Going Global-Issues in International Business - Case Study Example

? Going Global-Issues in International Business Introduction Lincoln Electric Company is one of the leading US based multinational manufacturer of several welding products, such as welding consumables, arc welding equipments, oxy-fuel cutting equipment, robotic and plasma welding systems. The organization was founded by John C. Lincoln in the year 1895. It is headquartered in Ohio. In the year 1995 the organization hit 1 billion US dollar in sales. Between 1995 and 2005, Lincoln Electronic Company started to gain popularity. In 2004 the organization appointed John M. Stropki as the president, chairman and CEO who was the seventh chairman of the organization. The operating income and net income of the organization increased significantly in the year 2005. The CEO introduced several strategies to expand their businesses in global market place. The study will discuss about the issues associated with business expansion strategies in global market place. Global Welding industry Welding is the most supporting activity in several industrial activities. Any two metals can be effectively or strongly joined through welding process. Arc welding is considered as the predominant method of welding. However, as of 2005, the welding industry became a 13 billion US dollar industry. Welding products play a key part in development of several important and strong structures around the globe. Welding products are highly required in civil and mechanical field. Day-by-day, the production and sales of welding products are increasing due to intense market demand around the globe. North America, Europe and Asia Pacific are the major regions of welding industry. Global Strategies and Issues The first major global expansion of Lincoln Electric Company occurred between 1986 and 1992. The organization established 22 different manufacturing plants in 15 emerging countries around the globe during this period. The organization purchased the assets from an Australian organization named Air Liquide in the year 1987. The organization followed aggressive business expansion process based on their enormous success in US market. The organization followed aggressive acquisition process in Brazil, Norway, Scotland and Mexico. However, these acquisitions have resulted huge operating losses. In spite of profitable business operation in US market, losses in international market place forced the organization to borrow money from different entities to distribute rewards and bonus for the US employees. In terms of acquisition process, the organization undertook several in adequate decisions. It is true that economic condition, access to market and resources cannot be similar in each and every country. Wrong market information and lack of in-depth primary research in international markets forced them to redefine their strategies after a certain period of time. The organization developed a series of determined financial goals, but the organization still depended upon its market growth rate in US to meet these organizational goals. Issues in Japanese, South Korean and Chinese Market The company faced several problems in selling the products in several emerging Asia Pacific countries, such as Japan, China and South Korea. The distribution of the organization in Japan was very limited. Lincoln Electric Company did not have any kind of access at the commodity end of the Japanese market. In addition to this, the organization had limited after sales support capability and limited in-country demonstration service facility in Japan. Therefore, it was difficult for the organization to achieve high-tech sales growth. The products of the organization sold in Japanese market as niche products for small groups of customers. The organization suffered from huge operating losses due to this factor. Lack of manufacturing plants, limited access to the market, improper decision, making strategy affected the business performance of the organization in Japan. In addition to this, the products were not optimized for effective and required application in Japan. Actually, the organization did not enter in the Japanese market with appropriate resources. Moreover, the expansion plan was developed quite early. The organization did not have any kind of production presence in South Korea. The organization had the access to this market through its distributers and business partners. Slowly and gradually, several local organizations started to establish high-end wielding equipments. In addition to this, these organizations started to introduce products according to the current market demand. On the other hand, Lincoln Electric Company takes huge time to distribute the products in the Korean market as the products come from outside country. These issues affected the organization’s business performance. In China, the organization developed a production unit. The organization had access to the Chinese market for a certain period of time. However, the organization faced difficulties in several ways. The organization was finding it difficult to get skilled and competent managers and employees (Ahlstorm & Bruton, 2009). In addition to this, frequent change in governmental rules and regulations and several legal barriers decreased the sales of the products. Opportunity in Indian Market It is known to all that India is one of the emerging and developing economies around the globe. The nation is maintaining significant and constant economic growth rate since 1991. In spite of global economic downturn, India is among of those few countries that secured and maintained positive GDP growth. The welding market in India is considered as the third largest market in Asia. In addition to this, the organization used to outsource from several foreign organizations and government of India motivate the foreign players to invest in domestic market in order to avoid several economic challenges, such as unemployment. It is true that large number of potential competitors is competing with each other in Indian market. The organization could enter in Indian market by joint venture or acquisition. But, several political and legal factors stop them to take these decisions. Conclusion Lincoln Electric Company is one of the leading welding product manufacturing organizations. The organization is facing problems and challenges due to inadequate business expansion strategy in international market place. Lack of primary market research, poor expansion strategy and lack of plants in several emerging economic made it difficult for the organization to increase its global market share. The organization still has to depend on its US sales and business performance. It is important to redefine and develop new strategies for international market to overcome the challenges and losses. References Ahlstorm, D., & Bruton, G. (2009). International management. Stamford: Cengage Learning. Read More