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Lincoln Electric Case Analysis
Lincoln Electric case

1. Explain how the human resource (HR) policies of Lincoln Electric are linked to its

overall corporate strategy. Would you say that HR is a source of competitive advantage at Lincoln Electric? Lincoln Electric’s competitive advantage is in manufacturing of quality products at a lower cost than their competitors. As stated in the case, their strategy was to concentrate on reducing costs and passing the savings through to the customer by continuously lowering prices. This resulted in expansion of both market share and primary demand for arc welding equipment, primary demand for arc welding equipment and supplies, and encouraged exit of major companies from the industry. The management system also incorporated an incentive compensation method. The reward system was premised on the belief that one’s fullest potential can be realized through an effective incentive system that is designed to build teamwork but at the same time encourage individual competition among team members. Through this system, the company is able to build employee loyalty but even more importantly match the HR policy with their overall strategy of high quality products produced at the lowest possible cost to the company. The company endeavors to share in the cost saving by the employee bonus system and low cost of the final products to the customers. This is essentially the hallmark of the competitive advantage of Lincoln Company in the USA. This approach combined with an open door policy and lean management at Lincoln set the company operations and performance apart from the rest. The HR policy is anchored on the overall company strategy by ensuring the following factors: a) Compensation Policies

The compensation policies in place are the basis for the following aspects of the incentive scheme at Lincoln Electric: wage based on piecework output; sharing in company earnings through the annual bonus system with limited company benefits whose implementation is determined by...