Lincoln Electric: Case Study

Topics: Management, Employment, Employee stock option Pages: 7 (2222 words) Published: April 15, 2013
Lincoln Electric: Case Study

Lincoln Electric is one of the leading producers and manufacturers of Arc Welding Products and Electric Motors. Lincoln Electric’s success lies on the foundation of the various company policies introduced by James Lincoln. This case study analyzed the critical points on which the success of Lincoln Electric’s has its foundations.

Company’s Basic Principle

Lincoln Electric’s foundations are based on values of trust, overt nature to management, self reliance, righteousness, commitment, answerability and inter-collaboration. These beliefs and moral code formed a powerful base of Lincoln’s culture and management regularly providing the rewards to deserving employees. Pride of workmanship and feelings of involvement and contribution are intrinsic awards that flourish at Lincoln electrics. Company always update their employees about the company’s functioning and financial achievements which encourage the hard work in employees. James Lincoln firmly believed that customers are valuable assets of company. Company’s primary goal should be in the interests of customers. Researchers (Kanji 2010) have made theoretical models relating the Customer Satisfaction with growth in business. Kanji introduces customer satisfaction as critical factor for the model he presented. Other benefits which are included in Customer Satisfaction is Company’s Efficient Advertising and its Human Capital Performances (Luo 2007). Luo and Homburg (2007) findings indicate that company’s human resource managers should show strong interests in customer satisfaction which will lead to boosting of company business and profits. Rachel et. al. (2008) also provided profound evidence to the relationship of customer satisfaction and profitability. James Lincoln beliefs came out to be true with his belief in giving priorities to his customers instead of employees and shareholders. He said shareholders own his company’s stock because they believe it is profitable to invest their money than in any other way.

Cost Optimization Strategies

Cost of Products in the company is always kept at minimum to ensure the best interests of customers. Efficiency is the key in Lincoln Electric’s Cost minimization strategies. Products are manufactured with as high efficiency as possible which in turn ensured minimum amount of wastage and maximum output for the fixed amount of raw materials. Thus, cutting out the costs to be applied in the waste management of company. Scitovszky (1943) researches supports the arguments related to Profit Maximization where his findings implied that efficient process always lead to minimal use of raw materials with fixed output and maximum output for a fixed amount of raw material. The Production process system is highly structured because of the efficient management and worker doing every job efficiently as per the job description. Transportation costs are reduced to a minimal by storing the raw materials to be used as close to the work station as possible thus reduction in time and money to be invested. The Layout of the company also plays a key role in the efficient manufacturing process. These crucial factors allow Lincoln Electrics to manufacture High Quality Products at very low prices in the market thus beating its competitors in terms of Quality and Prices giving customers full satisfaction.

Work Culture and Corporate Organization at Lincoln

Employee’s satisfaction level at Lincoln is very high compared to other companies in the local area. They get annual bonuses approximately equal to the annual wages. Employee’s own company’s stock which later proved a high motivator for the dedication towards their work in the company. At Lincoln, per hour wages are higher compared to other companies in area which is a direct result of efficient process allowing Lincoln to provide proper compensation to the employees. Research (Rachel et. al. 2008) proved that employee contentment is a crucial factor of...
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