1. Should Lincoln Electric expand into India by investing in a major production facility there?
I think that Lincoln Electric (LE) should definitely has a production facility in India because of its growth and foreseen opportunities, but if I were LE I would suggest to enter with a local partner in order to gain knowledge and experience in how the country operates in terms of bureaucracy, labor, culture and so on.
LE is known for its high quality products and its technical innovations. On its 60 years of international experience, the company gained valuable knowledge on what to do and what to avoid when moving abroad, and that is why they refocused their expansion strategy into joint ventures, instead of acquisitions avoiding the
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That could jeopardize LE position of finding a partner in India, because the company would be exposed to share some of its secrets with them, and as the case states, they wouldn’t mind coping it in the future. Another difficulty the company will face is the two main competitors that are already doing business in India, Ador welding Ltd and ESAD India.
Finally, we have to wonder how the Liability of Foreigners would affect the company. Even though we do not have any direct reference on the culture and political situation, we can assume that they are a lot different to what the company is used in its own country. Therefore, and even though the recommendation is to enter India finding a partner that can help them understanding the culture, distribution channels and help them dealing with the Indian bureaucracy, the LOF variables should be taking into account to help the company minimize the failure risk of succeeding in India.
2. Irrespective of your answer to the first question, suppose Lincoln Electric does expand into the Indian market by investing in a production facility: Should they enter through acquisition, Greenfield, or joint venture? What factors inform your decision among these entry modes?
Analyzing the pros and cons of each entry mode, I would say that a Joint Venture(JV) is the best option for LE to enter the country. On the one hand, local partners can help LE to reduce the LOF. The local
Electro Inc. is fast developing company which strive to build a high tech wonder company image, it also has clear market segmentation and specific strategies to penetrate this segment. However, in recent report, the company’s financial statement indicates that the company experience financial difficulties at this moment. Some managers believe that this difficulty is largely due to two projects – Series A and Mercury. In this case analysis I will examine these two projects and make some recommendations for the company’s management as a whole.
What do you think of Lincoln’s emerging international strategy by the mid-1990s? Does this company have a competitive advantage that can be transferred to the global environment? How is Massaro’s recent overseas initiative different from Lincoln’s earlier failed approach?Lincoln Electric: Venturing Abroad
With the years going by, Lincoln Electric Company, despite its excellent performance in production, has been growing in a very steady speed, and never really grew to a large scale company.
Michael Gillespie, The Lincoln Electric Company’s new president for the Asia Region, was “encouraged to develop plans to open welding consumables factories in several Asian countries” by the new CEO, Anthony Massaro, and Gillespie had specifically “turned his attention to plans for Indonesia [O’Connell,[1] main reference, p 1].” We worked with Gillespie to prepare for the September 1996 meeting with Massaro and the presidents of the other worldwide regions. We analyzed Lincoln’s current capabilities and its past experiences and prepared a transformative plan based on business concept innovation [Hamel[2], ch 3], documented by this report, with a three pronged approach for the Asia Region. The first
Through the joint venture strategy in Indian market, Lincoln Electric has a chance of attracting wider market share in the region. The major
Ans. An Indian expansion through an investment in the major production facility is the most logical step for Lincoln Electric in pursuance of its long term strategic goals. The company needs to be free from its dependence on North American sales; the sales in the North American markets are stagnant whereas other markets especially the Asian markets are growing significantly faster. Its long term financial targets which include sales growth double the rate of growth in worldwide industrial production, operating margins over 15%, earnings
The 3 entry modes present different advantages and drawbacks, Franchising Strategy showed low control in the operations, low risk of exposure, low investment and high support from the local partner. Joint Venture entry mode indicated moderate-high investment, moderate risk, medium exposure and moderate control. Lastly, Greenfield entry mode denoted high risk, high investment, high control of the operations and high exposure.
In order to make future international plants more successful than previous acquisitions, Lincoln Electric’s managers may consider re-evaluating their management control approach; carefully evaluating the international labor laws and regulations of the plant prior to deciding whether or not to invest in it; and providing increased training and development to managers and workers of both the parent company and host company to ensure understanding of both sides’ cultural values and beliefs.
It is also important to consider the relations of the company with the government, that can make easier or more difficult the
Once an organization has decided to expand into the global marketplace, it must select a method of market entry. Companies may choose from five general options: (1) exporting, (2) franchising, (3) a strategic alliance, (4) a joint venture, and (5) direct investment. Deciding which option is right for an organization is based upon the level of financial commitment, risk,
As an executive of a large U.S. multinational corporation planning to open a new manufacturing plants in China and India to save on labor cost. There are a few factors that must consider when making the decision. The factors are including the environment business of the both country.
These factors consist in studying the country’s culture, assessing the market, hiring locals and establishing work contacts. In addition to that, Zahra considers that INV’s managers should demonstrate a high degree of openness and flexibility thus allowing the firm to function in the foreign environment.
Nikola Tesla is regarded as one of the most brilliant inventors in history. His work provided the basis for the modern alternating current power system, as well as having developed both radio and the fluorescent light bulb. He worked with Thomas Edison and George Westinghouse, among others. He was also widely misunderstood by his peers and the public at large.
The lesson learned from this is that sometimes it is easier and faster reach a new market via joint venture, even though the profit will be less, but the company can save a lot of money in studying the new market trying to understand the new culture and how they purchase and also it can minimize the risk because there is a national brand supporting the new international brand, which gives confidence and security to the customers.
For any company going out for the foreign market is because of any one out of globalization, reducing tariff all over the world, to increase the market share, saturation of the local market, for getting the economies of scale of production, to use their excess capacity and use the resources where it is available at law cost.