Lincoln case study

7/29/2019 Lincoln case study

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Case Study: Lincoln Electric inChina

Presented By:Lilian Ho

Steven Lo

Cynthia Lam


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Agenda

Lincolns success in Cleveland &

international expansion plans into Shanghai Problem Statement

Situation Analysis

Recommendation

Implementation


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Lincolns Success in Cleveland:

Lincoln Incentive System

Piecerate payment scheme

Year-end bonus system based onperformance paid in time for Christmas,

bonus can be as large as the size of annual

salary


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Other factors that have contributed to

Lincolns Productivity in Cleveland

Stock purchase plan for employees who have

worked for more than one year

Guaranteed Employment Policy at least 30 hours

of full-time work for employees who have worked 3

years or more

Policy of promoting from within

Employee Advisory Board meetings run by

President

Open-door policy


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Current Situation

To bring Lincoln to Asiato produce within

the region for the region, products that wereappropriate to the regionlots of locally

owned stick companies that are fighting each

other to death and we saw the opportunity to

come in with a good quality automatictechnology, both for the China market and for

export


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Joint Venture (JV)

Pros Cons

1. Gain access to local

knowledge, distribution

channels, and guanxi of

local partner

1. Slow down decision-

making process

2. Dilution of control

3. Different styles ofmanagement

4. Profits/ losses are

shared


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Wholly-Owned Foreign Enterprise

(WOFE)

Pros Cons

1. Autonomy in decision-

making process

2. Protection of intellectual

property rights

1. Closer scrutiny from

Chinese government

2. National level approval

3. Requirement of 30%export quota


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Organizational Structure

Gillespie

President for Asia

Shan Bing

Finance & Control

Ray Bender

VP Manufacturing

Peter Grant

S&M Manager

Dr. Li

Plant Manager

Julius Wu

GM for SH

Jason Foo

Finance

Kundrach

Acting GM


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Problem Statement

Should the Lincoln incentive system which hasworked so well in Cleveland be suitable for

implementation in China? If so, when and

how should it be implemented?


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International Expansion

Potential Problems:

Difference in organizational culturesChinese hierarchy

National and regional differences

government laws, unions

Language barriers & cultural differences


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Cultural Lens

Workforce would not speak out or make suggestions in thehierarchical Chinese Society

Push and encourage people to debate and argue at theright time.

Workers in the country wont accept the remuneration systemif the companys performance is unstable/ in doubt

Introduce the system when the company is steady andstable, which the workers could be clear about their rewards


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Strategic Lens

The upper management in United States highlybelieves in the piecework system, they plan to

implement this to all branches

People need reason and time to adopt

Management of local employees is complicated and

varies in different regions

Each country/region has specific cultural traitsthat could inhibit traditional Lincoln managementpractices


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Political Lens

New acting GM, Jeffrey Kundrach in 1998

because Julius Wu was ill. Uncertainleadership in the future.

Dr. Li would be a main character in the

incentive system since he is the only bridge

between the upper management and theworkers


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Recommendation

To progressively implement the piecework

incentive system in Lincoln China


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Implementation

Hire staff, possibly in the time-study

department, with command of English andChinese and with foreign and China working

experience to execute the plan for effective

communications

Create channels such as employeescommittee and informal gatherings for the

workforce to speak out and make

suggestions


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Implementation

Establish a long trial period to better estimate

the piecework price of each worker Introduce the piecework system only to the

experienced workers to minimize the chance

of adjusting the piecework price


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Implementation - Others

Need to remember that other factorscontributed to Lincolns high productivity: Stock purchase plan

Guaranteed Employment Policy

Employee Advisory Board

Open-door policy

Policy of promoting from within

These should also be implemented

alongside the piecerate incentive system!


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Question & Answer thank you!

Documents

Lincoln case study