Strengths & Weaknesses

Key Points• Core Competencies

– Product mix• Culture & Leadership

– Management– Organization– Decision-making abilities

• Technical Developments– innovation,– technology.

• Operations– speed– Productivity– efficiency

• Customer Relations & Marketing– Quality– Service

• Logistics• Financials

Core Competencies

Tech Development

Strengths• Technological innovation allows the company

to earn a price premium for many of its products.– Industry leader in new market introductions and

quality performance.– the most aggressive, comprehensive, and

successful R&D program in the welding industry

Tech Development

– More than 50% of Lincoln Electric’s equipment sales in 2005 were generated by welding machines introduced in the previous five years.

– Known as “The Welding Experts,” vs. its leading competitors who chose to diversify their resources far away from welding.

– In 2004 began building regional engineering development centers worldwide.

Culture

Strengths• Industry-leading productivity advances

through innovative human resource and incentive systems.– stock ownership– incentive bonuses via merit ratings– Employee Advisory Board– employee suggestion system

Culture

– annuities for retired employees– group life insurance.– No lay-off policy

• The entrepreneurial spirit– Piecework– Work days– Merit ratings

• Trusting relationships

Culture

Weaknesses• Competent executive management• Synergies of acquisitions• Competent operational/functional

management• Incentive and bonuses

Costumer Relations

Strengths• Product support and guarantees, allows the

company to earn a price premium for many of its products.– Customer support– Training– Consultation– Guaranteed Cost Reduction Program

Costumer Relations

Weaknesses• Geographical distance; logistics

Marketing

Strengths• Strong brand identity

Operations

Strengths• Efficiency– Solutions oriented– Supply chain and FANUC Robotics– Harris Colorific acquisition

Weaknesses– Maintaining operational efficiency internationally– Incompatible power source

Logistics

Weaknesses• Local production presence

Financials

Strengths• 2005: operating income was $153.5 million

and net income was $122 million on sales of $1.6 billion.

Weaknesses• Domestic Reliance• Over-forecast and spending

Competition

Ador Welding Ltd.

Ador Welding Ltd.

• $50 million in sales in 2005 with a 15% operating margin, and a portion of its shares traded on the local stock exchange.

• Cost-adjusted annual revenue growth rate at 20% over the next two years, which should continue with a return on capital employed at over 40%.

Ador Welding Ltd.

• The company has shifted some production to Silvassa, a government-created tax-free zone, and by concentrating production at a smaller number of facilities Ador had realized both economies of scale as well as tax savings.

• In July 2006 the company’s publicly traded shares were valued at 10.9x FY07 estimated net earnings per share, and EBITDA per share was predicted by the same local analyst to grow at a CAGR of 29% and net earnings per share to grow at a CAGR of 23% over the next two years.

Ador Welding Ltd.

• Ador had annual sales of 241.6 crore (large values of India’s currency, the rupee, are counted in terms of crore, with one crore the same as 10,000,000 rupees).

• The company had produced 17,217 MT of consumable welding products in FY06, and Ador had previously constructed plant lines that could produce far more than that should the market continue to grow. Ador had in FY06 paid a dividend of 15 rupees, equal to a 4% yield on the stock.

Competition

ESAB India

• Over $50 million in sales in 2005.