentive system that work in China and those that may not be as effective, providing a comprehensive overview of the company's approach to global expansion and employee motivation. The report uses various academic sources to support the analysis.

International Business
Strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................3
1. Factors and components for the growth and prosper of Lincoln electric ...............................3
2. Factors used by Lincoln Electric for the globalisation............................................................4
3: Given the great success, why did the internationalization thrust of the late 1980s and early
1990s fail? What do you think of Lincoln’s emerging international strategy by the mid-1990s5
4: Can Lincoln Electric use all the components of its incentive system in all the other
countries in which it operates? What components of the incentive system work in China?
Which ones might not work in China, but in the U.S. ...............................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Every organisation is required to regulate their business activities in better manner and
under this whole management require to establish different strategies and tactics which allow
them to achieve their objectives and goals in effective manner. Further, HR manager at the time
of formulating various plans and functions then in such case they need to ensure that it suited to
their workforce that allow them to put their efforts to achieving their daily targets. Company
strategic level at the time of planning for expanding their business at global level then in such
case they need to concern regarding all the legal laws that applied at international markets
(Astrachan ,2010). Under this assignment the company which is preferred i.e. Lincoln Electric
which is US based electronic company established in 13 may 1998 by Lincoln electric chairman
and CEO of that company and engaged in the business of welding products, equipment and
robotic welding system. Further, this report discuss about growth and prosperity, factors of
globalisation and components using for incentives given to employee of china.
TASK
1. Factors and components for the growth and prosper of Lincoln electric
Lincoln electric is fast growing industry dealing in different electronic products and
services and they also planning to expand their product line by including battery chargers for
electronic auto-mobiles and arc wielding equipments. Further, this company also scan all the
changes coming in external environment and include all the modification in their organisation
structure that help in satisfying the needs and requirement of customers. Company is successful
in establishing their brand position and goodwill in US market and now they are planning to
expand their services in china where they earn the huge amount of revenues because of getting
large customers base (Birkinshaw , Brannen and Tung, R ,2011). This rapid success of Lincoln
electronic induced other rivalry like General electric to use such strategies and techniques in their
electronic items that allow them to beat all the challenges of rivalry. Following are the factors for
the growth of Lincoln electronic which are described below:-
 The core competency of business is basically related to central revenue generator with the
duo facility in which first thing they facilitate related to variable, single operator and
portable welding machine in all over the world.
 After that the whole team work under the effective leadership that help in maintaining
good corporate culture within the organisation.

 Company also provide better incentive facilities to their employees that help in boosting
up the morale of employees that allow them to perform best in order to achieve
organisational objectives.
 Further, company also provide various incentive facility to their employees that help in
boosting up the morale of workforce so that they use their skills and capabilities in order
to improve their performance at the time providing services to customers.
 Further company using different types of tools and techniques in the wielding industry by
using manual, semi automatic and automatic machine tools and Lincoln having effective
leadership in US market for strict electrodes, wielding wires and consumables through
which they provide such products services which are cost effective and give profitability
to business.
2. Factors used by Lincoln Electric for the globalisation
There are different factors and components used by Lincoln electric in order to expand their
business at global level (Cantwell , Dunning and Lundan , 2010). Further globalisation is such
process in which all the barrier related to transfer of goods, machinery and labour are removed
and they are easily globalised from one pace to another. In 1986 Lincoln electric having five
factories operated in different places like US, Canada, Australia and France. Under this operation
conducted in Canada, Australia and French is purely similar to Cleveland parent in which
policies, strategies and bonus schemes all are similar. Following points that describe regarding
all the international business operate globally are described below:-
 Company larger expansion done through acquisitions, merger but they are facing various
difficulties in terms of different culture, ethics and practices of business but under these
circumstances whole management handle whole situation rationally by understanding the
needs and requirement of different workforce which is consider as main key for their
success.
 Lincoln electric make an efforts to expand their business operations in Asia and main
they run their business in three locations I.e. Indonesia, Philippines and china and various
strategy adopt by them which stated below:-
In case of Indonesia they come into joint venture with Lincoln's local distributor and their main
focus is on stick electrodes and in case of Philippines operations they focuses on maintaining the
quality standards of goods and services according to the requirement of target audience of that

country. But their main target is the market of china in which they are using high technology in
their wielding through stick electrodes which help in increasing the efficiency and productivity
of business.
In china their main expansion is on shanghai in which there are hiring high level of welding
engineers and also providing technical training programmes that help in maintaining the quality
standard of product services. Further they started advanced manufacturing facility in Shanghai
which were consider as main mechanism through which they deliver goods and services in
different countries to various customers at stated time period.
Under this there is also free trade zone known as Waigaoqiao free trade zone located at pudong
and it is consider as first free trade zone that facilitates easy shipping access and proper generous
system.
Further, they also provide better incentive facilities to employees that help in establishing loyalty
and trust of china employees on the basis which manager can easily influence them to adopt all
the changes coming in organisation structure which lead to grabbing external opportunities and
earn huge profit from them.
Therefore these are important factors of success that adopted by Lincoln electric which give
better returns and profitability to business at globalised market.
3: Given the great success, why did the internationalization thrust of the late 1980s and early
1990s fail? What do you think of Lincoln’s emerging international strategy by the mid-
1990s
The early 1980's was a good example for business like Lincoln where length get assess
properly for removing the layoff. But for management such years were define as most
inappropriate time in their history. At such course of time, inflation was peaking up to high to the
sky as well as energy cost was also tend to rise with every regular day or course. Moreover, there
was a national recession as well which used to impacted upon demands of products and services.
The sales went to decline around 40% with last 18 month period of time. All such things stated
that the great success of business lie Lincoln get impacted very badly which need to assess and
understand properly. Thus, better individuals start looking upon whom used to facilitate and
enable in enhancing sales of a company better. This result in target such individuals and aspects
to increase sales at the moment when recession occur and arise most.

With 1986 time frame, management of Lincoln start operating and open five factories in
four major countries of the world which enable them in getting led down from such course of
consideration (Carroll and Shabana ,2010). Company start providing jobs to such individuals and
executives whom have potential to dig down better things for a company and their productivity.
Business start making their global presence through opening two major factories in USA one in
France, one in Canada etc. This emerging international strategy enable them to reach wide range
of customers so that they could gain better and determined results in frame. Thus, such strategy
adopted with a single prospect to gain growth and remove deviation whom already arise during
the thrust of 1980 and 1990. Thus, their plan for international expansion would be a good thing
so that better and signified outcome could be gain for maximising efficiency.
4: Can Lincoln Electric use all the components of its incentive system in all the other countries in
which it operates? What components of the incentive system work in China? Which ones
might not work in China, but in the U.S.
Generally company using two modes in their incentive management system I.e wages on
piece work basis and year end bonus and both are describe below:-
 Piecework:- This system has been set up in 1914 in which each job has been rated on the
basis of skills and capabilities, roles responsibilities of employees and base rate given to
employees are done on time basis in which wages has been increased on the time they
spend on their work. Under this system employees has to focus on quality and quantity
both on the basis of which productivity of business increased.
 Year end bonus:- Under this incentives has been given on the basis of overall
performance of employees which has been measured at the end of year. The bonus is
generally depend upon output, quality, ideas and cooperation an individual made at the
time of performing work in team.
But the employees working in china are not motivated by piece rate system so there is need for
management to change their incentive schemes in this sector that allow them to boost up the
morale of employees and help in retaining the professional and able employees in company that
help in achieving the goals and objective of business (Casadesus-Masanell and Ricart ,2010).

CONCLUSION
It has been concluded from whole assignment that international business strategy is one
of the important components that help in enhancing the growth and development of business.
Further, Lincoln electronic also use different incentive techniques in order to boost up the morale
and overall performance of employees that lead to accomplishment of objectives.

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