Lincoln Electrics

Topics: Joint venture, India, The Help Pages: 4 (1182 words) Published: December 13, 2010
1.Should Lincoln Electric expand into India by investing in a major production facility there?

I think that Lincoln Electric (LE) should definitely has a production facility in India because of its growth and foreseen opportunities, but if I were LE I would suggest to enter with a local partner in order to gain knowledge and experience in how the country operates in terms of bureaucracy, labor, culture and so on.

LE is known for its high quality products and its technical innovations. On its 60 years of international experience, the company gained valuable knowledge on what to do and what to avoid when moving abroad, and that is why they refocused their expansion strategy into joint ventures, instead of acquisitions avoiding the problems suffered in the early 1990s. Moreover, their technical know-how and sales structure allow them to provide the best solution for its customer’s worldwide and differentiate from its competitors.

On the upside of moving to India, the country represents a huge growth opportunity for the company. With a GDP increase of 6% in 2005 and the projection done by Goldman Sachs to become the fastest-growing economy in the next 50 years globally, a lot of chances will emerge for LE in the region. India foresees an increasing demand on construction and infrastructure projects that will require a lot of wilding machinery and consumables. Being the 3rd market in Asia and having a 500 million dollar (2006) market for the welding industry, India will become a key strategic region for LE in its effort to keep the global leading position. Finally, the fact that the country is friendly to use of pay-for-performance would allow LE to introduce some of their keys of success previously used in the US, the HR policies. These policies would need to be modified in order to upheld with the Indian legislation, but the changes are minor compared to other countries where such policies did not fit (Europe).

On the downside, large firms only take the...
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