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Managing People and Organizations

Assignment: Case Study – Lincoln Electric in China

Word count: 3912
(Excluding: Contents, Executive
Summary, Reference list and Appendices)

Moscow, October 2011

Contents
Executive summary3
1. Analysis of the external environment of the Global Welding industry4
1.1.Political and Legal factors4
1.2.Economic factors5
1.3.Social factors5
1.4.Technological factors5
2. Analysis of the internal environment of Lincoln Electric7 3. Lincoln Electric’s performance management system.9
3.1. Piecework system10
3.2. Year-end Bonus11
3.3. Other features12
4. Recommendations15
References list17
Appendix 1: PEST analysis table18
Appendix 2: Typology of organizational culture18
Appendix 3: Comparative data20
Appendix 4: Implementing a Total Rewards Program: Four Phases21

Executive summary

After a very successful launch, the Lincoln Electric Welding (Shanghai) Company Ltd. on the position of reviewing the strategy and focusing on developing the incentive plan that will perfectly suit to the China specific market. The prepared report reflects the main areas which are important for the Strategy review and provides with specific recommendations. First part presented with Analysis of the external environment of the Global Welding industry that will helpful to reinforce the key existent advantages of the strategy and concentrate on improvement of possible weak fields. The second part - Analysis of the internal environment of Lincoln Electric is focused on description of specific organizational culture of the business in China and support the main part of the report - Lincoln Electric’s performance management system, where identified and critically analyzed the key success factors of Lincoln Electric’s performance management system. Within the analysis the comments are focused on Recommendations whether these factors might be successfully transferred to Lincoln Electric (Shanghai) Welding Company Ltd. And finally, the fourth part of the report summarizes and presents the precise recommendations for the business regarding management of performance implementation. The report provided with supportive materials which located in Appendixes as well as in the main body of report.
1. Analysis of the external environment of the Global Welding industry

In order to develop the implementation plan and further recommendations for the successful management of performance in Lincoln Electric (Shanghai) Welding Company Ltd, it is vitally to identify and analyze the key factors in the external environment of the welding industry and its impact on management people and organization. One widespread and efficient approach to comprehend the global external environment is that of the PEST analysis (Appendix 1). It allows to assess an industry position within the changing external environment and to correlate the main factors changing with the company implications within the further MESO level analysis.

1.1. Political and Legal factors
Entrance to the developing countries for the industry is more attractive, as from government side it is often proposed incentives for investing in local economy. It is obviously since it potentially provides employments, GDP growth and economic stability in general. In his speech during Business summit, John Stropki – Chairman, President and CEO, Lincoln Electric Holdings, Inc. stressed that government actions in China had been very committed to growth and supportive to business. On the other hand since industry development considered through global perspective, it should adopt the general strategy to the local legalization requirements (e.g. employment laws, taxation laws, competition regulations, environmental regulations etc.). Also, entering the new market the welding industry is always faces to certification and intellectual property issues. In some countries, corruption factors becomes the barriers for...
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