According to the case, Lincoln Electric was a company that mainly manufactured welding machinery and consumables based in the United States but the lifting of trade barriers case prompted the management to contemplate on an expansion strategy to expand its production base internationally. The management was in view of establishing plants in Asia through joint ventures or as wholly-owned firms and whether regarding Lincoln Electric company depicts a situation where the adopts the firms incentive system in its new ventures. The company operated on the founding philosophy in which James believed that each person could transform to its full capacity via a system of right incentives implemented to inspire both competition and teamwork.
Question One: Lincoln’s Emerging International Strategy
The idea of the company’s management to adopt an international strategy in the 1990’s was uncalled for considering that a firm needs to carry out thorough research before venturing into international markets because every foreign direct investment is associated with a cost. The management during that instance did not pay attention to the fact that foreign direct investment is a risky endeavour in addition to the fact that Lincoln had limited management resources. In that, the company should have embarked on the building of a dependable management team a number of years before launching the FDI strategy in addition to allocating twice the budgeted money by making an assumption that various setbacks will be encountered. The company’s management at that time only concentrated on the goal of having an immediate market presence; hence, their actions were not being done based on clear goals leading to huge losses. The company’s balance of payment was greatly affected as a result of venturing into international markets considering that nine plants were acquired in various nations that resulted to an initial outflow that was needed to finance the foreign direct investment.
Question Two: The Firms Competitive Advantage
Lincoln Electric Company regarded itself as a firm that observes exclusive culture and incentive system in addition to a lot of hardworking employees that the firm had moulded over the years, as these were its sources for competitive advantage. Therefore, the company’s management had arrived at the assumption that the culture along with the incentive system could be shifted to the new international ventures. The company’s culture was also one of its competitive advantage considering that the company concentrated on nurturing growth and meeting individual needs was part of it (Bartlett & O'Connell, 1998). Therefore, in order to transfer the culture, the organisation should not have aimed at imposing but on nurturing it because employees needed satisfied that they are correctly recognised. As a result of not nurturing that culture and not correctly recognizing the workforce led to massive resistance from various quarters that sabotaged the adoption of core aspects of the incentive system.
Question Three: Difference of Massaro’s Recent Overseas Initiative
Massaro’s approach to foreign direct investment was more cautious as he first began by analysing the reason why Lincoln approach to international venture failed in which found out that the acquisition approach was one reason for the poor performance. The issue with the management was also established as one of the reason for poor performance in Brazil and Venezuela based plants as Lincoln distributors had replaced inherent managers. Therefore, Massaro mainly concentrated in entering foreign markets and restructuring those that had already been entered through joint ventures. Additionally, he decided to relax the Lincoln incentive system on foreign countries by allowing managers to adopt a method that best suites the country.
In conclusion, Lincoln Electric was a firm that was mainly centered on the production of welding machinery and consumables and decided to venture into the international markets using foreign direct investment that was unsuccessful under Lincoln management. The initial strategy mainly dwelled on the firm’s incentive system for recognising employees that was ineffective in foreign nations in addition to inexperienced managers that were made to lead the acquired plants. Massaro’s initiative was different as he disregarded Lincoln’s way of management by allowing managers to adopt a method that best suites the country and dwelling on joint ventures as a means of entering foreign international markets.
References
Bartlett, C. A., & O'Connell, J. (1998). Lincoln Electric: Venturing Abroad. Harvard Business School Cases, 9: 398-095.
