Table of Contents

Introduction..............................................................................................................................2

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

2.1

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

2.2

Key Porters Forces...........................................................................................................4

2.3

Competitor Analysis..........................................................................................................6

Strategic Choices......................................................................................................................7

The Best Mode of Entry into India...........................................................................................7

Challenges and Recommendations...........................................................................................8

5.1

Key Issues and Problems..................................................................................................8

5.2

Recommendations.............................................................................................................8

Conclusion................................................................................................................................9

References..............................................................................................................................10

Introduction

First of all Lincoln Electrics had been considered for several years for India expansion. John
Stropki, CEO of Lincoln Electric, have productive involvement in corporate and lessons
into India investment decision, because his company has the internationalization management. At
the same time, with the development of industry deals wage may be higher, on the grounds that
all things considered 2005 when development is made out of welding items popular in China,
India and Eastern Europe. Because of the advancement of the welding business development
nearly take after a condition of the economy, India has turned into an appealing market in the
previous 15 years. Stropki noted that India is currently revamping its base, so will require an
enormous number of new oil and gas pipelines.
Key vital objective of The Lincoln Electric welded into the India business sector target. There are
a few choices; Lincoln Electric can enter the company in India. It can enter through the
procurement, venturing aboard or manufacture new plants of one's own. This notice of
comprehension will assess every decision, the best decision and give a proposal can enter India
welding business sector. Proposals will be resolved after cautious evaluation of the examination
of a few diverse, clarify later in this notice of comprehension. (Siegel, Jordan. 2008)
In the following report, it will first describe the background about Lincoln'ss objective in
expanding internationally then it external environment analysis of India in order to come up this
strategic choices, the next part would be the best mode for Lincolns of entry into India followed
by the challenges and recommendation and to wind up by summarizing the key points discussed
above.

2
2.1

Environment/ Industry Analysis

PEST Analysis

Political factors comprise political stability and the approaches of the administration. Inclination
of political gatherings, individual enthusiasm on politicians, party discussions and so forth make
political environment. Being one of the largest democracies nations all over the world, India runs
on a federal form of government. The taxation framework is overall created and a few expenses,
for example, income taxation is forced by the Union Government. Privatization is additionally
impacted and the government encourages free business through an assortment of projects.
For economic factor, by review the business unit volume development rate changes and
worldwide economic growth rate, it is found that Asia responsible for 45% of global sales, North
America accounted for 23% and Europe 21%. Because of expansions in the welding business
with the development of the whole economy of the nation, India has turned into an attractive
market in the previous 15 years. Therefore, the economic perspective of India is promising and
there is high possibility for India to become one of the largest economic giant in developing
countries. From a study by Goldman Sachs is regular in the following 50 years, India will turn
into the world's quickest developing significant economy.
The social factors refer to any progressions in patterns which would affect a business
environment. Case in point, the rise in India's maturing population is bringing about a significant
climb in pension expenses and increment in the job of more seasoned workers. India has a
population of more than 1.2 billion individuals with around 70% between the ages of 15 and 65.
These structures contain work attitudes, income distribution, education, fluctuating adaptability,
etc.

For legal environment in India, the nation will permit piece-rate compensation and reward
system implementation without government, unions or another outside party. The statutory extra
is a jolt for all the workers wage up to 3500 rupees a month and may run from the most minimal
to the most astounding 8.33% each of the specialists' compensation. (M.paycheck.in, 2014) In
August 2006, be that as it may, Indian leader Mohammedan Singh guaranteed to enhance the
enactment on the premise of optional extra is ascertained.
2.2

Key Porters Forces

Competitive rivalry
The welding business rivalry is high. There are six principle welding makers, representing 45%
of the worldwide corporate sector. A portion of the real contenders include ESAB (Charter plc),
Illinois Tool Works, Air Liquide, Kobelco, Thermadyne, Ador Welding Ltd., and ESAB India,
EWAC Alloys Ltd. Even small companies in the welding industry could be seen as competition
because of the threat they possess in copying production practices and then sell products at a
lower price. Also, by exit barriers exist because current companies have invested too much
capital in its company to back out. As the industry growth continues to increase as global
economic growth rate increases.
Threat of New Entrants
High capital requirements and lack of experience are critical barriers for new entrants to enter the
welding industry. Therefore, the threat of new entrants should be relatively little. At the same
time, economies of scale are crucial for success in the industry as it will become difficult for new
companies to become as big as the six major welding companies that exist in the industry.
Having a strong brand identity is also critical for new entrants and would be difficult to achieve
given the success of existing companies.

Bargaining Power of Buyers

Since the exchanging cost small property purchasers have a high authority in the same business.
Also, brand identity could be significant if companies offer quality customer service that may be
different from other enterprises. (Villeneuve, K. 2014).
Since 1991, India appreciates the genuine typical yearly GDP development of about 6%, which
makes it one of the more quickly developing nations on the planet. India's financial development
to reach more than 7.5% in 2005, 2003, a study by Goldman Sachs is typical in the following 50
years; India will turn into the world's quickest developing significant economy.
Welding Market in India likewise in Asia is third to 2006, a $500,000,000 yearly industry deals
are normal before the current year's over. Industry development was much higher than the
national growth rate, because India late core development and framework ventures. An intriguing
gimmick of the India business, welding consumable offers of just around 56% of massive
organizations created by the outline and engineering of its own, however the other welding
materials around 44% sold 300 small groups, can instantly attempt to impersonate the business
any new plan and attempt to offer it a considerable rebate.
2.3

Competitor Analysis

Competition is high in the welding industry and arises from pricing, brand image, product
quality, customer service, and innovative technology. Although there are thousands of welding
companies worldwide, only six make up about 45% of the global market. (Limberg, S.T. 2004).
Key global competitors of Lincoln Electric include: ESAB (Charter plc) had 2005 revenues of
$1.3 billion. ESAB is a subsidiary of parent Charter, whose core goals are a European-based
company while having a presence in international markets. It is the third largest welding
manufacturer in the United States, but a leader in Europe, Brazil, Argentina, and India. Thus,

ESAB can be seen as Lincolns number one international competitor. Besides, There are also key
competitors in the Indian market: First, Ador Welding Ltd, for $50 revenues in 2005 and has
projected growth rate of 20% for 2006-2007. Ador produces in Silvassa, which is a tax-free zone,
resulting in tax savings. Second, ESAB India, which created $50 million revenues in 2005. Also,
by constructing the greenfield manufacturing plant firm $4.6 million Indian rupees. Next is
EWAC Alloys Ltd, which created 30-million revenue 2005. At the same time it joint venture with
Messer and L&T of India. Other small firms exist in overall Asia market which could become
key players in the competitive landscape if they figure out how to duplicate production process
of Lincoln.
3

Strategic Choices

Numerous professionals accept that the exceptional execution is more imperative than astute
methods. The reason is straightforward: accomplish more than a dream, not the usage of the
method is a visual. Viable execution can demonstrate troublesome because it obliges
coordination and fitting people in hierarchical endeavors. In this manner, the key errand of the
senior supervisor is the technique and advancement meaning of basic achievement exercises of
the association an authoritative framework, advance these activities. (Barry, D. 2003) Lincoln
Electric can enter the Indian market through acquisition, joint venture, or greenfield investment.
4

The Best Mode of Entry into India

Strategic Alliance/Greenfield Investment Hybrid

Lincoln ought to go into the venture another new site because the obtaining method can not meet
the procurement criteria, and Lincoln may pay more than in the past it has been utilized to pay.
Family control might likewise be an issue and rivals in a joint wander. Lincoln brand esteem in
Southeast Asia and will help Lincoln establish to enter the India showcase a solid assembling

base. On the other hand, to be active on the new site, Lincoln must adjust its motivation
arrangement, to meet India's work market framework. Lincoln must be quick as an association,
to take care of the demand of the outside environment, its corporate society to adjust to the
neighborhood market. (Eicher, T. & Kang, J.W. 2003)

5
5.1

Challenges and Recommendations

Key Issues and Problems

A paramount part of directly incorporates the meaning of Technology (potentially including

innovation, not by any gathering) will be in the assertion and the terms and conditions, they will
be given to the joint wander organization. (Lincoln Electric)
The creating nation accomplices want to define limits of the sovereignties and charges they will
need to pay suppliers, mainly as innovation gets to be old and extend the control of the joint
wander and its utilization.
It has now been showed, by ESAB India, that passage into the business sector built exclusively
in light of acquisitions is not beneficial in the short term. Their acquisitions methodology, began
in 1988, just turned productive in 2005 (+17 years from section) and this was because of
monstrous rebuilding, expanded capital subsidizing, and bookkeeping record; for that level of
capital venture a greenfield speculation would be a superior utilization of capital in both the
close and long haul. (Villeneuve, K. 2014).

5.2

Recommendations

The establishment of a strategic alliance with the Ador will give instant access to the Lincoln
Electric Company welding equipment and consumables maximum market share in India.
(Weldingdesign.com, 2014)
Ador is expected income development of 20% over the following two years each, with the same
period in 40% of the rate of profit for capital. Shares of the organization are accessible available,
the organization is clearly well run, and getting a minority stake (25%) in the organization ought
to let the Lincoln Electric use surplus production facilities which Ador available with Silvassa.
This would empower the creation of consumables while a greenfield office for examination,
improvement, and supplies generation is built. (Newsroom.lincolnelectric.com, 2014)
Propels in engineering, particularly inverter innovation, will be significant in India, given their
constrained access to such innovation, the proficiency of this innovation and the high cost of
power in India. This gives an enormous chance to Lincoln Electric to gain by its past innovative
accomplishments in another business while creating fresher innovations for more established
markets.
Considering the levels of development in the nation's GDP development, the typical level of
government schema wanders, the new headway of an expansive number of miles of oil and
general gas pipeline, the India business will be useful until no short of what 2015,, and in all
probability past, as these framework enhancements empower further form out.
6

Conclusion

The primary gear chose to put resources into India must take a danger/ profit appraisal of the
political and monetary conditions, the way of the business sector, and the opposition
circumstance of India. Political soundness and financial success, Lincoln took a tremendous

danger speculation. Lincoln is a decent money related case at India extension plans. Lincoln can
meet this promising business sector through different ways, yet it soon need to expand the
assembling ability in India. Welding industry in India will specifically lessen welding cost, more
focused value supply and focal point when India manufacturers started to request more
perplexing programmed welding engineering and welding robot.
7

References

Lincoln Electric. ``I choose LincolnExperienced Professionals`` Retrieved from:

<http://www.lincolnelectric.com/en-us/company/careers/Pages/experiencedprofessionals.aspx>

Shook, Ray. (Dec. 15, 2009) Gawda: Welding & Gases Today Online. Welding Trends for
2010 and Beyond Retrieved from:
<http://www.weldingandgasestoday.org/index.php/2009/12/welding-trends-for-2010-andbeyond/>

Siegel, Jordan. (August 25, 2008). Harvard Business School. Lincoln Electric.

Ba4196-lincolnelectric.wikispaces.com, (2014). BA4196-LincolnElectric Recommendations. [online] Available at: http://ba4196lincolnelectric.wikispaces.com/Recommendations [Accessed 17 Dec. 2014].

Weldingdesign.com, (2014). Lincoln Electric Dedicates Consumables Plant in India |

Archive content from Welding Design & Fabrication. [online] Available at:
http://weldingdesign.com/mag/lincoln_electric_dedicates [Accessed 18 Dec. 2014].

Newsroom.lincolnelectric.com, (2014). Lincoln Electric Newsroom | Lincoln Electric

Dedicates New Welding Consumables Facility in India to Serve Growing Markets. [online]

Available at: http://newsroom.lincolnelectric.com/News+Releases/lincoln-electric-dedicatesnew-welding-consumables-facility-in-india-to-serve-growing-markets.htm#.VJMICmADs

[Accessed 18 Dec. 2014].
7

Villeneuve, K. (2014). Should Lincoln Electric expand in India by investing in a major

facility there?. [online] Karl Villeneuve. Available at:
http://www.karlvilleneuve.com/categories/nouvelles-b2b/should-lincoln-electric-expand-inindia-by-investing-in-a-major-facility-there.html [Accessed 18 Dec. 2014].

Barry, D. (June 2003). Nows the Time for Asia. U.S. Government Export Portal Website.
http://www.export.gov/comm_svc/pdf/nc_AsiaNow_0603.pdf

M.paycheck.in, (2014). Paycheck.in -Labour law and Bonus Payment - Bonus Payment
Policy in India. [online] Available at: http://m.paycheck.in/main/labour-law-india/work-andwages/bonus-payment

10 Broadfoot, R. (October 2, 1998). The Importance of Political Risk. Political and Economic
Risk Consultancy, Ltd. Website. http://www.asiarisk.com/library5.html
11 Eicher, T. & Kang, J.W. (September 2003). Optimal Entry Modes for Multinationals.
University of Washington Website. http://faculty.washington.edu/te/papers/eicherkang.pdf
12 Embassy of the Republic of Indonesia (2003). Doing Business in Indonesia. Website of the
Embassy of the Republic of Indonesia http://www.kbrikl.org.my/p02info-dobu01.htm
13 Indo.net. (2004). Legal Aspects of Foreign Investment in Indonesia. Indo Website.
http://www.indo.net.id/mbs/legal_aspects_of_foreign_investment_in_indonesia.htm

14 Limberg, S.T. (2004). International Expansion and Taxes. University of Texas McCombs
School of Business Department of Accounting Professor Stephen T. Limbergs Website.
http://www.mccombs.utexas.edu/dept/accounting/limberg/topics/t04-exp.doc