...Lincoln Electric Case The Lincoln Electric Company upholds the motto of producing the best quality products at the lowest cost. It is the world's largest manufacturing company that primarily makes welding products. It has also become one of the world's leading manufacturers in arc welding equipment since World War II. Lincoln Electric's organizational culture and philosophy is still strong and consistent and continues to persist. Its strong culture and company philosophy has driven the company to remain successful over the years and the reason why it's still successful today. The company's approach to motivate its employees is both simple and unwavering. It has built a climate that fosters individual growth and continual improvement and productivity and has implemented a very clever incentive system. Firstly, the company creates better quality products and progressively continues to make better quality products than its competitors at such low costs mainly because of its employees. Lincoln Electric nurtured the idea of individual growth. The foundation of the company is based on employee development. To drive its employees to seek growth in their abilities and to motivate them to be more productive, they championed the idea competition. The company believed that competition makes a man work harder. It eliminates lazy and incompetent workers and pushes people to perform at their ultimate best. Competition develops progress and determination. It takes the hidden talents and...
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...The Lincoln Electric Company is the world’s largest manufacturer of arc welding products and a leading producer of industrial electric motors. Their key competency is achieving higher worker productivity. Every year the company has seen high profits and bonuses. Employee morale and productivity remains very good and employees are very loyal to the company. The company also puts customers goals as top priority. This is a very organic organization. They do not have a formal organization chart in this company because they want to ensure maximum flexibility. They have an open-door policy in which employees take problems to the people that are most capable of solving them. Routine supervision is almost nonexistent. Lincoln has a fairly flat organization in which there are usually two or three levels of supervision between production workers and the president. Employees are evaluated on quality, dependability, ideas and cooperation, and output. They also have great job security, while also being able to participate in decision-making. Lincoln Electric does not really seem to have any big problems in their current operations while working under an organic structure, but one problem seems to be the lack of attention that the stockholders get. At Lincoln, the stockholders are given last priority. The whole philosophy behind this is that they think that it will be more profitable than investing money in any other way. Alternatives for this company is to work towards...
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...Lincoln Electric, a company started over a century ago by John Lincoln had grown from a small electric motor company into the worldwide leader in welding consumables and other innovative products. It's success is attributed to dynamic and innovative products coupled with leadership based on shared-knowledge and adaptable incentive plans for it's employees. These incentive plans included company stock offerings, stock bonuses, good salaries, paid vacation, and guaranteed jobs. The incentives were believed to have contributed to the incredible success of the organization, and could be utilized as a model to their international operations.. Though Lincoln had a string of international success in their Canadian, Australian, and French operation,they were failing to realize profits internationally despite having rapid sales growth. Their balance sheet took a major hit as their debt began to climb, and were beginning to run low on cash. There were a number of causes to this failed policy. Just to name a few, acquisitions, management, and a poor business environment. As a result of their acquisitions, they were entering new markets that had poor labor management, unions, and low productivity. The management was dislocated abroad, and local management was highly inadequate. Secondly, the business environment was also poor. They were in the middle of a global recession, and the market was overpriced for companies. They would eventually learn from their mistakes, raise...
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...ACP IBOM International Business Strategy Case Study: Management focus Lincoln Electric Presented by Raphaël ROBIN Raphaël ROBIN Table of content Introduction………………………………………….page 2 … The beginning of Lincoln Electric………………..page 3 … From the motors to the welders production……..page 4 … Becoming International…………………………....page 4 … A new era…………………………………………...page 5 … Conclusion………………………………………….page 6 … References………………………………………....page 6 … page 1/6 Raphaël ROBIN Introduction A picture of John C. Lincoln "The Welding Experts" Created in 1895 by John C. Lincoln a capital investment of $200 Lincoln with , the Electric Company is today a world leader in the design, development and manufacture of welding products, archery, robotic systems, equipment oxyfuel and plasma cutting and occupies the first position in the global market for brazing and soldering alloys. Lincoln Electric continuously invests in the development of welding solutions to meet the specific needs of customers worldwide. Choose Lincoln Electric as welding partner is offer your company a wide range of equipment and consumables proven in industrial environments, and designed to meet the most stringent requirements...
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...9-707-445 REV: AUGUST 25, 2008 JORDAN SIEGEL Lincoln Electric Introduction John Stropki, CEO of Lincoln Electric, returned home from Mumbai to company headquarters in Cleveland, having sampled the local Maharashtran delicacies while studying opportunities in the Indian market. From his vantage point in 2006, Stropki looked back on his company’s more than 100 years in the welding equipment and consumables industry with pride, wondering whether a strong push into India should be the next step in his company’s globalization. An India expansion had been considered for several years, but thus far the company had focused on growing its operations in China and elsewhere around the globe. If Stropki were to approve a significant allocation of resources toward an India expansion, he wondered what would be the best way to enter. He had a wealth of company lessons and experiences to apply to the India investment decision, as his company had had international operations since the 1940s, had struggled internationally in the late 1980s and early 1990s, and had gone on to regain its global competitive advantage in the late 1990s and early 2000s. During Stropki’s tenure as CEO since 2004, the company had further expanded globally and by 2006 owned manufacturing operations in 19 countries across five continents. Most recently, the company had enjoyed increasing success in China as a result of its aggressive expansion through both a joint venture and set of majority-owned...
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...Should Lincoln Electric enter India or not? Yes No + Most of the future growth in their industry - Their performance in Asia is lower than in the rest will come from India and China. of the world, and they need to solve that problem first. + The market is still ripe for the taking. It is - They already have a lot of complexity from operating wide open for a successful entry. on all but one continent. + If they don’t go to India, their toughest competitors - If they had difficulty for years adapting to Europe, why will dominate the market and use their free cash flow would they have any better luck navigating India’s to attack Lincoln Electric in other geographies. challenging business environment? Firms can increase their profitability through global expansion in a number of ways—can Lincoln Electric do the following: * Implement cost-cutting initiatives (such as lower-cost labor pools) - ? (best practices to raise labor productivity in a local-for-local operation) * Bring differentiated products to an underserved geographic market - ? What is Lincoln’s reputation? * Spread “fixed costs” of R & D and branding over a more expansive customer base - ? Can they? * Actively attempt to improve industry structure through acquisitions - ? (fragmented—buyout larger player) If Lincoln Electric enters India, which entry mode choice is best? Licensing Strategic Alliance/JV Acquisition Wholly Owned ...
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...Strategy Lincoln Electric’s strategy is focused on its customers and to provide them with a high quality and reliable product at the lowest price. “To build a better and better product at a lower and lower price,” stated by Lincoln Electric regarding its organizational purpose. Purpose Lincoln Electric’s control system is very effective because of the communication of the organizational objectives to its stakeholders. The primary objective of the organization is creating a high quality, low cost product to consumers, which is achieved in many facets of the company. The organization has evaluated their market as having low risk because of a lack of superior alternatives. The company’s policies are effectively communicated throughout the organization and include the promotion of “owner-employees” through the purchase of company stock and the use of retained earnings and employee purchased stock to finance company growth. Performance indicators and targets are controlled using a compensation system that is centered on evaluating employee performance. Employees are motivated by this compensation system because they are paid directly proportional to the efficiency and quality of his or her work. All of these components of the control system contribute to the ultimate goal. Commitment Lincoln Electric creates its identity by emphasizing the values of performance and productivity within the organization and effectively achieves this because of its control system. The high level...
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...The assigned case study explores the overwhelming success of Lincoln Electric, an American based company and major producer of welding equipment and associated consumables. Lincoln Electric has been in business for over 100 years and has been the subject of countless case studies for MBA students to analyze the reasons why the company is so successful (Lincoln Electric, 2012; Eisenberg, Sieger & Greenwald, 2001). Within this assessment, I will explore the primary reasons why I feel Lincoln Electric has been so successful and a high performing organization for so many years. Specifically, I will propose literature and research based reasons for these reasons as well as specific actions Lincoln Electric can take as a company to achieve even higher performance in the future. Lincoln Electrics Keys to Success From humble beginnings to worldwide example Lincoln Electric started off from very humble beginnings, being formed during a depression and hardly prospering during the first 25 years of its existence (Robbins, De Cenzo, & Coulter, 2013; Wiley, 1993). However, Lincoln Electric has since become a regular on the Forbes magazine’s list of the 400 Best Big Companies in America and the Fortune 1000 list as well (Koller, 2010). Additionally, Lincoln Electric serves as an example for other companies striving for high performance within their own organizations (Koller, 2010). So what has made Lincoln Electric such a successful company? I’d propose it’s directly related to the...
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...The Lincoln Electric Company An inventor by the name of John C. Lincoln designed and developed the electric motor in such a way that it could not be topped by any competitor; however, his passion for inventing kept him from wanting to manage the company he created. So in 1907 John hired his brother, James F. Lincoln, to manage the plant and this is when it all started, the success and growth of a billion dollar company. The Lincoln Electric Company, the world’s largest arc-welding manufacture and top producer of industrial electric motors, now employees over 4000 people and sales have topped $1 billion. But, how did they gain this overwhelming prosperity? Many have tried to figure it out, even studies have been conducted on Lincoln Electric’s organizational structure, James’ incentive management practices, and the keys to their success, and still no one has mastered it. They still operate today the same way they did year’s ago and it is working...for them. However, what does the future hold for Lincoln Electric? Will they be able to keep up with their high demand of productivity without lowering employee job satisfaction? We will examine different factors of Lincoln Electric such as the companies communication between employees, their problem solving techniques, and their conflicts, but the two most important factors we will analyze are: The incentive reward system - Its pro’s and con’s An effective organizational change process to position the firm’s incentives...
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...1. What is Lincoln Electric’s strategy? Lincoln Electric’s strategy relies on its low cost to manufacture and low overhead. The company has been able to achieve this by continually improving its labor productivity. Its innovative management style and incentive based pay system has been at the core of Lincoln’s strategy. The company’s success relied heavily on the culture in which it created. The founder was focused on erasing any heirarchical distinctions and creating an environment that fostered production and innovation through trust, openness and shared control. To gain the employees trust, Lincoln sought to gurantee the workers employment by instituting policy prohibiting lay-offs. They did this by producing invnetory and if demand didn’t pick-up would scale back employee hours. This was not only an efficient model, but reduced overhead costs otherwise endured by competitors. Lincoln was not faced with the costs associated to recruiting and the retraining of its workers. The company fostered creativity with its open-door policy by allowing its experienced production workers to openly share complaints and ideas for improvement with management. An Advisory Board elected employee representatives to share feedback, which was later posted on bulletin boards throughout the facility. Many of the company’s workers are hired straight from high school and trained to perform in many roles. To further gain loyalty from its workforce, many of Lincoln’s executives were employees...
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...Lincoln Electric 1. How would you describe Lincoln's approach to the organization and motivation of their employee? I would describe Lincoln's approach to the organization and motivation of their employees as organized, work oriented, and frugal with their money. Lincoln expects a lot from their employees but in return is willing to pay them very well. I think his piecework compensation is a very good idea. There is no reason to waste money paying an employee that isn't willing to work as hard as Lincoln needs them to. Employees are motivated with bonuses, piecework compensation, and promotions. By only hiring from within, employees are motivated to work harder because they know that have a good chance of being promoted if they show they have a good work ethic. Overall I really like Lincoln's approach. Money is not spent on useless things and the employees seem to be happy working at Lincoln Electric. 3. What are some of the key financial metrics that demonstrate the success of Lincoln? Lincoln Electric hires fewer employees and expects more from them in order to save Lincoln money. They also give great incentives such as bonuses, piecework compensation, and guaranteed employment after two years in order to keep employees happy and avoid having a high turnover rate. When Lincoln orders new machines they tend to buy them in pieces and put them together themselves in order to save money and so that they can make the machines work quicker and more efficiently. Lincoln focuses...
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... Why did Lincoln’s early international expansion efforts fail? I think that the main reason why Lincoln’s early international expansion efforts fail is that company has lack of international experience. Therefore they made a lot of mistakes while they were trying to expand the company’s international manufacturing presence. The first mistake was that they tried to implement their incentive system instead of the system that existed in acquired plants. Willis didn’t take into account the cultural differences between countries. For example, European managers and workers were philosophically opposed to piecework and seemed to value vacation time more highly than extra income from bonuses. I think that for implementing new incentive scheme Lincoln also chose wrong mode of entry into European market. Afterwards European plants went into troubles. Another mistake was that corporative executives paid little attention to their subsidiaries; the whole company became very decentralized. HQ didn’t know real causes of troubles in their plants and deemed that their incentive scheme would increase productivity and solve their financial problems, it was also low level of collaboration between plants. After that the headquarter of company realized full scale of troubles and tried to assemble an International Strategic Liaison Team to analyze the foreign operations. In this step they also made a mistake. Instead of assembling this team from managers which were aware of situation In European...
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...Lincoln Electric: Case Study Lincoln Electric is one of the leading producers and manufacturers of Arc Welding Products and Electric Motors. Lincoln Electric’s success lies on the foundation of the various company policies introduced by James Lincoln. This case study analyzed the critical points on which the success of Lincoln Electric’s has its foundations. Company’s Basic Principle Lincoln Electric’s foundations are based on values of trust, overt nature to management, self reliance, righteousness, commitment, answerability and inter-collaboration. These beliefs and moral code formed a powerful base of Lincoln’s culture and management regularly providing the rewards to deserving employees. Pride of workmanship and feelings of involvement and contribution are intrinsic awards that flourish at Lincoln electrics. Company always update their employees about the company’s functioning and financial achievements which encourage the hard work in employees. James Lincoln firmly believed that customers are valuable assets of company. Company’s primary goal should be in the interests of customers. Researchers (Kanji 2010) have made theoretical models relating the Customer Satisfaction with growth in business. Kanji introduces customer satisfaction as critical factor for the model he presented. Other benefits which are included in Customer Satisfaction is Company’s Efficient Advertising and its Human Capital Performances (Luo 2007). Luo and Homburg (2007) findings indicate that...
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...Lincoln Electric Pay Scale Curtis Pelston Personnel Management When a person graduates from high school or college either one they seem to look for what company or which job they can work in order to make the most money. What most people fail to look for is which job is going to offer the overall best atmosphere to work in. This includes bonuses they will be paid, vacation time received, health care benefits, how they will progress in the company, and the conditions they will be working in. There are a lot of different aspects of a job that people tend to overlook when looking for their first or next job. The truth is most people jump to conclusions and take the job that offers the biggest paycheck. One company that is an older company that has been offering some of the best pay systems possible for their employees is a company called Lincoln Electric. In this paper I am going to discuss the different ways in which the employees are paid and what puts Lincoln Electric heads and tails above the competition when it comes to employees. First, you have to look at what the company does to understand the jobs that are to be offered by the company and what the employees are to be qualified in or what they are to do at their job. Lincoln Electric is a company that started out in 1895 by John Lincoln creating small motors for different tools and other items. They later moved into creating the first portable welder in 1909 which came to be what Lincoln Electric is most known for...
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...The Lincoln Electric Company The Lincoln electric, founded by John C. Lincoln is now an American multinational manufacturer of welding products. Over the course of decades, it has obtained outstanding growth in all fronts; target markets, market share, production quantity, firm size, production variety etc. It has become a well-known and widely worked on case study, especially due to the firms policies and incentive systems. Rewarding its employees handsomely for the productivity, high quality, cost reduction ideas etc. James F. Lincoln`s philosophy of “Incentive management” with tree policies employment guarantee, yearend bonus and piecework based wages became company`s core strategy. Lincoln electric is a firm with strong fundaments and healthy business values. Then after the death of John and James Lincoln came the hard times in 1980`s. Due to effects of inflation, higher costs, recession etc. Lincoln Electric (with George E. Wills as the firm president) faced a 40% drop in sales. Even through this management held its ground, no employees were laid off and no policies were altered. Nevertheless, sharing reward, equality for everyone, belief in the individual these shared values gave result and repaid over the next years, especially in 1993. When employees voluntarily postponed 614 weeks of vacation to meet customer demand In order to evaluate the exportability outside the US, of Lincoln`s approach to the organization and motivation of employees, we need to first understand...
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