“Strategies That Fit Emerging Markets”; written by Tarun Khanna, Krishna Palepu, and Jayant Sinha; discusses the importance of CEOs and top management teams of North American companies, such as Lincoln Electric, to learn how to develop strategies that “work around institutional voids” and allow for the company to implement “customized approaches […] that are different from those they use at home.” While Lincoln Electric has been a strong and powerful contender in the United States, it is vital the CEO realizes that those characteristics which gave them a competitive edge at home may not, and probably will not, be the same characteristics. India is a different market than the U.S., with its own features. Khanna, Palepu and Sinha suggest that companies begin by asking a series of questions about the desired emerging market across the 5 key institutional voids: 1) Political and Social System, 2) Openness, 3) Product Markets, 4) Labor Markets, and 5) Capital Markets.
This process is important for all companies to preform, however it becomes quintessential in the decision for Lincoln Electric because their past ventures into emerging markets has been historically shaky and underdeveloped, with Lincoln having to close all their emerging market plants due to unprofitably. Even Lincoln Electric’s most recent global strategy, under CEO Donald Hastings and current CEO John Stropki, had some avoidable problems. There continued to be miscalculations in market access (Japan and China), in evaluation of desired product (Japan and South Korea), and in resource allocation (Japan). In fact all Asian Markets had Lincoln Electric running into some difficulty. When deciding how to proceed with India, Stropki must ensure a complete understanding of the emerging market, otherwise he could very easily find himself repeating his mistakes.
Along with evaluating India’s institutional voids, the CEO must also work to ensure that the core values of Lincoln Electric are not disposed or forgotten. Throughout its 120 year history, Lincoln Electric has stressed the “incentives for individuals to fulfill their potential,” encouraged “a highly entrepreneurial environment,” as well as prided themselves on their technological focus and development. If Lincoln Electric lost these attributes in the process of capturing India’s emerging market, they would no longer be Lincoln Electric, but just another welding company in a highly competitive field. However, keeping true to its core values does not mean that the CEO cannot be open to changing its practices and processes. For Lincoln Electric to enter into India with the philosophy that they can just implant their Cleveland processes and structure would be naïve and unproductive. It is imperative that Lincoln Electric’s CEO strike a balance between preserving core values and being open to innovative process changes.