Lincoln Electric
Lincoln Electric
1. Problem The problem foe Lincoln Electric is that they are having less than expected revenues from their overseas venture. Their management system worked so well in their original facility in Ohio. They had such high confidence in the way they made their products there that they thought that if they do what they did in another country, they will reap the same benefits. When they applied the same management principles in other countries, they had net losses that are so high, that they are enough to offset the yearly bonuses of the employees in the Ohio plant. The company decided to borrow money in order to not lose the trust of the American employees.
2. Objectives One has to wonder at first about the reason Lincoln Electric would want to set up camp in another location in the first place when they are having lots of profits already. According to chapter 4 of our textbook which is about doing business overseas, the reasons companies are (1) to outsource their products or services in order to make its operations cost cheaper and (2) to develop markets for finished goods or services. Most likely, the latter reason is why Lincoln Electric sought new business ventures in other locations. When companies are making profits, they usually expand their business in order to make more profits. One reason for this is that the high population and economic growth in developing nations, like China, Brazil and Russia, have increase in demand for buildings, making the market in such countries very attractive for their welding products.
3. Analysis: It seems like a very good way to run a company. Lincoln Electric has a decentralized approach to management, meaning that most of their operational decisions are carried out at the division level. They have a performance-based compensation, which reward employees for meeting specific goals. Because of this, employees are motivated to carry out their tasks in order to meet management goals. They
1. Problem The problem foe Lincoln Electric is that they are having less than expected revenues from their overseas venture. Their management system worked so well in their original facility in Ohio. They had such high confidence in the way they made their products there that they thought that if they do what they did in another country, they will reap the same benefits. When they applied the same management principles in other countries, they had net losses that are so high, that they are enough to offset the yearly bonuses of the employees in the Ohio plant. The company decided to borrow money in order to not lose the trust of the American employees.
2. Objectives One has to wonder at first about the reason Lincoln Electric would want to set up camp in another location in the first place when they are having lots of profits already. According to chapter 4 of our textbook which is about doing business overseas, the reasons companies are (1) to outsource their products or services in order to make its operations cost cheaper and (2) to develop markets for finished goods or services. Most likely, the latter reason is why Lincoln Electric sought new business ventures in other locations. When companies are making profits, they usually expand their business in order to make more profits. One reason for this is that the high population and economic growth in developing nations, like China, Brazil and Russia, have increase in demand for buildings, making the market in such countries very attractive for their welding products.
3. Analysis: It seems like a very good way to run a company. Lincoln Electric has a decentralized approach to management, meaning that most of their operational decisions are carried out at the division level. They have a performance-based compensation, which reward employees for meeting specific goals. Because of this, employees are motivated to carry out their tasks in order to meet management goals. They