Lincoln Electric

The two most important issues that Lincoln Electric is faced with are as follows. First, the inability to meet customer demand because of the shortages in supply creates opportunities for competing firms to enter the industry. What resources and capabilities does Lincoln Electric have that can mitigate this threat of entry. Second, the emphasis put on the monetary incentive plan leaves the company vulnerable in economic hardships. How can Lincoln Electric continue to encourage competition and quality without a high emphasis on monetary incentives? Examining the arc welding product industry structure will help identify the opportunities associated with that structure. Arc welding is part of the emerging, mature, and international industry. In an emerging industry an opportunity arises in technological leadership. More specifically, firms in the arc welding industry that invest in particular technologies that create greater cumulative volume of production at a lower cost are implementing the technological leadership strategy. Lincoln Electric takes advantage of this opportunity by developing its own proprietary equipment used on the manufacturing assembly line. In a mature industry, process innovation is an important opportunity for arc welding products. The cost advantage of process innovation is done by reducing manufacturing cost, increasing product quality, and streamlining management. The innovative and strategic manufacturing floor plan in Lincoln Electrics manufacturing plant is a prime example of process innovation. Their valuable, rare, organizational competence capability of coordination between product design engineers and the methods department creates an efficient cost saving competitive advantage. “This was seen as a key factor in reducing costs and rationalizing manufacturing,” William Irrgang explained. The international industry creates opportunities in sales growth for arc welding products. However, international competition can create new threats