Lincoln Electric Essay

capital of Nebraska Electrics chief operating officer Massaro was correct in his assessment that, market places in developing countries would grow faster and yield a high return. This strategy was critical and in alignment with the organizations goal to reach 50% unconnected sales revenue. As president of Lincoln Asia, Mike Gillespie faces a great challenge with his decision to memorialize the Indonesian market. If Mr. Gillespie does decide to preface Indonesia, he must also decide whether to do it alone or through a joint venture, and how to structure employee compensation.It looks like Gillespie conducted enough corporate anthropology research to identify feasible consumer product needs that Lincoln Electric will be able to provide (stick consumables vs. automatic consumables segments). I understand that investing in Indonesia offers many benefits to the organization, mostly towards increased pull ahead margins and market share of consumable products (for further information regarding the strategic planning for entering Indonesia see Exhibit 1).However, in my opinion, Gillespie does not rush enough data to make an informed decision regarding this move. Fear of a rekindled Civil War, unstable fanfare rates, and other activities in the country revealed both economic and political inst qualification. Other issues to be considered include prod issues of Indonesia 1. I would recommend further market and cultural analysis to aid his decision-making. If Gillespie decides to enter Indonesia, it is my recommendation to enter with a married person.I support this recommendation because, through his own market analysis and consultation it was set that over payable to the political structure a local better half with in-depth knowledge, and political connections would be essential for success. I understand that a joint venture will decrease Lincoln Electrics profit margins, but in my opinion, the joint venture will minimize investment risk, especially if a pa rtner is able to provide capital towards the cost of building a facility. Gillespies choice in partners should be based off of a predefined set of criteria.These criteria should include current relations/contracts with Lincoln Electric, current market share, knowledge of local market and culture, political and business contacts. The partner should also have the ability to withstand any financial risk toward this investment. See table 2 for a breakdown of both possible partners and how they compare to the criteria. I would recommend a joint venture with both companies (Tira and SSHJ). The reason for this recommendation is due to the diverse benefits, which both companies can bring to the venture.However, I have concerns regarding the loyalty of either partner to the Lincoln Electric brand. If we apply the social exchange theory to this situation, one could speculate that when more than one partner is included in a business relationship, the loyalty of each business partner may decr eases due to competition and fear of favoritism 2. It is Gillespies intention to implement a piecework compensation structure and I support this decision. It is also the intent of Lincoln Electric to exceed minimum wage requirements and prevailing rates.Gillespie has concerns regarding the ability for all employees to meet minimum wage using piecework compensation. It is my recommendation to set the minimum daily quota at the minimum wage rate. I would also implement an aggressive performance bonus paying stunned monthly vs. annual. I would highly recommend further cultural analysis with a focus on time perceptions and labor perceptions of the local culture. The compensation structure should be adjusted as time goes on and favorable trends in compensation are identified.