《Lincoln Electric Venturing Abroad 》.pdfVIP

For the exclusive use of C. LEE Harvard Business School 9-398-095 Rev. April 22, 1998 Lincoln Electric: Venturing Abroad Returning late to his half-finished lunch of rice and stir-fried vegetables, Michael Gillespie, president for the Asia region of The Lincoln Electric Company, reviewed his plans to expand the company’s production base in his area. Although this venerable U.S.-based manufacturer of welding machinery and consumables had sold products throughout Asia for decades, these had been produced at plants in Australia, the United States, and Europe. Anthony Massaro, Lincoln’s new CEO and—like Gillespie—a newcomer to the company, had encouraged the Asia president to develop plans to open welding consumables factories in several Asian countries. Such facilities would enable Lincoln to take advantage of low labor costs and avoid trade barriers. Specifically, Gillespie now turned his attention to plans for Indonesia. He faced several sets of choices. The first concerned whether to build a factory in Indonesia at all, given the particular political and economic conditions in that country, the nature of the market for welding products, and the competitive situation. If he decided this in the affirmative, he would need to choose whether to enter the market through a wholly-owned factory or a joint venture. Finally, Gillespie wondered whether the planned operation should adopt Lincoln Electric’s famous incentive system, credited wit