Lincoln Electrics Case Study

Introduction
 Lincoln Electric is a leading manufacturer of welding products, welding equipment and electric motors  Their management system is so successful that people refer to it with capital letters-the Lincoln Management System-and other business uses it to benchmark their own  Lincoln uses diverse control approach  The company’s system success is largely is due to the organizational culture based on openness and trust  Because the management system worked so well, senior executives decided to extend Lincoln Electric overseas  Things didn’t go quite as they planned and managers at international plants failed to meet their production and financial goals every year

Question 1: Does Lincoln follow a hierarchical or decentralized approach to management?
Hierarchical (centralization) – decision authority is located near the top of the organization
Decentralization – decision authority is pushed downward to all levels Lincoln Electric follows a decentralized approach to management  The company uses an “open-door” policy Every employee has direct access to managers for open communication, discussion and give feedback  They have an advisory board composed of people elected by their fellow workers who meet with senior management biweekly

Question 2: What is the problem with transporting Lincoln’s control system to other national cultures? What suggestions would you make to Lincoln’s managers to make future international manufacturing plants more successful?
Problems  Differences in culture across the globe - The European labor culture was hostile to the piece-work and bonus control system - Therefore, the system wasn’t very effective in different countries with different work cultures

Suggestions  Increase sales and maintain monthly profit - Management should use salespeople because they highlight the costsavings and benefits of Lincoln Electric's products, and also draw in new customers via LE's name recognition and reputation for high