Lincoln Electric is a company which sells electric motors in the early stage of their business, which was in the year of 1895. The company’s headquarters is located at Cleveland, U.S. The founder of the company is John C. Lincoln. In 1907, James (John’s brothers) joined Lincoln Electric as a senior manager and introduced different types of HR policies and management practices (Jordon Siegel, 2008). In the year 1909, the company ventured their business into welding equipment and it became their main business. Starting with a capital investment of only $200 in 1895, Lincoln Electric is now a US$2.9 billion multinational enterprise dominating global markets. Lincoln Electric has many award winning engineers; they were responsible for technological leadership in welding and the company spent 2% of their sales on research and development (R&D) (Jordon Siegel, 2008).
Their main source of business is welding. Welding is a method for combining pieces of metal by fusion through the application of concentrated heat (Jordon Siegel, 2008). Lincoln Electric has expanded their business throughout the world such as countries like Italy, Indonesia, Japan, China, Canada, Australia, Mexico, Germany, France, UK and others countries as well. All these countries differ in the terms of level of economic development, economic performance and economic potential. Lincoln’s distribution in Japan was limited; however the welding consumables were sold to a small group of customers. The main 5 competitors of Lincoln are EASB, Illinois Tool Works (ITW), Air Liquide, Kobelco and Thermadyne Holding Corp. By reading the case study, Lincoln Electric’s strategic position is very well planned and futuristic. Micheal Porter (1996) has defined strategy as “competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value”. Lincoln Electric has showed several differences in HR and incentive system compared to other organisations. For an example, they believed that capitalism, which will not lead to any classes (Jordon Siegel, 2008).
So Lincoln was one of the first companies to implement human resource innovations. In the innovations includes incentive bonuses, employee stock ownership, employee suggestion system and other types of benefits. This would be the strategy used by Lincoln Electric to maintain a healthy relationship with their employees.
This essay will determine and give suggestions to Lincoln Electric, what is the possible and successful ways to venture welding market in India. To understand the India market, a study should be done through PESTEL analysis externally; by using this analysis Lincoln could identify the threats and the opportunities.
2.0 ANALYSIS OF BUSINESS EXPANSION
2.1 Expansion to India market
PESTEL analysis is consisting of political, economical, social, technology, environmental and legal. By doing a research through this analysis in India, Lincoln Electric could find out whether is going to generate opportunity or threats. India is one of the fastest growing countries in their economical and has a very attractive market in Asia. India’s welding market was also the third – largest in Asia by 2006, whereby the annual sales was around $500 million (Jordon Siegel, 2008).
When we study the political view of India, the corruption activities is actually very high in India between the government and people. A major area of concern in India is corruption. Corruption increases the cost of business operations and often affects foreign direct investment (Rahman, 2018). India also has a well-developed tax structure with a three-tier federal structure, comprising the Union Government, the State Governments and the Urban ; Rural Local Bodies (Ashish Suman, 2005).
India’s economic situation is very promising because of the fast growth and allows investors to consider setting a business over there. They also have a lot of skill employees and these employees are fast learners (Piri, 2017). Another reason that can bring opportunity is India has inexpensive labour force compared to other Asian countries. Every investor would like to look for a place that has reasonable labour cost and they are willing to learn. India’s gross domestic product grew 7.2% in the third quarter, surpassing expectations and wresting back the mantle of fastest growing economy from China (ET Bureau, 2018).
India’s culture and business idea is totally different from other countries. According to Hoftsede’s culture theory, India is high in power distance with a score of 77. This means the hierarchy of the organization is top to down and communication is only one way. Lincoln Electric should try to adopt this culture and understand what the employee wants. LE shouldn’t have any problem in the language spoken in India because English is the second language spoken there. LE can easily communicate with the local and government employees.
Through the technological analysis, R&D is focused in India for long term development.