Lincoln's Expansion Into India_2

8/10/2019 Lincoln's Expansion Into India_2

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Table of Contents

1 Introduction..............................................................................................................................2

2 Environment/ Industry Analysis...............................................................................................3

2.1 PEST Analysis...................................................................................................................3

2.2 Key Porter’s Forces...........................................................................................................4

2.3 om!etitor Analysis.........................................................................................................."

3 Strate#ic $oices......................................................................................................................%

4 T$e &est 'ode o( Entry into India...........................................................................................%

) $allen#es and *ecommendations...........................................................................................+

).1 Key Issues and Pro,lems..................................................................................................+

).2 *ecommendations.............................................................................................................+

" onclusion................................................................................................................................-

% *e(erences..............................................................................................................................1



1 Introduction

First o( all incoln Electric’s $ad ,een considered (or several years (or India e0!ansion. o$n

Stro!i E o( incoln Electric $ave !roductive involvement in cor!orate and lessons

into India investment decision ,ecause $is com!any $as t$e internationali5ation mana#ement. At

t$e same time 6it$ t$e develo!ment o( industry deals 6a#e may ,e $i#$er on t$e #rounds t$at

all t$in#s considered 2) 6$en develo!ment is made out o( 6eldin# items !o!ular in $ina

India and Eastern Euro!e. &ecause o( t$e advancement o( t$e 6eldin# ,usiness develo!ment

nearly tae a(ter a condition o( t$e economy India $as turned into an a!!ealin# maret in t$e

!revious 1) years. Stro!i noted t$at India is currently revam!in# its ,ase so 6ill re7uire an

enormous num,er o( ne6 oil and #as !i!elines.

Key vital o,8ective o( T$e incoln Electric 6elded into t$e India ,usiness sector tar#et. T$ere are

a (e6 c$oices9 incoln Electric can enter t$e com!any in India. It can enter t$rou#$ t$e

!rocurement venturin# a,oard or manu(acture ne6 !lants o( one:s o6n. T$is notice o(

com!re$ension 6ill assess every decision t$e ,est decision and #ive a !ro!osal can enter India

6eldin# ,usiness sector. Pro!osals 6ill ,e resolved a(ter cautious evaluation o( t$e e0amination

o( a (e6 diverse clari(y later in t$is notice o( com!re$ension. ;Sie#el ordan. 2+<

In t$e (ollo6in# re!ort it 6ill (irst descri,e t$e ,ac#round a,out incoln:s’s o,8ective in

e0!andin# internationally t$en it e0ternal environment analysis o( India in order to come u! t$is

strate#ic c$oices t$e ne0t !art 6ould ,e t$e ,est mode (or incoln’s o( entry into India (ollo6ed

,y t$e c$allen#es and recommendation and to 6ind u! ,y summari5in# t$e ey !oints discussed

a,ove.



2 Environment/ Industry Analysis

2.1 PEST Analysis

Political (actors com!rise !olitical sta,ility and t$e a!!roac$es o( t$e administration. Inclination

o( !olitical #at$erin#s individual ent$usiasm on !oliticians !arty discussions and so (ort$ mae

!olitical environment. &ein# one o( t$e lar#est democracies nations all over t$e 6orld India runs

on a (ederal (orm o( #overnment. T$e ta0ation (rame6or is overall created and a (e6 e0!enses

(or e0am!le income ta0ation is (orced ,y t$e =nion >overnment. Privati5ation is additionally

im!acted and t$e #overnment encoura#es (ree ,usiness t$rou#$ an assortment o( !ro8ects.

For economic (actor ,y revie6 t$e ,usiness unit volume develo!ment rate c$an#es and

6orld6ide economic #ro6t$ rate it is (ound t$at Asia res!onsi,le (or 4)? o( #lo,al sales @ort$

America accounted (or 23? and Euro!e 21?. &ecause o( e0!ansions in t$e 6eldin# ,usiness

6it$ t$e develo!ment o( t$e 6$ole economy o( t$e nation India $as turned into an attractive

maret in t$e !revious 1) years. T$ere(ore t$e economic !ers!ective o( India is !romisin# and

t$ere is $i#$ !ossi,ility (or India to ,ecome one o( t$e lar#est economic #iant in develo!in#

countries. From a study ,y >oldman Sac$s is re#ular in t$e (ollo6in# ) years India 6ill turn

into t$e 6orld:s 7uicest develo!in# si#ni(icant economy.

T$e social (actors re(er to any !ro#ressions in !atterns 6$ic$ 6ould a((ect a ,usiness

environment. ase in !oint t$e rise in India:s maturin# !o!ulation is ,rin#in# a,out a si#ni(icant

clim, in !ension e0!enses and increment in t$e 8o, o( more seasoned 6orers. India $as a

!o!ulation o( more t$an 1.2 ,illion individuals 6it$ around %? ,et6een t$e a#es o( 1) and ").

T$ese structures contain 6or attitudes income distri,ution education (luctuatin# ada!ta,ility

etc.



For le#al environment in India t$e nation 6ill !ermit !iecerate com!ensation and re6ard

system im!lementation 6it$out #overnment unions or anot$er outside !arty. T$e statutory e0tra

is a 8olt (or all t$e 6orers 6a#e u! to 3) ru!ees a mont$ and may run (rom t$e most minimal

to t$e most astoundin# +.33? eac$ o( t$e s!ecialists: com!ensation. ;'.!ayc$ec.in 214< In

Au#ust 2" ,e t$at as it may Indian leader 'o$ammedan Sin#$ #uaranteed to en$ance t$e

enactment on t$e !remise o( o!tional e0tra is ascertained.

2.2 Key Porter’s orces

om!etitive rivalry

T$e 6eldin# ,usiness rivalry is $i#$. T$ere are si0 !rinci!le 6eldin# maers re!resentin# 4)?

o( t$e 6orld6ide cor!orate sector. A !ortion o( t$e real contenders include ESA& ;$arter !lc<

Illinois Tool Bors Air i7uide Ko,elco T$ermadyne Ador Beldin# td. and ESA& India

EBA Alloys td. Even small com!anies in t$e 6eldin# industry could ,e seen as com!etition

,ecause o( t$e t$reat t$ey !ossess in co!yin# !roduction !ractices and t$en sell !roducts at a

lo6er !rice. Also ,y e0it ,arriers e0ist ,ecause current com!anies $ave invested too muc$

ca!ital in its com!any to ,ac out. As t$e industry #ro6t$ continues to increase as #lo,al

economic #ro6t$ rate increases.

T$reat o( @e6 Entrants

Ci#$ ca!ital re7uirements and lac o( e0!erience are critical ,arriers (or ne6 entrants to enter t$e

6eldin# industry. T$ere(ore t$e t$reat o( ne6 entrants s$ould ,e relatively little. At t$e same

time economies o( scale are crucial (or success in t$e industry as it 6ill ,ecome di((icult (or ne6

com!anies to ,ecome as ,i# as t$e si0 ma8or 6eldin# com!anies t$at e0ist in t$e industry.

Cavin# a stron# ,rand identity is also critical (or ne6 entrants and 6ould ,e di((icult to ac$ieve

#iven t$e success o( e0istin# com!anies.



&ar#ainin# Po6er o( &uyers

Since t$e e0c$an#in# cost small !ro!erty !urc$asers $ave a $i#$ aut$ority in t$e same ,usiness.

Also ,rand identity could ,e si#ni(icant i( com!anies o((er 7uality customer service t$at may ,e

di((erent (rom ot$er enter!rises. ;Dilleneuve K. 214<.

Since 1--1 India a!!reciates t$e #enuine ty!ical yearly >P develo!ment o( a,out "? 6$ic$

maes it one o( t$e more 7uicly develo!in# nations on t$e !lanet. India:s (inancial develo!ment

to reac$ more t$an %.)? in 2) 23 a study ,y >oldman Sac$s is ty!ical in t$e (ollo6in# )

years9 India 6ill turn into t$e 6orld:s 7uicest develo!in# si#ni(icant economy.

Beldin# 'aret in India lie6ise in Asia is t$ird to 2" a ) yearly industry deals

are normal ,e(ore t$e current year:s over. Industry develo!ment 6as muc$ $i#$er t$an t$e

national #ro6t$ rate ,ecause India late core develo!ment and (rame6or ventures. An intri#uin#

#immic o( t$e India ,usiness 6eldin# consuma,le o((ers o( 8ust around )"? o( massive

or#ani5ations created ,y t$e outline and en#ineerin# o( its o6n $o6ever t$e ot$er 6eldin#

materials around 44? sold 3 small #rou!s can instantly attem!t to im!ersonate t$e ,usiness

any ne6 !lan and attem!t to o((er it a considera,le re,ate.

2.! Com"etitor Analysis

om!etition is $i#$ in t$e 6eldin# industry and arises (rom !ricin# ,rand ima#e !roduct

7uality customer service and innovative tec$nolo#y. Alt$ou#$ t$ere are t$ousands o( 6eldin#

com!anies 6orld6ide only si0 mae u! a,out 4)? o( t$e #lo,al maret. ;im,er# S.T. 24<.

Key #lo,al com!etitors o( incoln Electric includeG ESA& ;$arter !lc< $ad 2) revenues o(

1.3 ,illion. ESA& is a su,sidiary o( !arent $arter 6$ose core #oals are a Euro!ean,ased

com!any 6$ile $avin# a !resence in international marets. It is t$e t$ird lar#est 6eldin#

manu(acturer in t$e =nited States ,ut a leader in Euro!e &ra5il Ar#entina and India. T$us



ESA& can ,e seen as incoln’s num,er one international com!etitor. &esides T$ere are also ey

com!etitors in t$e Indian maretG First Ador Beldin# td (or ) revenues in 2) and $as

!ro8ected #ro6t$ rate o( 2? (or 2"2%. Ador !roduces in Silvassa 6$ic$ is a ta0(ree 5one

resultin# in ta0 savin#s. Second ESA& India 6$ic$ created ) million revenues in 2). Also

,y constructin# t$e #reen(ield manu(acturin# !lant (irm 4." million Indian ru!ees. @e0t is

EBA Alloys td 6$ic$ created 3million revenue 2). At t$e same time it 8oint venture 6it$

'esser and HT o( India. t$er small (irms e0ist in overall Asia maret 6$ic$ could ,ecome

ey !layers in t$e com!etitive landsca!e i( t$ey (i#ure out $o6 to du!licate !roduction !rocess

o( incoln.

! Strate#ic C$oices

@umerous !ro(essionals acce!t t$at t$e e0ce!tional e0ecution is more im!erative t$an astute

met$ods. T$e reason is strai#$t(or6ardG accom!lis$ more t$an a dream not t$e usa#e o( t$e

met$od is a visual. Dia,le e0ecution can demonstrate trou,lesome ,ecause it o,li#es

coordination and (ittin# !eo!le in $ierarc$ical endeavors. In t$is manner t$e ey errand o( t$e

senior su!ervisor is t$e tec$ni7ue and advancement meanin# o( ,asic ac$ievement e0ercises o(

t$e association an aut$oritative (rame6or advance t$ese activities. ;&arry . 23< incoln

Electric can enter t$e Indian maret t$rou#$ ac7uisition 8oint venture or #reen(ield investment.

% T$e &est 'ode o f Entry into India

Strate#ic Alliance/>reen(ield Investment Cy,rid

incoln ou#$t to #o into t$e venture anot$er ne6 site ,ecause t$e o,tainin# met$od can not meet

t$e !rocurement criteria and incoln may !ay more t$an in t$e !ast it $as ,een utili5ed to !ay.

Family control mi#$t lie6ise ,e an issue and rivals in a 8oint 6ander. incoln ,rand esteem in

Sout$east Asia and 6ill $el! incoln esta,lis$ to enter t$e India s$o6case a solid assem,lin#



,ase. n t$e ot$er $and to ,e active on t$e ne6 site incoln must ad8ust its motivation

arran#ement to meet India:s 6or maret (rame6or. incoln must ,e 7uic as an association

to tae care o( t$e demand o( t$e outside environment its cor!orate society to ad8ust to t$e

nei#$,or$ood maret. ;Eic$er T. H Kan# .B. 23<

( C$allen#es and )ecommendations

(.1 Key Issues and Problems

A !aramount !art o( directly incor!orates t$e meanin# o( Tec$nolo#y ;!otentially includin#

innovation not ,y any #at$erin#< 6ill ,e in t$e assertion and t$e terms and conditions t$ey 6ill

,e #iven to t$e 8oint 6ander or#ani5ation. ;incoln Electric<

T$e creatin# nation accom!lices 6ant to de(ine limits o( t$e soverei#nties and c$ar#es t$ey 6ill

need to !ay su!!liers mainly as innovation #ets to ,e old and e0tend t$e control o( t$e 8oint

6ander and its utili5ation.

It $as no6 ,een s$o6ed ,y ESA& India t$at !assa#e into t$e ,usiness sector ,uilt e0clusively

in li#$t o( ac7uisitions is not ,ene(icial in t$e s$ort term. T$eir ac7uisitions met$odolo#y ,e#an

in 1-++ 8ust turned !roductive in 2) ;1% years (rom section< and t$is 6as ,ecause o(

monstrous re,uildin# e0!anded ca!ital su,sidi5in# and ,ooee!in# record9 (or t$at level o(

ca!ital venture a #reen(ield s!eculation 6ould ,e a su!erior utili5ation o( ca!ital in ,ot$ t$e

close and lon# $aul. ;Dilleneuve K. 214<.



(.2 )ecommendations

T$e esta,lis$ment o( a strate#ic alliance 6it$ t$e Ador 6ill #ive instant access to t$e incoln

Electric om!any 6eldin# e7ui!ment and consuma,les ma0imum maret s$are in India.

;Beldin#desi#n.com 214<

Ador is e0!ected income develo!ment o( 2? over t$e (ollo6in# t6o years eac$ 6it$ t$e same

!eriod in 4? o( t$e rate o( !ro(it (or ca!ital. S$ares o( t$e or#ani5ation are accessi,le availa,le

t$e or#ani5ation is clearly 6ell run and #ettin# a minority stae ;2)?< in t$e or#ani5ation ou#$t

to let t$e incoln Electric use sur!lus !roduction (acilities 6$ic$ Ador availa,le 6it$ Silvassa.

T$is 6ould em!o6er t$e creation o( consuma,les 6$ile a #reen(ield o((ice (or e0amination

im!rovement and su!!lies #eneration is ,uilt. ;@e6sroom.lincolnelectric.com 214<

Pro!els in en#ineerin# !articularly inverter innovation 6ill ,e si#ni(icant in India #iven t$eir

constrained access to suc$ innovation t$e !ro(iciency o( t$is innovation and t$e $i#$ cost o(

!o6er in India. T$is #ives an enormous c$ance to incoln Electric to #ain ,y its !ast innovative

accom!lis$ments in anot$er ,usiness 6$ile creatin# (res$er innovations (or more esta,lis$ed

marets.

onsiderin# t$e levels o( develo!ment in t$e nation:s >P develo!ment t$e ty!ical level o(

#overnment sc$ema 6anders t$e ne6 $ead6ay o( an e0!ansive num,er o( miles o( oil and

#eneral #as !i!eline t$e India ,usiness 6ill ,e use(ul until no s$ort o( 6$at 21) and in all

!ro,a,ility !ast as t$ese (rame6or en$ancements em!o6er (urt$er (orm out.

* Conclusion

T$e !rimary #ear c$ose to !ut resources into India must tae a dan#er/ !ro(it a!!raisal o( t$e

!olitical and monetary conditions t$e 6ay o( t$e ,usiness sector and t$e o!!osition

circumstance o( India. Political soundness and (inancial success incoln too a tremendous



dan#er s!eculation. incoln is a decent money related case at India e0tension !lans. incoln can

meet t$is !romisin# ,usiness sector t$rou#$ di((erent 6ays yet it soon need to e0!and t$e

assem,lin# a,ility in India. Beldin# industry in India 6ill s!eci(ically lessen 6eldin# cost more

(ocused value su!!ly and (ocal !oint 6$en India manu(acturers started to re7uest more

!er!le0in# !ro#rammed 6eldin# en#ineerin# and 6eldin# ro,ot.

+ )eferences

1 incoln Electric. JJI c$oose incolnE0!erienced Pro(essionalsJJ *etrieved (romG

L$tt!G//666.lincolnelectric.com/enus/com!any/careers/Pa#es/e0!erienced

!ro(essionals.as!0M

2 S$oo *ay. ;ec. 1) 2-< >a6daG Beldin# H >ases Today nline. NBeldin# Trends (or

21 and &eyondO *etrieved (romG

L$tt!G//666.6eldin#and#asestoday.or#/inde0.!$!/2-/12/6eldin#trends(or21and

,eyond/M

3 Sie#el ordan. ;Au#ust 2) 2+<. Carvard &usiness Sc$ool. incoln Electric.

4 &a41-"lincolnelectric.6iis!aces.com ;214<. &A41-"incolnElectric

*ecommendations. onlineQ Availa,le atG $tt!G//,a41-"

lincolnelectric.6iis!aces.com/*ecommendations Accessed 1% ec. 214Q.

) Beldin#desi#n.com ;214<. incoln Electric edicates onsuma,les Plant in India R

Arc$ive content (rom Beldin# esi#n H Fa,rication. onlineQ Availa,le atG

$tt!G//6eldin#desi#n.com/ma#/lincolnelectricdedicates Accessed 1+ ec. 214Q.

" @e6sroom.lincolnelectric.com ;214<. incoln Electric @e6sroom R incoln Electric

edicates @e6 Beldin# onsuma,les Facility in India to Serve >ro6in# 'arets. onlineQ





14 im,er# S.T. ;24<. International E0!ansion and Ta0es. =niversity o( Te0as 'com,s

Sc$ool o( &usiness e!artment o( Accountin# Pro(essor Ste!$en T. im,er#’s Be,site.

$tt!G//666.mccom,s.ute0as.edu/de!t/accountin#/lim,er#/to!ics/t4e0!.doc

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Lincoln's Expansion Into India_2