Lincoln Electrical Company's Strategies - Essay Example

Lincoln Electrical Company's Strategies Answers 1. Lincoln Electrical Company used two strategies to ensure that it gained the competitive advantage over rivals. The first strategy was the ability to offer quality products at lower costs through cost reduction approaches. The second strategy was to reward employees depending on the innovativeness, loyalty, and performance. These two strategies ensured that the company expanded its customer base. In addition, productivity improved thereby gaining the competitive advantage over rivals. 2. Lincoln used the four principles of management to establish mission, vision, culture, and strategy of the company. The major objective of the company was the supply of quality and low priced products. Planning involved the supply of low priced products was achieved through reduced cost of production and quality products were achieved through constant innovation and employee satisfaction. The company ensured that the most important resource, human resource, was motivated and streamlined towards the attainment of the objectives of the company; supply of low cost and quality products. The management of the company was visionary in spearheading the progressive development of the company. The company employed a self-evaluation process where the employees were at liberty to critic the prices set by the company. 3. Lincoln company realized that employee attitude towards the organization was important for their motivation and subsequently performance. Therefore, the company ensured that the employees interacted freely with the management and that compensation and reward corresponded to performance. In essence, the company ensured that employees felt valued an important in the company and that their needs were cared for by the management. 4. The approach to deliberately motivate employees through reward and free interaction by the management ensured that employee satisfaction was always high. Cost reduction also functioned to motivate employees because the saved revenue was transferred to the employees. However, the emphasis the company placed on performance functioned to motivate the employee to increase their productivity. The piecework compensation strategy functioned to motivate employees to work harder. In addition, the paid for holidays and the rewards functioned to improve employee satisfaction. 5. The classical approach to the human resource is that employees are an asset to an organization and not a liability. Therefore Lincoln ensured that it always invested in the employees to increase their productivity. The scientific approach had viewed human beings as a people who do not like working naturally and that responsibilities should be broken down into smaller tasks for motivation. Lincoln employed the classical approach in the management of its human resource. 6. Lincoln's approach to TQM, quality control, and quality assurance was to employ an in-house strategy to ensure that the employees owned the quality control and quality assurance processes. Employees were empowered and sense of ownership nurtured within the human resource. In essence, employees always ensured that they produced quality products. In addition, the company strived to automate most of the production processes to improve the efficiency and accuracy of production. 7. 8. Lincoln’s success will depend on the ability of the company to sustainably keep production costs low so as to be able to offer products and relatively lower prices. In addition, the company will have to keep pace with technological advancements with regard to its products. Innovation and inventions should be at the forefront of the company’s mission and vision to ensure that the quality of its products remains high. 9. Building its strategies around Porter's five competitive forces will ensure that the company remains relevant in the industry by constantly employing innovation to ensure that new competition does not become a threat, to ensure that the company's product is of exceptional quality and to always offer customers competitive prices. 10. Lincoln’s strategy within Porter’s five competitive forces is by intensifying their competitive advantage through the constant production of relatively low priced products and by ensuring that the products are of high quality. 11. The key elements in Lincoln’s management system are minimal management personnel by ensuring that employees are responsible for their production lines with little supervision, Minimal managerial is a cost reduction strategy. The management strived to instill within employees competitiveness to ensure that their input was of good quality. The strategy has been important in improving productivity and promoting innovation and invention in the company. 12. The cultural variations that were a hindrance to Lincoln expansion overseas were that the most European managers did not embrace the piece work strategy employed by Lincoln and in Germany piece work was illegal. Furthermore, the overemphasis on leaving individual managers to make their own decisions led to constant mistakes by overseas managers. 13. The acquisition strategy was important because it would give the company the opportunity to study existing organization culture in new markets. Furthermore, the company would have the opportunity to absorb employees who were already conversant with operations instead of beginning a fresh recruitment system all over again. 14. Lincoln's management system is overly decentralized to the point where country managers make decisions with little understanding of the dynamics of operation within specific environments. Furthermore, managers are not able to share ideas with regard to successes and challenges. 15. Lincoln's compensation system would not have worked in all companies especially overseas companies where different employee cultures existed and different legislations were in place. The compensation system would have worked in companies where compensation was more valued than going on holidays and there was no legislation against piecework. However, the system could not have worked in environments where piecework was illegal and workers preferred holiday more than compensation. 16. Lincoln's experience asserted Hertzberg's assertions because in the U.S. workers were interested in payment more than holidays and the piecework system worked effectively for them. On the other hand in Europe workers valued holiday more. In essence, the worker had different needs that if satisfied made them feel more cared for. 17. Lincoln's failure to turn the profit in other countries was caused by a production system that placed different plants on competing paths with each other. Each company produced all the raw materials required for manufacturing and the companies could no longer enjoy profits. The compensation system could not have worked in all environments due to different cultures in different countries. 18. Lincoln should continue with its plan to invest in Indonesia because, despite the political risks evident in the country, the business opportunities are vast with regard to expanding the market for the handheld arc welding machines. The piecework employee compensation should be adopted but with some changes. 19. Lincoln's continued success can be attributed the adoption reduced production processes and the emphasis on the supply of quality products. With low production cost, the company could supply consumers with relatively low priced product increasing the company's consumer base. In addition, the low production cost led to increased revenues that could be transferred to employees with regard to bonuses and piecework leading to increased worker motivation and subsequently high productivity. 20. My recommendation with regard to its management policy is that the company should continue using the individualistic and decentralized system but create a platform where managers can consult with each other. The decentralized system is good for the company because it allows managers the freedom to apply innovative ideas in management. However, it is also important that managers consult with each other and share challenges and successes. The company can take advantage of developments in the area informational technology to create a platform where managers can network and interact with one another. Works Cited Kinicki, Angelo & Williams, Brian. Management: A Practical Introduction. New York: McGraw-Hill, 2011. Print. Read More