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 Greenfield

+ Potentially quick + Leverage local + Grab immediate + Capital requirements spike in sales with partner’s knowledge market share by based on ESAB India’s minimal capital of market and buying a competent experience are requirements political contacts local firm in India reasonable

- Hard to price -This is not an - They don’t want to + They can avoid paying the intangible industry where sell, and are asking excessive acquisition know-how that is political contacts or for an unreasonable premiums responsible for market-specific premiums most of Lincoln knowledge is as
Electric’s important as in - No single acquisition + In recent years, they competitive many other will consolidate what have successfully advantage industries is a highly fragmented figured out how to industry structure operate in distant
- Could potentially - Any intellectual markets on their own lost control over property leakage their technology could damage Lincoln Electric in multiple markets

What factors could explain the differences in Lincoln Electric’s performance around the world?

Hypotheses:

Highest performance/success in:

* Wealthiest countries * Largest markets * Fastest-growing markets * Market where they have dominate market share

Company will be least profitable in:

* Countries with weak rule of law * Geographically distant countries * Countries that privilege the rights of organized labor

Lincoln Electric Core Management Practices: Which one is expandable?

Piecework

Discretionary Bonus

Merit Rating

Employee Advisory Board

When Lincoln Electric thinks about countries with conflicting laws and regulations, should Lincoln (a) avoid those countries, (b) follow a “when in Rome, do as the Romans do” approach (maximum adaptation), or (c) transplant as much of its system as is legally possible?

Avoid these countries When in Rome, do as the Maximum Transplantation Romans do

+ Know where the distance + We will rely on our + We know how to make our barriers are lowest; let’s technology and brand system work in Cleveland; focus our attention there to get us through this system can work anywhere

- May lose out on large - Our competitive advantage - We know from the markets which have the is to a large degree based on 1980s/early 1990s experience most growth potential our industry-leading that some countries seek to productivity; we may lose that block our practices; we’re
- May lose out on our own if we give up core beliefs so just creating legal and ability to learn how to adapt easily market risks if we do so; we successfully to opposing learned that the institutional conditions cookie-cutter approach failed in the 1980s