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Lincoln Electric Case Solution
The CEO John Stropki of the Company named Lincoln electric was on a mission to expand the company so he visited the Asian market himself mainly India, which was known for its potential growth chances. Stropki saw some barriers on the way to India. Lincoln is a hundred and nineteen-year-old company, owned by John Lincoln. The company was initially created to produce electric motors, later they got involved in welding construction. Lincoln made the company rule the manufacturing corporation of the world. The company has novelties that make them move five steps ahead of other companies and make them able to make its sales at a higher price in comparison to the market price.
The company had created features to improve not only the health of the company but also ways to hold employees’ loyalty to the company. The company provides its workers with many incentives and bonuses, other than that Lincoln follows policies that no other company follows. The case study discusses the company’s business strategy. The incentive system they follow in the US. It also describes the global strategy choices that Lincoln electric faces when expanding, as they plan to expand in India keeping in mind the last experience they had. The case also discusses the problem they faced while adjusting to the culture in other nations
Following questions are answered in this case study solution:
Does Lincoln follow a hierarchical or decentralized approach to management? Explain your answer and give examples.
Based on what you've just read, what do you think makes the Lincoln System so successful in the United States?
What is the problem with transporting Lincoln's control systems to other national cultures? What suggestions would you make to Lincoln's managers to make future international manufacturing plants more successful?
Should Lincoln borrow money and pay bonuses to avoid breaking trust with its U.S. workers? Why or why not?
Case Study Questions Answers
1. Does Lincoln follow a hierarchical or decentralized approach to management? Explain your answer and give examples.
The company gives the authority of decision making to employees of all level, this is called the decentralized management approach, whereas the hierarchical also known as the centralized approach when only one person make all the decisions for the company, and that person is mainly from top-level management. Lincoln electric follows a decentralized management approach, as the approach emphasizes a uniform goal that the employees share and work on it together for achieving the goal. The company follows a culture of trust and shared control. The openness and belief in human equality helped Lincoln's system to succeed so much. The company follows an open-door policy for its employees including top executives, middle managers, and workers.
The company encourages face-to-face communication between the employees so a worker can challenge the top management if he or she believes compensation rates are unfair to them. The Lincoln culture’s core has certain values for example honesty, self-management, accountability, and loyalty. The company rewarded the staff who were fulfilling these attributes as the company helped employees socialize. A piece-rate Incentive scheme is also applied with less tangible rewards. Intrinsic rewards include sentiments of pride in one's work as well as engagement, and contribution. Cross-functional teams with decision-making authority and product ownership development, planning, and marketing. Details about the business's operations and financial results are publicly discussed among employees across the entire company. The company follows Open-book management, this is done to share the financial position of the company with all the staff, and this encourages the employees to work actively to achieve organizational goals.
This also helps employees as they feel how their work has helped the company improve and see the importance of their business function. Lincoln uses the lateral approach; this approach is used between the employees and the management of the company for basically achieving the goals of the company. There is the no-layoff policy in Lincoln, these examples show that Lincoln follows a decentralized approach as this makes the company flatter.
2. Based on what you've just read, what do you think makes the Lincoln System so successful in the United States?
The use of diverse control approach by Lincoln helped the Lincoln system become successful in the United States. The work is carefully defined to the employees and every worker needs to follow strict work goals to achieve high pay. The company’s incentive and control systems are also strong as a piece-rate basis is followed for production workers and merit pay based on the work they have done. Annual bonuses are also given to the employees, bonuses change according to the company’s profit annually. Lincoln electric became successful because they tried to fully invest the resources in intellectual capital mainly human capital. The human capital is fully nurtured so they perform fully as the company uses the human resources at their peak.
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