REV: AUGUST 25, 2008
John Stropki, CEO of Lincoln Electric, returned home from Mumbai to company headquarters in Cleveland, having sampled the local Maharashtran delicacies while studying opportunities in the Indian market. From his vantage point in 2006, Stropki looked back on his company’s more than 100 years in the welding equipment and consumables industry with pride, wondering whether a strong push into India should be the next step in his company’s globalization. An India expansion had been considered for several years, but thus far the company had focused on growing its operations in China and elsewhere around the globe. If Stropki were to approve a significant allocation of resources toward an India expansion, he wondered what would be the best way to enter. He had a wealth of company lessons and experiences to apply to the India investment decision, as his company had had international operations since the 1940s, had struggled internationally in the late 1980s and early 1990s, and had gone on to regain its global competitive advantage in the late 1990s and early 2000s. During Stropki’s tenure as CEO since 2004, the company had further expanded globally and by 2006 owned manufacturing operations in 19 countries across five continents. Most recently, the company had enjoyed increasing success in China as a result of its aggressive expansion through both a joint venture and set of majority-owned plants. As Stropki opened the Cleveland newspaper to check the previous Sunday’s Cleveland Browns score, he wondered how he could apply the lessons of the Chinese experience in particular, to India.
Welding is a technique for joining pieces of metal by fusion through the application of concentrated heat. Virtually any two metal items can be joined by welding. Welding is also a supporting activity in most industrial activities, from the manufacture of construction equipment to machine tools, from pipelines to petrochemical complexes. The predominant method of welding is arc welding, where a welding power source generates electric current, which is used to create an electric arc, which then melts a filler metal used to create the bond between the two metal parts. The filler metal is in the form of a stick or wire electrode, and the electrode often has a series of chemical coatings and/or shielding gases designed to protect the welded metal from oxygen and nitrogen in the air and thus strengthen the bond. Electrodes are referred to as “consumables,” and the power sources and related parts used to create the electric arc are referred to as “equipment.”
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As of 2005, the welding industry together with its associated metal-cutting technology was a $13 billion industry globally. As shown in Exhibit 1, 42% of welding industry sales came from equipment,...
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