Lincoln Electric Co

In1986 there was a new CEO at Lincoln Electric Company. His name was Mr. Willis. Prior to this period the company only operated domestically. Don Hastings became president. It was at this time the decision was made to broaden the geographical scope of operations. They expanded into foreign countries via expansion or acquisition. Canada, Australia, Brazil, Venezuela, Germany, Norway, Mexico, Italy and Turkey were some of the countries they expanded into within 1986 and 1998. Global organizations have three special problems. They are: cultural differences, transfer pricing, and exchange rates. Lincoln Electric Company learned some lessons in the process with regards to transferring their managements systems into various foreign operations.

Cultural differences played a great part as to why Lincoln Electric Company was not successful in some countries. Lincoln's culture could not be imposed but nurtured. They had thought global companies would embrace the Lincoln way, the Lincoln culture. Lincoln Electric Company will have to know the differences of shared values, assumptions, and norms of behavior for other countries in which it seeks to do business in. The company will have to review the four dimensions a culture can differ. These are: power distance, individualism/collectivism, uncertainty avoidance, and masculinity/femininity.

Lincoln Electric Company learned that the type of planning and control systems at Lincoln may not transfer well to another company in another country. The company needs to be able to adapt and change their planning and control systems in global companies. The incentive system that would reduce costs and raise production was not well accepted in other countries. "In individualistic cultures, employees are likely to prefer rewards based on individual performance, whereas group-based rewards are likely to be preferred by employees in collectivistic cultures (Anthony, p679)." Lincoln has to understand these cultural differences and adapt management controls.

The company needs to do its research on a country before making an investment in that country. For example, in Germany workers were not as productive, flexible or worked as many hours as U.S. employees. Therefore, Lincoln could not successfully pass its systems and principles. Piecework did not work there because the culture values of the production worker were different. The Incentive Management System was not motivating all employees. Piecework was illegal in Germany.

Lincoln Electric should determine the country risk of the country they want to expand into. If more planning or research had been done, the crucial fact above would have been discovered and Lincoln Electric would have avoided expansion into Germany. Also, government regulation in Germany and Brazil led to major adjustments that undermined Lincoln Electric's incentive efforts. If Lincoln would have assessed the exposure of country