Lincoln Electric Management - Case Study Example

Lincoln Electric Management 1. From Lincoln Electric’s case, four identifiable routines are used at nurturing competitive advantage over their competitors, these including the integration of sales and manufacturing strategies, which capitalize on the endowment of the company’s operational distributor and customer networks. There is also the training of a highly skilled sales team, which helped market their products; the development of employees – through capitalizing on a favorable incentive system, encouraging creativity and competition; and the continual reduction of production costs, thus a corresponding decrease in the prices of their products. The rationale, as to why the company capitalized on these, is because; the reducing production costs led to a corresponding decrease in the prices of their products, thus increased sales. From nurturing employee potential, the quality of products would increase, thus a corresponding rise in the confidence of customers, in the price of the products. The efforts of an experienced sales team would result to an increase in sales volumes, thus the success of the company. The nurture of the operational distributor and customer networks, the company would reach more market centers, thus an increase in revenue levels. 2. Four identifiable roles of the company’s management – leading to the creation of the company strategy, mission, vision, and company culture are enumerated next. The management laid down the plans for the company (planning), transmitting these to the employees, which is evident in the changes at the company – these including the specialization in the production of welding products. In the area or organizing, the company has actively defined job definitions for employees, and then left the execution to individual workers – offering rewards for increase in output. Under leading, the management of the company has established effective relations with the employees, thus an effective directing on meeting the set targets. Under controlling, the general no-nonsense culture and supervision lines of the company helped the management in controlling employee output. 3. With reference to early behaviorist models, the company’s approach to employee motivation and organization is effective, though lacking in some aspects. The company has addressed the major areas of motivation, these including the behavioral inclinations of workers and recognizing their input at the company. This can be seen from the case of the interviewed workers, who feel that they control their output and income, like Espinoza. 4. The strategy used discussed at question three, which is about motivation and organizing of the employees has greatly influenced the success of the company. This is clear from the views of the interviewed workers, who believe that they reduce the number of breaks – so as to increase their salaries. Other vital factors towards the success include the rewarding of quality production and the continual reduction of production costs. However, the first factor is more significant, as compared to these two – as the motivation model was the core, of the workers improvement on quality and production cost reduction. 5. The company’s manufacturing operations reflect the viewpoints of management – in relation to the scientific management model. This is evident from the continual attempts to increase the productivity of the workers – which is done through encouraging piecework reward system, self-supervision, and the promotion of creativity. The strategies are also evident in the continual pursuit for production efficiency, through production-cost reduction models, which are passed on to the customers as price cuts. 6. The company’s quality control, quality assurance and the total quality management is fully dictated by the dynamics of the market, as evident from the case, where the company moved into the production of welding products. The effort was guided by the high demand for welding products. From specialization in the production of welding products only, the creativity of the employees was nurtured and their innovation and creativity fostered –thus a continual increase in the quality of products. From the reward system, the reward of improved ideas, innovation and the improvement of quality is based on the total worker population. 7. Six forces identifiable form the case, as guiding the success of the company include, the establishment of effective relations between the mangers and the workers of the company, as it enhances the adoption of changes in company operations and strategy; the promotion of idea creation, innovation and creativity among every worker, as it led to cuts in production costs and increase in product quality. The production based incentive model, also influenced increased performance and quality delivery from employees. Others include the reduction in the cost of production, as it was transmitted to the consumers – thus increased quality produce and sales volumes; continued improvement of the quality of products, as its gave the company competitive advantage; and the company’s adjustment to customer dynamics, thus capitalizing on the market needs – which resulted in increased sales volumes. 8. Other factors – external and internal promoting the success of the company include the closure of competitor companies, as it reduced the competition threat to the company; the sophisticated competition and the attention offered to each worker, which creates an edge for the company and the increase in the demand for welding implements. Other factors include the inclination of the market – for the demand of the reputable quality and the prices of the products of the company, and the general work environment, created at the company’s premises. 9. With reference to porters five forces model of competition, the company should build strategies to counter the entry of new companies, which they can achieve by promoting their brand – to create confidence in their products. The company also needs to capitalize on countering the power of their major suppliers – as their production was once affected by the procurement of poor quality steel. The company should focus on promoting the quality of their products, as that will help reduce the threat of alternative products; work to earn further customer confidence, as the customers are highly knowledgeable in this line of production; as well as work towards contending the competition within the industry, using strategies like quality improvement and cost reduction. 10. Lincoln’sElectric has capitalized on four of the forces in porters models, these including, competitive rivalry, evidenced from the closure of a number of competitors; nurtured the preference for their produce, in meeting the bargaining power of the customers; the reputable company image, which counters the competition of new entrants; and the reputable products of the company, which cannot be completed by alternative commodities. The force not fully addressed, is that of controlling the power of suppliers, as the steel suppliers are noted as having delivered low quality steel at a certain time. 11. The management of the company has realized continuous success due to the following: promotion of equality among workers, as it promotes employees’ worth and contribution to the company; the resolution of the issues raised at board meetings in an immediate manner, thus capitalization of the solutions formulated; and the efficient communication between management and the workers – thus an effective communication of ideas, strategy, quality management and planning. There is also the close communication between management and the different levels of workers – which improve the confidence of the employees of the company, as well as the acquaintance of the management team with the different employees and the different company departments. An example here is the case of Willie and the bereaved man, where he is cited as showing concern for the stress of the employee. 12. The cultural differences that acted as hindrance to the company’s foreign investments include the case, where the workers at the company’s centers at Australia and Canada rejected unionization efforts – as they felt I would act against their interests. The lack of suitable acquisition at Japan and Venezuela affected the company, as it created the need for the creation of new venture models. At France, the company was challenged by the calls for vacation, holiday and sick leaf pays – which meant less work at increased running costs. The company had to adopt a different payment system, other than the piece work model, as it is illegal in Germany and Brazil, thus the need for time to adopt new models. Another challenge was the insistence of European managers, on vacation time, which resulted to changes in work patterns and revenue models. 13.The advantages drawn from the usage of acquisition strategies as opposed to the green field venture approach include capitalization on the economies of scale; cultural orientation form the foreign companies, and the resources and technology contribution of the acquired ventures. The company also benefited from the developed supplier and distributor links, as well as their contribution into decision making and change implementation strategies. From capitalizing on these acquisition benefits, the company took less risk of failure – thus more effective adaptability at the foreign markets. 14. The challenge areas created by the company’s management include their inability to change to varying time and workers’ needs, as the case was – with the worker, who was found yelling at Willie, because the company had neither offered a salary raise nor a change of work site, due to his advancing age. The management – due to the openness of Irang and Willis, also resulted to a reduction in the role of middle management – as lower level workers would go straight to their offices. As a result, the management created problems in the way of production and the meeting of company strategies. 15. The compensation model of the company can work at other companies, especially those specializing in the production of quantifiable products, as the workers can be paid according to the number of units produced. The system cannot work, in the case of organizations, where the work performed cannot be quantified, for example social work – which cannot be paid in terms of per-work basis (Sabo). 16. The company’s model of motivation and organizing employees is in line with the variables used in Herzberg’s model – as the company’s system places importance on employee responsibility, achievement, recognition and advancement. The company’s model is much limited – as compared to Herzberg’s model, which gives attention to challenges at the work place and work conditions. The company’soutlook is not contradictory toHerzberg’s model – though it has less variable coverage. 17. The reasons as to why the company was unable to make profits at foreign markets include the domination of national producers and the preference of local produce at centers like Indonesia. As a result of the threat of national companies, the company was obligated to a revision of payment models and levels, thus a reduction in the revenues generated. 18. Expert advice would discourage the entry of the company into Indonesia in 1996, mainly because of the political and economic instability and the domination of the market, by local products, these including stick consumables. However, the introduction of the company’s products by SSHJ would favor the company in case of entry into the Indonesian market. Additionally, the company will have to change the payment system to adopt a legally supported system like the minimum wage model. After adopting such a model, the company can use a complementary model to motivate the productivity of the employees. 19. The company’s continued success can be traced to its acceptance of the state’s extension call, the qualified skill-base of workers, adjustment to customer needs and dynamics, and the promotion of employee input in production. However, the company’s strategies worked at given overseas markets and not others – due to the differences in the demand levels at the different markets. For instance, at the Indonesian market, the customers preferred the products of local producers – thus the company did not flourish there. 20. Recommendations to the management of the company include that they should pay attention to the needs and the problems of each worker as an individual. The Management of the company would also be advised to establish a better management structure – as from the case of Lincoln, the middle management has been overlooked, thus, its inherent input not realized towards the success of the company. The company should also embrace the use of technology models, as these would help realize better management across the different operation centers – both foreign and local. Works Cited Sabo, Richard. ‘The Lincoln Electric Company’Harvard Business School Publication29 July 1983. Web. 2 May 2012. Read More