Question

Research Lincoln Electric and their Aligning for Global Growth What challenges do you see for Lincoln moving forward, and why? How strategic suggestions do you have for them, and why?

Answer 1

The two most vital and critical issues which might be faced by Lincoln Electric are as below:-

The company is having the issue of not being able to fulfil the demand of the customers due to a shortage of supply. There are a number of issues in the supply chain of the company. This provides a window for the other competing firms to enter the industry and market where Lincoln Electric is targeting. This will cause the firm to have greater competition in the target market leading to economic losses and greater expenses on retention of customers. In order to mitigate the threat of new entry in the market, the firm has to depend on its resources and capabilities.

The company gives a lot of emphasis on the incentive plans and thus it creates a lot of vulnerability for the company as far as economic aspect is concerned.

The firm is willing to go to international market but when any firm decides to extend its business internationally, despite having the opportunity of greater market share or growth in sales this increases the rivalry, chances of new entry and many new substitutes of the products. However, these issues can be tackled by the firm by adopting the cost leadership pricing strategy. The company’s prestigious and rare inventory control team can improve its efficiency and reduce costs by loading platters fully of the product; one the other hand competition can increase the platters only by half extent of product and thus wasting the valuable space.

In order to overcome these threats, the company can go for the following strategies-

The demand for the company’s product has increased as they offer a quality product at a lower price but looking at the present capacity of the production plant, the firm is not able to fulfil the demand of the market. This can be overcome by expanding operation internationally near to the customer’s location as the company can establish manufacturing plants in other countries and thus improving the supply. This will also help the company to use the opportunities offered in the field of process innovations and this will help in reducing the delivery time and cost of transportation as the distance between the customer and production houses will be reduced.

While in order to remove the financial constraints due to compensation plan offered to the manpower, the company can look for the part-time of contractual manpower and this will also help the company to adjust the manpower strength as per the demand. This kind of manpower is relatively cost-effective and can help the company to address restructuring expenses.