I think that Lincoln Electric (LE) should definitely has a production facility in India because of its growth and foreseen opportunities, but if I were LE I would suggest to enter with a local partner in order to gain knowledge and experience in how the country operates in terms of bureaucracy, labor, culture and so on.
LE is known for its high quality products and its technical innovations. On its 60 years of international experience, the company gained valuable knowledge on what to do and what to avoid when moving abroad, and that is why they refocused their expansion strategy into joint ventures, instead of acquisitions avoiding the …show more content…
As the CEO mentioned in the case the use of JV in China was key for starting business in that country (even though they are starting to do thing by their own) and that without the help from a local partner they could not have succeeded in that market.
On the other hand, the use of JV with a local partner would expose the company to share some confidential information that could be used by the partner, copying or imitating technology, in case the deal break. Another negative point is the fact that in a later stage of the relationship, interests might differ. As it happens in China, the partner wants to grow in volume but LE wants to do it in revenues. All this conflicts, even though are necessary, can erode the business relationship.
Another way of entering the country would be either by an acquisition of an existing Indian company or by starting from scratch a new plant. These two options in my opinion also have some positive and negative points, but do not overcome JV.
By acquiring a company within the welding industry the problem of which valuation to use become essential. As the case mentioned, LE has some very strict criteria to proceed with the acquisition and, the purchase price would be affected by the economic booming in India influencing on the price premium to pay. The strategy to use for acquiring such companies would