Strategic Management Lincoln Electric Expansion to India

Strategic Management

Lincoln Electric Expansion to India

The purpose of this assignment is to evaluate whether Lincoln Electric should expand its operations to India or not. In this assignment, firstly the facts are presented. Secondly, an analysis is presented about the Lincoln Electric's business strategies and its suitability to operate in India. Lastly, some recommendations are given which can help Lincoln Electric to expand in India successfully.

Facts

Lincoln Electric (LE) is a U.S.-based company headquartered in Cleveland. LE is a manufacturing concern generally deals in consumables and equipment related to arc welding. Lincoln Electric is a large set-up having 39 plants world-wide.

Due to fast-paced growth of India, Lincoln Electric is considering to expand its operations to India. This is a proposal and LE has to evaluate it considering the business opportunities in India. It is a fact that India provides foreign businesses to reduce their costs by offering different facilities including cheap labor. Lincoln Electric already is prone to reduce cost by using several business tactics. Business environment of India also support flat management structure in which there is a least communication gap between the management and the workers/employees. Lincoln Electric has also flattened down the organizational structure so as to reduce wages expenses and provide opportunity to employees for open environment. Thus, Lincoln Electric should go for expansion into Indian market.

Analysis

Entry into the Indian market will definitely prove to be a very positive step in globalization of the company. LE has experienced positive results while expanding its operations to China. The strategy adopted for that expansion was joint venture and majority-owned plants. LE should implement the learning of Chinese and other countries expansions to India. In case of India, Lincoln Electric should go for company owned plants rather than joint ventures. This is because the cost of establishing a plant in India is lower as compared to going for joint venture.

There would be several advantages of having a manufacturing concern in India. The rising trend of company revenue, lower costs of logistics and last but not the least, new gateways for entering in many different countries of Asian market. Currently, the Indian market is growing at a rate of 9-12% yearly. The entry of Lincoln Electric to Indian market will result in increased markets share against competitors which will result in increased revenue growth of the Asian region in this particular industry. Establishing a factory of arc welding in India will result in increased market share of automatic consumables and equipment because of lower logistics costs of the automatic consumables and equipment.

Finished goods transportation costs would be reduced as India is at a close distance from China and other Asian countries as compared to transporting goods from USA.

Recommendations

Some of the recommendations for Lincoln Electric for its proposed Indian expansion are as follows:

Since, Lincoln Electric would be a profitable business in India as well; therefore, the company should concentrate on automation which will result in reduced manufacturing costs.