Lincoln Electric Case Analysis Summary

Lincoln Electric Case Analysis Summary

There are several types of analytical tools that can be used to sift through data to aid in making the most informed decisions. The analytical tools I applied to learn from Lincoln

Electric’s data were a SWOT analysis, Porter’s 5 Forces, and a PEST analysis. The SWOT analysis helped to identify opportunities that could enhance overall operations. Additional analysis with the use of Porter’s 5 Forces helped to identify additional threats and opportunities by further assessing the bargaining positions of the buyers and suppliers, threats from any new entrants and substitutes, and all internal forces within the industry competition. The PEST analysis looked at the different opportunities and threats as a result of Political, Economic, Social, and Technological issues within the industry and its competitors.

SWOT Analysis

The SWOT analysis revealed many strengths, weaknesses, opportunities, and threats for Lincoln Electric, allowing the essential data to be extracted for review.

Strengths

• Diversification of products and product lines

• Innovative employee incentive programs

• Highly skilled sales force

• Award winning R&D department

• Steady expansion of international operations

• Receive a premium for their product Weaknesses

• Overly dependent on a matured North American sales market

• Limited knowledge of foreign labor laws and policies

• Accommodate employee incentive program during financial struggles

• Foreign operations top managers are expatriates Opportunities

• India projected to be the fastest growing economy over the next 50 years

• Joint venture with ESAB India would create substantial market share

• Possible alliance with Ador

• India is friendly with pay-for-performance incentives

• Selling off less successful operations in Asia to focus in India Threats

• Local competitors with well established presence in foreign markets

• Joint venture creates potential loss of business decision making power

• An acquisition could be too costly and carries risk for failure

• Building an independent plant is costly and has no established market share

Porter’s 5 Forces Analysis

Porter’s 5 Forces revealed additional threats and opportunities Lincoln Electric could face from the buyers, suppliers, new entrants and substitutes in the market, and from industry competition. The relationship among each of these forces is represented in Figure 1.

Figure 1

Threat of Substitutes

• Price performance of substitute

• Transferring costs for buyer

• Reduction of quality

• Comparable substitutions are available Threat of New Entrants

• Barriers include copy rights and patents

• Capital costs are high

• Government policy restrictions

• Ease of access to suppliers and distributions

• Customer loyalty to established brands

• Existing competitors

Rivalry Among Competitors

• Competitive advantage and strategies

• Ongoing R&D for technology innovation

• Sustainable position in competitive advantage

• Established brand recognition Bargaining Power of Suppliers

• Input differentiation

• Impact of cost on differentiation

• Effective localized distribution centers

• Availability of substitute’s input Bargaining Power of Buyers

• Switching cost for the buyer

• Price sensitivity of the buyer

• Competitive advantage of company’s product and quality

• Bargaining control

PEST Analysis

The PEST analysis, by examining the Political, Economic, Social, and Technological issues within the industry and