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Lincoln Electric: Venturing Abroad

Discussion Questions: 1. How was Lincoln able to grow and prosper for so long in such a difficult commodity industry that forced out other giants such as General Electric, Westinghouse, and BOC? What is the source of Lincolns outstanding and enduring success? 2. Given this outstanding success, why did the internationalization thrust of the late 1980s and early 1990s fail? 3. What is your evaluation of the companys internationalization strategy under Tony Massaros leadership? Is it likely to be more successful that the previous offshore initiatives? If so, why? 4. Should Lincoln go ahead with its investment in Indonesia? If so, what should be its entry strategy with respect to partnerships? Which compensation option would you recommend to Mike Gillespie as he considers the advisability of implementing the companys incentive management system? Writing Assignment (if you choose this case): What do you think of Lincolns emerging international strategy by the mid1990s? Does this company have a competitive advantage that can be transferred to the global environment? How is Massaros recent overseas initiative different from Lincolns earlier failed approach? I don't agree with Lincoln's international strategy during the mid 90's. Aganist the benefits that a firm can get from FDI, there is always a cost as well and Lincoln's balance of payments suffered greatly after the firm acquired nine plants in different countries and building two more in both Japan and Venezuela. The balance of payments suffer from the initial capital outflow that was required to finance the FDI. the reason behind all these acquisitions was what the management saw at this time "the chance to have an immediate market presence" due to the elimination of internal tariffs inside the European Community. the management actions that was not being done on a clear vision, goals and objectives resulted, in long term debt and the company had lost so much money for the first time in its history. Also, management was paying little attention on how to study the new market they just entered their main focus was to implement their incentives system, and later on modifying this system to make it compatible with the new markets. moreover, corporate executives didn't have a well defined plan on how to expand overseas they were focusing more on their current plant in Cleveland's. Furthermore, they applied the concept of direct coloration between incentives and rapid productivity and growth, which didn't apply in any of the

newly acquired plants all over Europe. on the contrary, it affected the already existed plant in France and all of them start dragging down the whole corporation.