Lincoln Electric: Venturing Abroad

Lincoln Electric was founded in Cleveland , Ohio on the principle of faith in the individual . The management style of Lincoln Electric was built around this philosophy . To enforce the principle of faith , Lincoln Electric generously rewarded competition and teamwork in its workforce The company paid not on the bases of fixed wages but rather on the basis of production output with wage calculated by the amount of pieces that an employee is able to finish . An annual bonus was given based on each employee 's performance . Guaranteed employment encouraged employees to become

efficient without the threat of layoffs if they become redundant .From 1911 to the period of World War II , Lincoln 's prosperity could be partly attributed to its proprietary technology which gave them a cost advantage over the competition . When a patriotic Lincoln shared its technological secrets during the war , this cost advantage was eroded Even with this loss , Lincoln was able to keep its lead over the competition due to higher levels of productivity . A Lincoln facility can produce three times the output of a competitor plant even if it had only half the available manpower . This productivity and efficiency is attributed to the employee incentive system used by Lincoln Electric Management

The slowdown of US manufacturing led Lincoln to expand its operations overseas . Under CEO George Willis , the company acquired factories in nine countries as well as building new factories in Japan and Venezuela However , Lincoln had no executive with International management experience . For most of the new Lincoln factories , Willis simply retained the existing management and simply retrained them under the managers from Cleveland . These trainings were supposed to introduce the new factories to the Lincoln way

These new plants were unable to implement the management style of Cleveland successfully . In many of these factories , labor was unionized and was very mistrusting of management . Piecework wages was rejected by some plants and were outright illegal in others . The company also had trouble implementing its bonus scheme due to legal technicalities . These local hindrances prevented the management from simply repeating the success of Lincoln in overseas plants

Under the eyes of newly hired consultant and later director for international operations Tony Massaro , Lincoln realized other problems with its overseas operations . Some of the acquired plants had small market shares and weak sales organizations . Costs were high due to fragmented production . Fragmented production also prevented the company from maximize the free trade between European countries

With this in mind , Tony Massaro launched a new internationalization strategy . This strategy has a higher chance of success than previous efforts . This is because Massaro realizes that the Lincoln system can not simply be translated to other locales and that to keep these locales up to spec meant higher oversight from Cleveland . Massaro is also open to cleaning and streamlining the company 's overseas operations as displayed by the shutdown of problematic plants in Germany and Brazil While productivity was the game in the US , efficiency was the plan of action...