The Lincoln Electric Company is a monument in its own right; the company started in 1895 and currently holds 40 percent of the U.S. welding market. Brothers John and James were Partners throughout most of the company's history. John designed and engineered while James managed operations. Lincoln is based in the industrial heavy area of greater Cleveland, Ohio and sells to customer's world wide. The company dominates one type of welding in particular. Arc-welding is commonly found in many industries, from the farms of the Midwest to the shipyards on the coasts. Also used in on a smaller scale in artistes studios, and garages everywhere.
Employee compensation sets Lincoln apart form their competition. Developed by James Lincoln shortly after joining the business, the payment scheme is compromised of piece rate pay and bonus pay. At the end of each year, a bonus is issued to each employee, the amount is determined upon company profits and the workers performance. In years passed an individuals bonus may have approached their annual salary. The connotation of the bonuses and generous benefits package is not to motivate, but rather to express respect for every employee's dedication. As a result turnover is at an industry minimum and productivity is twice that of competing companies.
[...] Although James Lincoln believed in putting the customers first they do not posses enough power to influence how Lincoln Electric and their competitors price their products. Power of Suppliers The power of supplies is low. Lincoln needs supplies so they can create their machinery. Lincoln has the ability and power to find new suppliers if they feel that they can receive a lower price. Degree of Substitution The degree of substitution is very low. Lincoln Electric is the world's largest manufacturer of arc welding products and a leading producer of industrial electric motors. [...]
[...] Lincoln return on assets is This ratio is very high when compared to the industry average of Lincoln is currently generating more profit from the company's assets than other businesses in the same industry, just because it earns a huge market share Lincoln's return on assets ratio shows that it uses its assets proficiently in order to produce income. The control of expenses and the company's ability to generate profit is one of the main factors to explain why it is more consistently profitable than any other company in the welding apparatus industry. [...]
[...] For example, Lincolns labor costs per sales dollar were $.26 in 1989 which well bellow the industry average, but Lincoln employees typically earn twice the amount of other factory workers in their area. Lincoln pays its employees on piece work pay system; they also reward employees with a bonus that is determined by the company's performance and their individual performance. The current human resource procedures of Lincoln Electric are a result of the Lincoln brothers' vision when the business began. [...]
[...] Visions, Missions, Goals and Objectives Vision Lincoln Electric will be the undisputed leader in the arc welding industry as measured by global sales volume, while simultaneously aiming to maximize shareholder value. Mission Lincoln electric will be driven by customer satisfaction and become known as the supplier of choice in our industries. We will strive to exceed customer expectations. We will be a solutions company, not simply a supplier of equipment or consumables. Goals and Objectives Differentiate from our competitors through technology, quality applications engineering, sales and marketing expertise. [...]
[...] In the case about Lincoln Electric there are some examples of the policies that the company follows in order to manufacture low cost, high quality products. When purchasing materials Lincoln has two major guidelines, one being to procure the materials at the lowest cost, the second is to work closely with the engineering and manufacturing departments to assure that the latest innovations are applied to the manufacturing process. During the manufacturing process top management, supervisors and all employees are held accountable for the, “reduction of scrap, energy conservation, and maintenance of product quality” (Case 448). [...]
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