Dee Ham
Robert Hupcher
Nicholas Lawrence
Albert Lee
Zhengning Li
Genesis
 Proposition
 The Global Perspective
 Indian Competitor Analysis
 The Indian Market
 Why Greenfield?
 SWOT Analysis
 Alternatives
 Financing & Implementations
 Recap & Conclusion
Proposition
 Secure a strategic market position in the rapidly
expanding welding industry of India
 Establish a Lincoln production facility within India
and immediately follow with supplemental
acquisitions of several smaller Indian welding firms
The Global Perspective
 $13 billion market (metal cutting & welding)
 3rd largest market in Asia
 3% unit volume industry growth rate (exp. 2006)
 Market fragmentation
 Top 6 firms account for 45% of global welding market
 Increasing demand in Europe, China and India
Welding Industry Global Sales 2005
Southeast Asia, 9%
Latin America, 5%
Russia, Africa, Middle
East, 6%
China, 17%
India, 3%
Japan, Korea, 16%
North America , 23%
Europe, 21%
Lincoln Electric in Asia
Indian Competitor Analysis
 ESAB Charter PLC
 Global market leaders, 3rd in United States
 Increase in revenue 2004-2005
 EWAC Alloys Ltd.
 Significant impact on Indian market
 Ador Welding Ltd.
 Pretax profit 2005-2006
 Existing capacity for market growth
The Indian Market
 Fastest growing economy in the world
 GDP and welding industry correlation
 Infrastructure revisions – demand for gas and oil
pipelines
 High fragmentation
 44% of welding consumables over 300 local firms
 300 firms occupying major market share
 15 languages – English most important for commercial
communication
Why “Do-It-Yourself?”
Pros
Cons
Retain full control of competencies and
functional processes
Initial research expenditures
Subsequent acquisitions equate to
absorption of penetrated markets
Corporate distraction, time deficit and
allocation
Reduce liability of foreignness
Strategic locations and building
relationships with local governments
Acquire focused local talent and market
insight that larger firms may overlook
Company SWOT Analysis
Strength
Weakness
Opportunity
Threat
•Strong global
presence in
more than 80
countries with a
successful
history of
acquisitions
•Valuable
patents and
insight to
efficient welding
techniques
•Lack of brand
equity in India
•Limited access
to distribution
channels, local
talent and
Indian market
insight
•High
fragmentation of
Indian market
maintains
significant
portion of
market share
•Niche markets
•Global
competitors
anticipating
Indian market
growth
Financing & Implementation
 Finance acquisitions and setup costs with debt
 Translation of market growth to ROI
 Reduction in company discretionary bonuses
 $74 million over 3,000 employees
 Cutting production of older generation welding
models
 Recent welding equipment as 50% of sales
 Facility location
 Strategic placement for distribution centers
Bonus Expenditures as a deduction
from EBIT
100%
90%
80%
70%
60%
50%
Spent on Bonus
40%
30%
20%
10%
0%
95
96
97
98
99
00
01
02
03
04
05
Alternatives
 Joint venture
 Loss of control
 Exposed competencies and strategic management processes
 Merge/acquire large competitor
 Funding, integration and synergy issues
 Lack of candidates
 The Competition Act of 2002
•
Relation to the US Anti-Trust laws
 Strategic alliance
 Loss of intellectual property
 Uncertain future
Recap and Conclusion
 Entrance into India
 Develop production plant under the Lincoln name
 Conduct acquisitions of smaller, fragmented firms in
Indian welding market
 Gain market dominance through utilization of past
experience with acquisitions
 Exploit local talent and distribution channels of
acquired firms
 Temporarily reduce company expenditures as Indian
welding market develops
Thank You!