Questions and Answers to Lincoln Electric case study by Harvard Business School.
What features of LECO account for its long-term success in the US? There are several factors that have contributed to the long-term success of Lincoln Electric in the US. Most notably, the productivity of the labor force and the efficiency of operations have generated a competitive advantage over the market. Existing and potential competitors are not able to produce at the same low costs and subsequently are not able to offer competitive prices to the market, thus increasing LECO 's market share. The high levels of productivity common to LECO employees can be attributed to motivation and job satisfaction:
*Guaranteed employment: no lay offs since 1948, instead LECO rotates through co. (skill variety).
*Equity: employees earn comparable, sometimes higher, wages than other manufacturing companies. In addition, there are short power distances between laborers and managers (common cafeteria, no reserved parking, managers work long shifts, etc.) As a result, employees feel that they are being treated fairly.
*Expectancy: wages based on piecework and an annual bonus gives the average worker the possibility to increase total compensation. According to expectancy theory, employees are motivated by the belief that they can expect to achieve certain desired rewards by working hard to attain them.
*Instrumentality: Rewards are explicitly linked to a measurable performance.
*Positive Valence: employees value the rewards that are offered to them for desirable behaviors.
Why did the internationalization thrust fail? There were many factors that contributed to LECO 's failed attempt at internationalization. It is evident that Willis ignored a variety of cultural and macroeconomic effects related to his plan. Specific to human behavior, LECO neglected the transferability of the incentive system to other countries and the utilization of management controls to monitor it.
*External: It was unreasonable to expect, considering the extensive experience with the US labor markets
*Guaranteed employment: no lay offs since 1948, instead LECO rotates through co. (skill variety).
*Equity: employees earn comparable, sometimes higher, wages than other manufacturing companies. In addition, there are short power distances between laborers and managers (common cafeteria, no reserved parking, managers work long shifts, etc.) As a result, employees feel that they are being treated fairly.
*Expectancy: wages based on piecework and an annual bonus gives the average worker the possibility to increase total compensation. According to expectancy theory, employees are motivated by the belief that they can expect to achieve certain desired rewards by working hard to attain them.
*Instrumentality: Rewards are explicitly linked to a measurable performance.
*Positive Valence: employees value the rewards that are offered to them for desirable behaviors.
Why did the internationalization thrust fail? There were many factors that contributed to LECO 's failed attempt at internationalization. It is evident that Willis ignored a variety of cultural and macroeconomic effects related to his plan. Specific to human behavior, LECO neglected the transferability of the incentive system to other countries and the utilization of management controls to monitor it.
*External: It was unreasonable to expect, considering the extensive experience with the US labor markets