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Lincoln Electric

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by

Luuk Jans

on 19 April 2016

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Transcript of Lincoln Electric

Good way for a
long-term
strategy
Great control of
all aspects

Pros
Cons
Higher investment costs
Lincoln Electric
Bas van den Ban 644577
Chris Joore 899503
Davey van Ginneke 396305
Luuk Jans 289893
Matthijs van der Made 349808
No potential
loss of intellectual
property
Solid
market
commitment

Less time-
consuming
decision-making
process

Establish
direct contact
with local
institutions
Introduction
American multinational

Global manufacturer of welding products and equipment

KSFs: Incentive systems & open communication

2006: Expansion to India?

• generation of additional economic activity;
• promotion of exports of goods and services;
• promotion of investment from domestic and foreign sources;
• creation of employment opportunities; and
• development of infrastructure facilities.
Current situation:
Lincoln Electric has invested US $ 20 million on the plant, located inside the Mahindra World City special economic zone near Chennai.
What are the advantages and disadvantages of using a Greenfield site to expand into India?

A greenfield investment is a setup of a completely new plant or factory in a foreign country (Harzing, 2002)
Main objectives Mahindra world special economic zone:
Pros & cons
Competition will be difficult to overcome
The entry process
may take years
Hard to find
qualified managers
High labour turnover
Minimize
transaction
costs (Coase, 1937)

Questions
CAGE framework
Cultural:
• English language (100M – 300M)
• Difference in work systems
• Different values, norms and dispositions
Administrative:
• Common colonizers
• Common law
• Political friendship
• No common currency
Geographical:
• Physical distance
• Transportation and communication infrastructure
Economic:
• Specialized labor
• Profitability
• Soft infrastructure (Weak transportation or communication links)
(Ghemawat, 2001)
Full transcript