Reference no: EM131466155

In 2005, the global welding industry was a $13 billion-dollar industry, and Lincoln was succeeding in the market. Lincoln Electric's 2005 welding industry financial success indicates $153.5 million in operating income, $122 million in net income, and $1.6 billion in sales. Throughout the years, Lincoln's success is indicated through their many years of international expansions. Since the 1940's, Lincoln has been globally expanding all over the world in particular ways such as joint venture, acquisition, and the construction of plants. In the 1980's, the attempt of forming acquisitions with other companies failed due to the executive's inexperience with trade unions and labor practices forcing the plants to have to be shut down to sustain the business. Although in the 1990's, global expansion was incorporated around all the ways such joint venture, acquisition, and plant building resulting in many sustained years of profitability. In the 2000's, the company has furthered expansion into Asian markets particularly China, Japan, and South Korea. Although, problems in the Asian market persisted in ways of distribution and experienced production processes. As 2006, the Indian market is becoming attractive by illustrating annual growth in GDP of 6% over the years and in 2005 a $415 million-dollar market. Lincoln has to consider the question of how to pursuing expansion into India.

When scanning the current environment, Lincoln's current competitors in the United States include Illinois Tool Works Inc., EASB, Air Liquide, Kobelco, and Thermadyne Holding Corporation. Out of these, Lincoln's strongest competitor is Illinois Tool Works Inc. followed by EASB. When considering expansion into India, the competitors consist of large and small firms. The large firms include Ador Welding, EASB, and EWAC Alloy. While the small firms include D & H Secheron, Indo-Matsushita, and Anand Arc. In India, the market is currently growing at a fast rate and is expected to be the fastest growing economy over the next 50 years. This raises the stakes in pursuing the Indian market along with the long-term viability of a possible industry shakeout. The welding industry is incorporated around two main products called arc welding equipment and consumables. Lincoln offers both of these products in a product mix with great performance over competition resulting in low substitution threats to deal with. Buyers currently have some power with the presence of vertical integration such as backward and forward attempts in Business-to-Business sales and Business to Consumer sales. Suppliers also have some power, as global expansion seems to need many improvements. The threat of entrants is low due to a patent on the product, proprietary know-how, and asset specification advantages in technology and plant power when dealing with distribution channels. This illustrates the current environment for Lincoln to operate in.

When formulating a strategy in an attempt to enter India, Lincoln Electric has developed a competitive advantage over their rivals through the years operating in the welding industry. To illustrate, Lincoln has resources such as a patent on their welding products, proprietary know-how in different expansion types, a solid brand reputation, and many assets such as plants, technology, and welding equipment. Lincoln also has many capabilities over the years of knowledge in the offering of Human Resources, technological developments in research and development, a product mix of equipment and consumables, a wide marketing approach across 86 countries, and an efficient design and production system resulting in many new products and technologies. With these resources and capabilities in use, Lincoln has an opportunity to create long-term core competencies with the possibility of innovation, increased production efficiency, a higher quality of product, and a better customer response rate.

When implementing the new strategy of entering the Indian market, the main problem is in which way Lincoln will enter. Lincoln can enter with an acquisition, but certain criteria must bet met before making a commitment. Lincoln could enter with joint venture, but then key business decisions would be harder to make. Finally, Lincoln could enter by building new plant, but is the cost worth it in the long-term. Although all of these ways of entry have problems, if Lincoln Electric demonstrates the proper use of resources, motivation from staff, and care in administrating the entry in India. Lincoln can succeed long-term with any entry method into the Indian market.