Lincoln Electric expansion to India Essay
Lincoln Electric expansion to India
Market entry strategy involves the essential requirement for a company to get into international level. The need of involving other companies whereby two companies join together is referred to as joint venture entry. They get into a similar market and make the same production with the aim of sharing risk and at the same time they share the profit according to their terms of agreement (Kretzberg, 2007). Therefore, Lincoln Electric Company has a chance to join with other company to venture in the Indian market. Through the joint venture strategy in Indian market, Lincoln Electric has a chance of attracting wider market share in the region.
The major consideration is done through extensive study of the market situation through various considerations. Market environment has a wide consideration depending on the factors such as political, social and economic integration. The basic considerations that Lincoln Company has to consider are directed in achievement in the market increase (Hastings, 1995). Concerning the Indian market structure, introduction of welding company is essential in reference to the technological improvement. The factors concerning the technology in the region, it covers the different aspects especially in developing market. While considering joint venture strategy in international market, the major considerations are made depending on business environment. This involves political, economic and social culture of the region.
Political status of the region helps in decision making regarding international marketing and business establishment. The major factors are on the risks that are involved while setting the business and the response from the market. The references are done in respect to the intention of the company and the level of investment (North & Trabajo, 1997). Lincoln Electric has a high chance of introducing its operation at Indian industries due to stability in the political field. The issues regarding the political situation in India are attractive to the investors. There is no major threat regarding the Lincoln Electric company investing in the region.
The Lincoln Electric company has to take advantages of the political situation in India. The Indian government offers full support in the provision of security and ensuring investments are safeguarded. On international investors, the government acknowledges their participation in the provision of employment in the region (Theobald, 2008). Therefore, they take high initiative in protecting the companies through different acts regarding business and industries. The political will in Indian government in upholding the foreign companies ensures development throughout. Therefore, political stability of the country has a major effect on the business setting and its operation.
India has a promising economic situation whereby investors consider it as a strong initiative leading to prosperity. Lincoln Electric Company has to consider long term condition regarding the market and economy of the region. The basis of market and competition helps in introducing appropriate measures regarding the future of the Lincoln Electric company. The management has chosen appropriately the markets that have a promising future and having the market structure that have the capability of improvement (Majumdar & Saad, 2005). The competitions in the region are based on the development capacity. Lincoln Electric Company deals with the electrical materials and hence taking advantage of Indian market. Through the technological improvement in the region, the Lincoln Electric company has the chances of improving the production. The major aim is connected to market share increase through innovative strategies in technology.
India is a superior country that the company ought to invest in since it has a wider market that requires the electrical materials. Few industries in the country provide the required electrical materials. Hence, it would be vital for the Lincoln Electric Company to expand its operations in this country. Huge profits will result from the company expanding its operations to India. The average sale of the company’s products will improve; it will hence be able to produce more products for the India market (Fratianni, 2006). Different tools can be used to analyze the expansion of this company in India. The expansion of the company will have different inferences; the company may get high level of profits or get losses. Profits can use as a good measure of the company’s expansion in a certain region. The success of the company is normally measured by the level of profits that it generates by involving itself in a certain venture. In this case this company is completing whether to enter the India market or not. It is recommendable for the company to enter India market since there is high demand for its products in the country (Hafford-Letchfield, 2010).
Though its products received mixed reactions from China and Japan, the company can take encouragement from the fact that the Indian market did not compose of many electrical companies like in the case of china and Japan. The degree of competition in India is low while the demand is high. Applying the law of demand and supply, entry to the Indian market will signify an increase in the profits of the company (Kuada, 2008). The demand for its products would be in the rise in this country. The performance of the welding materials in Asia countries for the country in the early years was not as expected for the country. There were mixed reactions for its products across the consumers. The reactions arose from trade restrictions that were imposed by the governments. Companies were to produce consumer products at low cost, and hence they would be provided to the consumers at low costs. This then gives the company a hectic decision, and they have to resolve to enter the market of not (Combe, 2006, p. 108).
If the company enters this market, it can expect anything to happen, it may either get improved profits or in turn it would get losses. The companies to India would imply that the company will increase its market share across different regions in India. It would then be possible to market itself to the locals by having its local company. The company’s improved sales would also imply that the company would be able to compete with other multinational companies that deal in the manufacture of welding and electrical products. India is among the growing countries, and attributed by the country’s GDP growth is high. The market is important, and its annual GDP is relatively high that of Latin countries combined together. India is projected to be an economic powerhouse in the next coming years (Kretzberg, 2007). This implies that the country is doing well economically, and it is, therefore, vital for the Lincoln Company to join the Indian market.
The company need o considerate some vital aspect before it have resolved on expanding to the Indian market. It should carefully analyze the market situation in the country (Chadwick, 2002). This helps the company to analyze the competitors of its products. Competitors are vital; the company should be more realistic and come up with strategies that would help it deal with competition. Strategy that the company should use to enter the Indian market (joint venture) Joint venture is essential for the Lincoln Electric company entering new market; it can enter the market on different grounds. The Indian welding market is made of three large competitors and small companies that sell their products at low discount (McClave & Benson, 1988). Considering the performance of the three companies in this market, the level of competition is high. The entry of Lincoln Company would hence impact the market, and high level of compilation would be witnessed. Since the Lincoln Company is well-established company with different multinational companies in different countries, it should then stand on its own and provide its products to this market.
As noted from the provided context different companies that tried to enter the market by either merging or acquisition found it rough to make it in the market (Miles, 2014, p. 153). Since the company is well financially grounded and wants to establish itself as a global, multinational, it should then make all the necessary structures required to enter this market. All the basic installation needed should be adopted by the company so that it can be in a position to compete with other companies in the market The company should establish itself on its own since it would signify an element of intent that would increase competition with its rivals (Tsoukas & Chia, 2011, p. 421). The company is also in a position to expand its production capacity when it has formed the company on its own. It would not be tired to commitments resulting from companies merging. The joint venture is a strategic entry of this company should be based on the formation of a new company that would use different inputs in the production of its product.
This strategy is important since- as noted in the China case the company should form the establish itself on its own since legal issues might arise in the case that the company enters the market in partnership with other companies. Partnership would restrict the growth of the firm, and there would be a dispute in profits sharing. It was also noted that the right decisions could not be made in the right time, and it took time while making decisions affecting the company. Due to the increase in the demand welding materials in South Korea the company’s distributor could not cater for the requirements needed by the shipping companies. The Company could have catered for the demand if it had established its own company dealing in the production of welding materials. This then forms the base for the company to establish its plant in demand so as to cater for the future changes in demand (Tompkins, 2005). This is possible in the case that the company is able to adopt new technology in manufacturing its products.
Lincoln could not cater for the demand of his products across South Korea since his was not involved in the manufacture of the materials while in South Korea. In Japan, the company production was limited; the company did not have any market link and hence was not involved in the final market demand of the products. The company faced many challenges while in its operation like the poor power supply. The power system was impaired hence the company could not function to optimality (Robert French & Vince, 1999).
The company should have entered the Japan market with all the necessary machines that are needed to produce its product hence it would be in a position to compete with the other competitors in this region. It is hence ideal for a company to enter the Indian market on it owns since it would cope with all the challenges without delaying its production. Entering the market in any other form would imply that the company would not be to handle the pressure that results from competitors (Daft, 2001, p. 212). The Indian market is demands welding materials hence the company should establish a renowned plant to help in the manufacture of its products.
Challenges faced by adopting this approach
It is hard for the company to establish itself with the other competitors in India. The Indian market is made of different companies that deal in the production of welding materials. Establishing its products requires the company to use advanced marketing strategies that would outdo the competitors.
The company needs to apply strategic management rules, which would help it establish its strength and weakness. This approach requires the company to sets its goals and objectives that would help it to identify the risks that are associated with its operations. The company should keenly analyze the key aspects that might hinder its operations, and the factors might be internal or the external factors. Analyzing the situations would help it to gather momentum, and, hence, would cope with competition from rivals.
The company might find it hard to make in the market since some of the consumers would not regard its products. Another challenge, which the company would face, is a huge capital outlay that it requires to establish itself. Since the company is establishing a new plant, it would need a lot of money to make the structures and buy equipments. The legal process needed to establish the plant may be cumbersome; hence the firm may take time to start its operations in the country. Some government procedures required to establish the company may take time before they are provided by the government, these are like the licenses needed to establish the company.
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