A joint venture in Indonesia is the best way to enter. Tira’s relationship with high-level government officials is very important due to the political situation. SSHJ has the financial strength that Tira does not possess. Lincoln should go into a joint venture with both Tira and SSHJ since each firm brings complementary strengths. This joint venture must be carefully crafted; compensation will be direct as a partnership type between SSHJ and Tira, where incentives exist to ensure mutual success. An agreement with SSHJ to build a new factory should be completed and support for a low-interest loan to help Tira with maintaining Lincoln inventory. This joint venture will be carefully controlled and monitored by Lincoln and they will maintain the maximum amount of ownership allowed by Indonesian law. As mentioned previously, Lincoln’s competitive edge is its ability to tap into employee innovation talents and then to quickly implement them. Lincoln should conduct cultural research into what types of rewards apply to the Indonesian culture and then custom design an incentive system that utilizes these rewards.
The successful implementation of this similar formula of corporate culture and incentives will allow Lincoln once again to continuously improve through employee innovations. The custom designed incentive reward may be: benefits on a rising scale; additional vacation/compensation time; or company ownership as a stock option plan instead of the bonus/compensation plan used in the U.S. Lincoln should continue to leverage their brand reputation/loyalty, and leverage their ability to produce a lower cost (through its successful innovation processes) and to break into this new market; also, price competition should be avoided as an entry strategy. Instead, compete on product value.
The planned entry strategy into the stick welding consumables is the right direction, the growth rate, and potential market are very attractive, however, the entry strategy must also be developed to counter whatever defensive or offensive moves the other controlling multinational firms do to prevent Lincoln from gaining market share. Finally, Lincoln’s long-term strategies must be compatible with achievable goals that allow sufficient time for the Indonesian venture to fully develop and start earning profits.