Industry Analysis: The Lincoln Electric case

Résumé du document

The Lincoln Electric Company is a monument in its own right; the company started in 1895 and currently holds 40 percent of the U.S. welding market. Brothers John and James were Partners throughout most of the company's history. John designed and engineered while James managed operations. Lincoln is based in the industrial heavy area of greater Cleveland, Ohio and sells to customer's world wide. The company dominates one type of welding in particular. Arc-welding is commonly found in many industries, from the farms of the Midwest to the shipyards on the coasts. Also used in on a smaller scale in artistes studios, and garages everywhere.

Employee compensation sets Lincoln apart form their competition. Developed by James Lincoln shortly after joining the business, the payment scheme is compromised of piece rate pay and bonus pay. At the end of each year, a bonus is issued to each employee, the amount is determined upon company profits and the workers performance. In years passed an individuals bonus may have approached their annual salary. The connotation of the bonuses and generous benefits package is not to motivate, but rather to express respect for every employee's dedication. As a result turnover is at an industry minimum and productivity is twice that of competing companies.

Extraits

[...] During the manufacturing process top management, supervisors and all employees are held accountable for the, “reduction of scrap, energy conservation, and maintenance of product quality” (Case 448). Once the manufacturing of the products are complete the low cost strategy is continued on by the shipping department. By using a piece work pay rate Lincoln Electric is able to ensure that all of the goods they produce are high quality. A laborer is only compensated for the quality goods that they produce. The piece work pay also supports Lincolns business level strategies because it fosters efficient operations and quality work. [...]

[...] Barriers to Entry The barriers to entry are high. In order to enter this industry you need to have the necessary assets, and proper technology. You can't just start a welding company because you need extremely advanced machinery. Lincoln has some of the most advance welding machinery in the welding industry. Rivalry Because Lincoln is the leading company in the industry rivalry is very high for them. Lincoln has to constantly watch what its competitors are doing and stay one step ahead of them. [...]

[...] Many of Lincoln' business philosophies are rooted in Christian Ethic. This is most apparent in employee relations and compensation, but also in their upfront and reliable business-to-business dealings. The welding industry moves methodically forward and Lincoln has poised itself to maintain its profitability well into the future. Visions, Missions, Goals and Objectives Vision Lincoln Electric will be the undisputed leader in the arc welding industry as measured by global sales volume, while simultaneously aiming to maximize shareholder value. Mission Lincoln electric will be driven by customer satisfaction and become known as the supplier of choice in our industries. [...]

[...] The perceptions of the welding environment being dirty and dangerous Environmental restraints are increasing operating costs The welding industry lacks a clear cut image and direction Appendix Industry Analysis Define International Arc Welding Products Key Competitors Reliance ElectricWestinghouse Electric General Electric Miller Electric Past and Present Strategies Past: Standard customer service with little guidance and specialization Present: Product Differentiation Low cost Importance of Innovation There is a need for the companies in welding industry to lead technological developments in order to develop flexible and durable products to satisfy customers' needs. Industry Dynamism It is important for the welding industry to keep up with technology, pricing and trends in order to compete. Concentration: High Stage in Life Cycle: Mature Government Impact: Regulations on the industry's energy use and environmental impact. [...]

[...] Brothers John and James were Partners throughout most of the company's history. John designed and engineered while James managed operations. Lincoln is based in the industrial heavy area of greater Cleveland, OH. and sells to customers world wide. The company dominates one type of welding in particular. Arc-welding is commonly found in many industries, from the farms of the Midwest to the shipyards on the coasts. Also used in on a smaller scale in artistes studios, and garages everywhere. Employee compensation sets Lincoln apart form their competition. [...]