Lincoln Electric Company Case Essay
Lincoln Electric Company Case
After reviewing the case I feel that the main reason of Lincoln’s foreign operation dilemma was because of its unique corporate strategy, which was the similar strategy that made Lincoln so strong in the United States. Lincoln’s competitive advantage in the United States was based in its unique culture and incentive system (Anthony and Govindarajan, 2007). A corporate culture that emphasized open communication and trust began with its top management. Lincoln’s leaders used an approach that encouraged all employees to share their thoughts not only with their managers but also with the CEO (Anthony and Govindarajan, 2007). This corporate wide approach to management, encouraged by the company’s incentive system, created an exceptionally committed and skilled workforce. Lincoln thought that its management style and incentive system would work to regenerate the foreign operations performance by energizing and committing its workers (Anthony and Govindarajan, 2007).
But Lincoln did not realize was that its corporate culture had been created and confirmed for over almost a hundred year and took time to build such a successful corporate culture (Anthony and Govindarajan, 2007). By 1993, Hastings realized the mistakes they had made (Anthony and Govindarajan, 2007). The corporate culture of European countries would not be compatible with their programs. For example, German workers were highly skilled and Germans worked fewer hours a week than Lincoln’s U.S. workers did (Anthony and Govindarajan, 2007). The U.S. workers frequently worked overtime and usually on short notice, which helped to make the incentive system work successfully (Anthony and Govindarajan, 2007). German workers were not as productive as Lincoln’s U.S. workers (Anthony and Govindarajan, 2007). Donald Hastings began to become conscious of what the company was up against. For the first time Lincoln evaluated the projects that it was undertaking with the view of what the company was facing and what it could actually accomplish (Anthony and Govindarajan, 2007).
Lincoln Electric would have to cut back on almost all of the operations it had invested in just a few years prior. Lincoln was forced to begin restructuring plan for all of its foreign operations to go outside the company to find innovative top management (Anthony and Govindarajan, 2007). In order to improve global operations, I recommend that Lincoln Electric must improve its company relations, its production systems, and its placement in the global community. Lincoln Electric should concentrate on developing and manufacturing inventive products. This action will help Lincoln Electric achieve a competitive advantage to its competitors. Furthermore, contracts should be set up with Lincoln’s supplier and buyers. By creating contracts with the suppliers, Lincoln can lessen material costs and price its products competitively.
Additionally, I think that they should have partnerships with great buyers will help in the creation of new products, as well as securing a contractual agreement. Given that Lincoln Electric has gone beyond its experimental global expansion stage, it should carry on such opportunities in profitable and a cost-effective environment. Lincoln should attempt to only come into new markets when it has a firm partner that currently operates in the market. Lincoln’s incentive system should only be put into practice in operations where the workforce and its culture are compatible with their program. This case did alter my viewpoint regarding managing foreign operations.
I think that in order to pursue business in another country you must have knowledge of the international markets or cultures. What may work in one country may not work in another country. I think that when deciding which countries to decide to expand in, that all factors regarding culture should be considered. Lincoln Electric Holdings has proven to be a successful, innovative company that holds a immense leadership position in its industry.
Anthony, R. N., & Govindarajan, V. (2007). Management control systems (12th ed.). New York, NY: McGraw-Hill/Irwin.