Introduction
The operational environment requires plausible analysis of the internal and external factors that are bound to impede on organizational performance. Through an analysis of the aforesaid aspects, plausible strategies are bound to emerge towards profitable outcomes. Thus, this paper will evaluate Lincoln electric as per the case questions in its venture into India.
Part I: environment analysis
Environmental audit of an organization denotes the macro environmental evaluation of the various aspects that are not within the control of the organization. As such, there are various tools that are used towards analysis of the external environment that an organization can inculcate. Thus, a PEST and porter five forces analysis are two plausible strategic tools towards analysis of the external environment. A proper and comprehensive analysis of the external environment is pivotal towards laying forth the operational strategies for the organization.
PEST
PEST analysis denotes the examination of the political, economic, social and technological factors that may impact on the operations of the organization. An extensive analysis of the aforesaid factors is bound to lay forth the plausible approach for operational excellence within Lincoln.• Political
The political environment of India has been changing plausibly for the diverse organizations towards their market venture into the market. Admittedly, the recent visits by the leader of India into USA and Australia have been construed towards portraying India as a highly lucrative political environment for organizations to venture. The visits by the head of India were construed towards necessitating bilateral trade coupled with renewing political relations among the various countries (Stonehouse & Houston 2013, pg 98). As such, India has been investing highly into diverse incentives for businesses to venture into the market. The incentives of reduction in taxation, cheaper costs in regards to the purchase of land and so forth have become the incentives evident towards generating an enabling environment for investors in their operational mandate at India.
• Economical
The welding industry has been growing extensively in India. As such, the novel market presents a lucrative avenue for the operations of Lincoln. Admittedly, the company has been growing in regards to its gross domestic product at an almost 6% annual growth since 1991 (Stonehouse & Houston 2013, pg 56). The country has been termed as one of the fastest growing economies laying forth a lucrative environment for the operational prospects of Lincoln. Furthermore, the company exuded a market of over$ 400 million for organizations within the electric sector such as Lincoln.
• Social
The social scene of India exudes highly friendly populous. As such, the social scene of the Indian environment has become a proper incentive for organizations towards their market venture into the market. As an ongoing trend, Zimmerman & Blythe (2012, pg 67) assert that many businesses have been outsourcing operations to Indian firms due to the friendly scene coupled with the societal accommodation of foreign organizations. MacDonald’s, noni, Nike and so forth are among the organizations that have market venture into India due to the evident friendly scene. • Technological
Technological growth is imperative towards sustenance of operations at Lincoln. Accordingly, the Indian market has been growing extensively in regards to technology and the welding industry. As a nation that is highly renowned for the welding activities most fundamentally in welding of ships has become an aspect of plausible growth within the welding industry. Furthermore, the recent launch of a spacecraft by India exudes the extensive growth within the technological avenue (Stonehouse & Houston 2013, pg 83). Thus, from the analysis of the environment of operation, there is evident technological growth that is imperative towards a successful venture among organizations.
Porter five forces analysis
The Michael porters 5 forces are a significant analysis of the forces such as competitive rivalry, barriers or hurdles of entry, the threat of substitutes, purchasing powers of buyers and power of sellers. Hence, an analysis of Lincoln as per the porter forces is as follows Competition in the industry
The welding industry that Lincoln wants to venture in India is highly competitive. Apart from small industry players, ISAB forms the most fundamental rival that will impede the operations of the organization. The company has a market share of 30% that will pose a daunting environment for operational success of the business. New Entrants
The prospect of new entrants is high and profound within India. Market liberalization has led to easing of new businesses towards venturing into the market. The significant changes in the regulatory mandate of the welding industry have generated an easier environment for organizations towers making market entry into the market. Thus, Lincoln electric should comprehend the ease to which new entrants can venture into the market. Power of suppliers
Suppliers within the welding industry do not exude significant power. As such, the various raw materials that Lincoln requires are extensively available in countries such as china within a cheaper mandate. The avenue for low supplier power generates an avenue for cheaper prices of supplies thus plausible performance. Power of customers
The welding industry is growing extensively in India. The plausible growth within the industry has led to an increase in customer power. The evident organizations within the sector lay forth a highly competitive environment thus the evident options for customers to select in regards to organizational loyalty. Threat of substitute products
The prospect of substitutes within the industry that Lincoln operates is highly minimal or negligent. In the welding industry, the substitute options are highly meager and non-evident in regards to operational sphere at Lincoln. Define is Lincoln still be able to go to India or not? P
Lincoln will be able to go into India due to two main reasons. Firstly, market liberalization in India has laid forth a plausible environment for foreign investors towards venturing into the market. Incentives and technological growth are bound to sustain effectiveness in performance. Secondly, the inculcation of plausible strategies in their market entry is bound to result into profitability. Despite the market share of ISAB, the operational margin is at 18%. Hence, inculcation of a distinctive venture approach is bound to result into a higher profitable outcome. Part IIList Entry Strategies advantages and disadvantages
Joint venture
Joint venture denotes a partnership approach with another organization that operates either in US or within the market of entry. As such, from the analysis of Lincoln, the joint venture approach should focus on a partnership or strategic alliance with an organization that has already set up operations within the market. As such, through the operational approach, the company is bound to ensure sustainable operations. Thus, as a strategic approach, the advantages and disadvantages of joint ventures are as follows:
Advantages
The joint venture approach is bound to yield the following advantages. Fiirstly, it is bound to ensure competency in the comprehension of the foreign market due to the partner organization that has already set up operations in a foreign market. Secondly, it ensures spread of risks thus the prospect of a reduction in losses within the operational mandate.
Disadvantages
On the other hand, the various disadvantages that are bound to be evident are as follows. Firstly, conflicts of interests are bound to prevail thus extensive losses among either party. Secondly, joint ventures are limited in regards to the partnership deeds and operational goals of both parties.
Foreign direct investment
Foreign direct investment denotes a more performance or individualized approach in the market venture of the organization. Accordingly, the foreign direct investment approach aims towards the organization undertaking a more holistic market entry into a new market. The company invests all its finances towards setting up a business in a foreign market and inculcates an extensive assumption of risks in the venture. Thus, an analysis of the diverse advantages and disadvantages are as follows:
Advantages
The above approach exudes two main advantages within the operational facet. Firstly, the company is bound to accrue all the profits within the market of operation without the prospect of shared profitability. Secondly, the managerial and financial control is bound to prevail in regards to the company operational mandate. The company can make various decisions without the prospect of conflicts of interest emanating from their probable partners. Thirdly, foreign direct investment provides the organization with new technologies, capital and organizational technologies that emanate from the local business. Skilled and non-skilled resources within the market provide opportunity for the company to sustain cross cultural competency in the foreign market. 1
Disadvantages
The two main disadvantages in regards to the venture approach are as follows. Firstly, the company is bound to incur vast losses in the instances that the foreign direct investment succumbs to operational hurdles. Secondly, foreign direct investment is bound to grapple with challenges emanating from maintenance of cross-cultural competency. Admittedly, the company will grapple with the cost disadvantages that are bound to impede on performance.
Acquisition
Acquisition denotes an organization purchasing another organization within the similar industry that operates in a foreign market. Through the acquisition approach, the company is bound to invest into an already established organization thus sustaining proper management of the acquired organization to suit to the operational targets and policy statement of the company (Shubik & Levitan 2010, pg 57). Hence, from the evaluation of the approach, the diverse advantages and disadvantages of acquisition are:
Advantages
There are two main aspects of benefits that the organization is bound to accrue. Firstly, cross cultural competency in operations is bound to prevaile due to the acquired organization that comprehends the market of operation. Secondly, acquisition reduces the costs of setting up a factory, the financial injection and so forth which is highly impactful on the performance prospects of a business.
Disadvantages
There prevail two main disadvantages. Firstly, acquisition is highly risk pruned especially in instances that the acquired organization does not meet the operational targets set. Secondly, acquisition is highly capital intensive leading to a significant burden on the organization and may lead to a long time for the company to recoup its initial financial investment
Strategy that best suits Lincoln
Thus from the analysis of Lincoln, the most plausible strategy is the foreign direct investment. Accordingly, India presents an emerging economy in which the company is bound to accrue diverse incentives emanating from the economic environment. Undertaking the foreign direct investment within the region will result into financial and managerial control. Financial and managerial control will ensure that the company can control the various operational aspects and inculcate the right strategies towards ensuring market control within the market. The investment into the foreign direct approach is advisable since the company will undertake various risky approaches towards ensuring control of the market despite the evident competition within the novel market. Part IIIChallenges & Recommendations or Solutionschallenges
Cross-cultural competency will be a significant challenge in regards to operational mandate of Lincoln. Admittedly, the notion of ventures into the Indian market lays forth the prospect of disparity in culture is an aspect of concern. Culture denotes the facets of language, beliefs, values and so forth. Lincoln’s operational mandate emanates from the local economic environment in which the organization comprehends the evident local market. Within the local market, the company has an extensive comprehension of the customer behavior, tastes and preferences thus it manages to develop proper products that suit the market. However, in its market venture into India, there prevails distinctness in regards to consumer behavior and so forth. Thus towards maintenance of extensive performance data mining should aim towards maintaining comprehensive information on the culture within India. Accordingly, maintenance of cross-cultural competency will generate a daunting environment for Lincoln since data mining requires intensive financial investment to sustain the competency in performance.
Recommendations
Thus, from the above analysis of the challenge evident in regards to cross-cultural competency, the company should inculcate a comprehensive and indepth approach towards data mining on the local market. The data mining approah should focus on maintaining plausible business relations with the local supplies within the Indian market should be highly plausible due to diverse reasons. Firstly, the evident local suppliers within the market comprehend the local culture, the operational facet and so forth. Furthermore,the extensive business relationships with suppliers should aim towards ensuring shared risks, support in regards to handling the various government regulations (Shubik & Levitan, 2010, pg 121). Additionally, the supplier relationshio should aim towards handling and comprehending the local competitive environment is imperative.
Conclusion
Business operations emanate from the understanding of the environment of operation. Thus, from the above analysis, the Indian market presents a highly lucrative market for the company to venture. Inculcation of the foreign diret investment focuses on maintenance of independeny in operations and sustenance of individualized operational mandate.
Reference List
Shubik, M. and R. Levitan. 2010. Market Structure and Behavior, Cambridge, MA: Harvard University Press.
Zimmerman, A., & Blythe, J. 2012. Business to business marketing management: A global perspective. London: Routledge
Stonehouse, G., and Houston, B. 2013. Business strategy. London: Routledge.
Bagad, V. S. (2009). Management science. London: Technical Publications.
Bodwell, C. (2012). Total responsibility management. New York: Greenleaf Publishing.
Copley, J. (2013). Marketing communications management. London: Routledge.
Daft, R. (2011). New era of management. Chicago: Cengage Learning.
Fox, W. (2010). The management process: An integrated functional approach. Chicago: IAP.
