Emerson Electric Company Case Study

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Lincoln Electric Case

...Lincoln Electric: Case Study Lincoln Electric is one of the leading producers and manufacturers of Arc Welding Products and Electric Motors. Lincoln Electric’s success lies on the foundation of the various company policies introduced by James Lincoln. This case study analyzed the critical points on which the success of Lincoln Electric’s has its foundations. Company’s Basic Principle Lincoln Electric’s foundations are based on values of trust, overt nature to management, self reliance, righteousness, commitment, answerability and inter-collaboration. These beliefs and moral code formed a powerful base of Lincoln’s culture and management regularly providing the rewards to deserving employees. Pride of workmanship and feelings of involvement and contribution are intrinsic awards that flourish at Lincoln electrics. Company always update their employees about the company’s functioning and financial achievements which encourage the hard work in employees. James Lincoln firmly believed that customers are valuable assets of company. Company’s primary goal should be in the interests of customers. Researchers (Kanji 2010) have made theoretical models relating the Customer Satisfaction with growth in business. Kanji introduces customer satisfaction as critical factor for the model he presented. Other benefits which are included in Customer Satisfaction is Company’s Efficient Advertising and its Human Capital Performances (Luo 2007). Luo and Homburg (2007) findings indicate......

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General Electric Case

...4. General Electric Company’s Aircraft Engine Business Group (AEBG) develops and produces aircraft engines for the airline industry. The airline industry demand is driven by safety, efficiency, and economic effect. The Unducted Fan Engine (UDF) design must meet this industry’s needs and expectations. The airline industry has three main players to consider, Boeing, McDonnell Douglas, and Airbus Industrie. The UDF can provide an economic advantage to the industry. The propeller design makes small-middle sized planes more fuel efficient. Planes will require 70 percent less fuel while carrying the same number of passengers, so in turn will be able to travel farther distances. This will provide the airlines with an opportunity to offer new travel routes to their customers. These passengers of the airline industry are the UDF’s real customers; however they are removed from the decision process by several steps. The UDF design will provide them an advantage of smoother travel with a reduce vibrations from the fan. The opportunity for the airline industry to offer new travel routes will also carry over for an advantage to passengers to plan new trips. The negatives associated with the UDF design, is the look of the design itself. The visible blades give an appealing look that does not provide passengers with a reassuring feeling. With safety being a key demand aspect in the airline industry, the blades do not satisfy this need. Demand for 150 seat airplanes, that would use the......

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Manila Electric Company

...Industry Analysis In its 110 years of service, Manila Electric Company (Meralco) has been one of the oldest and biggest companies to have survived in the Philippines. It is a company that distributes and supplies energy to industrial, residential and commercial markets in some areas of Luzon including Metro Manila, the entire provinces of Bulacan, Rizal and Cavite and parts of the provinces of Laguna, Quezon, Batangas and Pampanga. In addition, the company through its subsidiaries provides other services such as engineering, construction, information systems and technology, real estate and insurance. Porter’s Five Forces Threat of New Entrants Given the current position of Meralco, it is least likely to happen that competitors will enter its market since it would be difficult for them to compete with a company that is already established and trusted for more than a hundred years. Entrants who dare compete will be a lot farther from where Meralco is now, resulting to difficulty in gaining market share. Threat of Substitute Products or Services We are in a world where resources are limited. As to electricity, some of the alternatives for fossil fuels (commonly used for generating electricity) are solar panels, wind energy and water turbines. However, these are not good substitutes as of the moment since these energy sources are too expensive and have limited capacity. In addition, these sources though feasible still have lots of drawbacks that cannot be controlled yet. But with...

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Lincoln Electric Case Analysis

...Lincoln Electric case 1. Explain how the human resource (HR) policies of Lincoln Electric are linked to its overall corporate strategy. Would you say that HR is a source of competitive advantage at Lincoln Electric? Lincoln Electric’s competitive advantage is in manufacturing of quality products at a lower cost than their competitors. As stated in the case, their strategy was to concentrate on reducing costs and passing the savings through to the customer by continuously lowering prices. This resulted in expansion of both market share and primary demand for arc welding equipment, primary demand for arc welding equipment and supplies, and encouraged exit of major companies from the industry. The management system also incorporated an incentive compensation method. The reward system was premised on the belief that one’s fullest potential can be realized through an effective incentive system that is designed to build teamwork but at the same time encourage individual competition among team members. Through this system, the company is able to build employee loyalty but even more importantly match the HR policy with their overall strategy of high quality products produced at the lowest possible cost to the company. The company endeavors to share in the cost saving by the employee bonus system and low cost of the final products to the customers. This is essentially the hallmark of the competitive advantage of Lincoln Company in the USA. This approach combined with an open door......

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Abb Electric Case

...MARKETING ENGINEERING FOR EXCEL • CASE • VERSION 2.0.3 Case ABB Electric Segmentation By Gary L. Lilien & Arvind Rangaswamy 1. Before beginning any case, students should familiarize themselves with the model being used. Marketing Engineering for Excel comes with tutorials that demonstrate the capability of each model. The tutorial can be found under each model within the ME►XL menu after starting Excel. These tutorials are designed to work with our OfficeStar examples which are located in the My Marketing Engineering directory, usually installed in My Documents during software installation. The data required for this case is located in the My Marketing Engineering directory (usually located within My Documents): ABB Electric Data (Customer Choice).xls 2. ABB Electric History In March 1970, ABB Electric was incorporated as a Wisconsin-chartered corporation with initial capital provided by ASEA-ABB Sweden and RTE Corporation. The new firm’s management was to operate independently of the parent company. The company mission was to design and manufacture a line of medium-sized power transformers to market in North America. The firm produced such electrical equipment as transformers, breakers, switchgears and relays used in distributing and transmitting electrical energy. Four main types of customers buy this electrical equipment: (1) investor-owner electrical utilities (IOUs), the largest segment; (2) rural electrification cooperatives (RECs); (3)......

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Lincoln Electric Case Study

...LINCOLN ELECTRIC GROUP ASSIGNMENT Q1. Describe the management philosophy of Lincoln Electric. What are the main components of the compensation system? How much do you think they are influenced by the U.S. national culture? The basic philosophy of Lincoln Electric’s management rooted in James Lincoln’s fervent belief in self-reliance and in the necessity of competition for human progress. He emphasized the importance of incentives management which could bring unlimited progress and profits to the company. From this philosophy Lincoln Electric derived three major components of its compensation system: 1. Wages on a piecework basis 2. A year-end bonus based on a merit-rating procedure 3. Guaranteed employment for workers Although piecework pay system prevails in Western corporations, Lincoln Electric’s bonus rate was one of the highest in the United States, reached approximately 40%~55% of pre-tax at some point. James believed that relating employee’s welfare to corporation’s profits encourages their motivation and dedication to the company. In addition, employment guarantee protected employees’ job security thus ensured efficiency and willingness in production. Nevertheless, another underlying philosophy also contributed to maintain the execution of the compensation system, i.e. James’s belief in the equality of management and employees. The open door policy was practiced under this guideline. Moreover, small numbers of supervisors and equal treatments in parking......

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Jones Electric Case Study

...CASE STUDY 1 – JONES ELECTRICAL BY BREK MINARIK 1. How is Jones Electric Performing? The performance of Jones Electric can be shown in using the ratios section of the excel document. These financial ratios can help measure a performance of the short term, long term, asset management, and profitability. In the short term, Jones Electric liquidity can be measured with the current ratio, quick ratio, and net working capital to total assets. Since the current ratio is always greater than 1.0 that is a good thing since it means current assets are always greater than current liabilities. However, since the current ratio has been dropping from 2004 to 2006, it might be something to keep an eye since the amount of liabilities is increasing quicker than assets. That being said, there is no major concern here since the ratio is greater than 1.0 and it may only be a sign that increased borrowing is needed. With increased inventory, the quick ratio has also been dropping from 2004 to 2006, showing that Jones Electric has been getting less liquid; however with the types of products Jones sells, the quick ratio is still in an ok range. The Net working capital to total assets is also decreasing, which again shows that Jones Electric is becoming less liquid. In the long term, Jones Electric leverage can be shown in the Debt to Equity ratio. Since the Debt to equity ratio remains somewhat constant, it is a good sign that the business is keeping up with and paying off its......

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Lincoln Electric Company Analysis

...than is humanly possible – The root cause being personal limitations. (Regardless of an employee’s motivation to be compensated for producing more, they do not have the capabilities to do so.) The organization has excess employees in slow times because of employment policies and a shortage of employees in prosperous times. Management is not maximizing profits. 3. Practice of promoting within can lead to group think, and lack of innovation. Analysis Lincoln Electric has an impeccable control system in place. It is multi-dimensional and does not just focus on one issue. Instead if an issue arises, there are controls in place to deal with the issue. For example being compensated by piecework is an example of results control. An employee is unable to cut corners; because employees are not compensated for the time it takes them to rework their botched goods. Lincoln’s performance is tied to their strong management control systems. Employees are motivated, because their wages are dependent on the success of the company that they have an ownership stake, and more importantly, because they virtually have guaranteed job security. The organization provides direction that all the employees understand. Managements’ openness towards its employees and their constant involvement with employees, allows communication to run up and down the management ladder easily. Even though the nature of the work is action oriented, employees feel empowered, because they have the ability to offer......

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Emersion Electric Company Case

...Bilal Hussain Asad BUAD 417 Emersion Electric Company Case Emerson Electric has been showing a notable growth in its international sales over the past three years. The company has over this period, therefore, shifted its focus from exports towards offshore production; increasing offshore plants from 50 to 82. To keep this trend going, W.F. Bousquette, Emerson Electric Company’s Chief financial officer has to develop a plan to raise $65 million to meet Emerson’s general corporate needs. The management of the company believes that Asia has the most potential for future sales growth, and perhaps plans to open new plants close somewhere as well. Previously, the company required mostly short term loans which it borrowed in the local currency where the operations needed funding, but now it needs a more reliable currency to issue long-term debt in. As high as the required New Zealand coupon rate of 18.55% is, it is not necessarily a nonstarter. The inflation in New Zealand “is high and is certain to go higher”. The high expected inflation and a freely floating New Zealand dollar (NZ$) means that the depreciation of NZ$ could result in a lower total cost of debt. The relative purchasing power parity implies that the inflation rate and exchange rate of NZ$ will move in proportion to each other i.e. a higher inflation rate would cause the country’s currency (NZ$) to depreciate, thus reducing the amount of US$ needed to buy NZ$ to pay back the loan. Before, nonetheless, we......

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Emerson Electric Hbr Case

...Heidi Heckel Prof. Boschen International Finance: Emerson Electric Company Case Write up September 14, 2015 Emerson Electric does the majority of its business in the United States, however foreign sales are growing as a direct result of a new strategy that focuses on offshore production rather than export. It increased its offshore plants from 50 in 1981 to 82 1986 and has seven subsidiaries in Switzerland and one in New Zealand. Emerson’s total foreign assets almost doubled since 1984 and net assets have risen 70%. It also has 200 million in Eurodollar notes outstanding, while concurrently, the dollar started to weaken against other world currencies. Emerson did partially hedge against the exposure created by it’s 7.875 Eurodollar note due in 1998 by acquiring other currencies that, grouped together, had an interest rate of 5.86%. This helped to offset their cost of debt. Emerson needs to raise capital and therefore plans on issuing 65 million in new debt in the spring of 1987. Emerson has three potential opportunities to consider and it must choose wisely. The three possibilities are issuing a domestic bond, a Swiss Eurobond or a New Zealand Eurobond. The economies of these three countries are very different. As stated earlier, it is anticipated that the US dollar will loose some of its value compared to other foreign currencies. If we also look at analyzing the US Treasury Bill against the inflation rate, we can see that the difference is hovering in a positive......

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The Lincoln Electric Company

...The Lincoln Electric Company The Lincoln electric, founded by John C. Lincoln is now an American multinational manufacturer of welding products. Over the course of decades, it has obtained outstanding growth in all fronts; target markets, market share, production quantity, firm size, production variety etc. It has become a well-known and widely worked on case study, especially due to the firms policies and incentive systems. Rewarding its employees handsomely for the productivity, high quality, cost reduction ideas etc. James F. Lincoln`s philosophy of “Incentive management” with tree policies employment guarantee, yearend bonus and piecework based wages became company`s core strategy. Lincoln electric is a firm with strong fundaments and healthy business values. Then after the death of John and James Lincoln came the hard times in 1980`s. Due to effects of inflation, higher costs, recession etc. Lincoln Electric (with George E. Wills as the firm president) faced a 40% drop in sales. Even through this management held its ground, no employees were laid off and no policies were altered. Nevertheless, sharing reward, equality for everyone, belief in the individual these shared values gave result and repaid over the next years, especially in 1993. When employees voluntarily postponed 614 weeks of vacation to meet customer demand In order to evaluate the exportability outside the US, of Lincoln`s approach to the organization and motivation of employees, we need to first......

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A Case Analysis on the Lincoln Electric Company

...The purpose of this case analysis is to analyze the culture of Lincoln Electric Company. According to Harvard Case Study by Arthur Sharplin, this company is the world’s largest manufacturer of welding machines and electrodes. Let’s look at the Continuing Influence of the Founders of the Company. John C. Lincoln business was incorporated but in 1906 and he expanded his workforce to 30 and sales grew to over $50,000 a year. James F. Lincoln joined the company still small and he became the General Manager and Vice –President of the company. Employee morale and productivity remained with higher profits and bonuses and Lincoln’s market share is stable. When the advisory Board came into power, between 1915 and 1917, a paid-up life insurance policy was given by the company to the employee and a welding school was begun. In 1918, an employee bonus was attempted. In 1919, the Lincoln Electric Employees’ association was formed. In addition, the Board of Directors voted to start a suggestion system in 1929. The legendary Lincoln bonus plan was proposed by the Advisory Board and accepted on a trial basis by James Lincoln in 1934. The golden rule emphasizes on James Lincoln’s Christian ethics which he says “Treat People as you would like to be Treated” “In his words, he says if the Christian ethics control our acts, the savings in the cost of distribution will be tremendous.” In his view, the customer should always come first. Lincoln’s Incentive Management Plan was defined by the......

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Summit Electric Case Study

...Summary Summit electric is one of the prominent industry for the wholesale Electric equipment in the United State. There are almost 500 employees working with this large company. Summit electric was found in 1977, New Mexico. The company has reached higher rank in the united states for the selling the electric equipment after the company came to the market. Summit electric plays a role as a middleman for supplying and manufacturing the good of electric. Summit was continuing to grow and was beginning the outgoing the legacy information system that were built in 1980. Summit SAP software also produce a significant return on investment from automating sales tax processing and chargeback. As we talk about chargeback, it is a most important and large part of the wholesale distribution channel of equipment in profit model. In that situation summit electric was losing the revenue opportunity only because of its chargeback process was damaged and the other reason was reporting ability was incomplete. In addition, summit workers have to work on opening through client’s bills for particular manufacturer to identify which chargeback the company could claim. By the sometime the vendors of the summit electric responded to the chargeback invoices, as per talk the bills were three of four months old. In that case as a part of ERP solution, summit electric putted the SAP paybacks and chargeback application and this application was specifically for the vender industries. The SAP system......

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General Electric Company

...Case 11- 6 General Electric Company The General Electric Company is a large multilocation corporation engaged in the manufacture and marketing of a wide variety of electrical and allied prod-ucts. In 1964, there were almost 400 separate product lines and over three mil-lion catalog items. Sales volume in that year totaled $4,941 million, and net income was $237 million. Total employment was about 262,000. Early in the 1950s, General Electric initiated an extensive decentralization of authority and responsibility for the operations of the company. The basic unit of organization became the product department. AB of 1964, there were over 100 of these departments. The company recognized that if this decentralization was to be fully effective it would need an improved system of management control. It also recognized that any improved system of control would require better measures of per¬formance. To meet this need, the company established a measurements project and created a special organizational unit to carry out this project. This case summarizes the main features of this project, with particular emphasis on measuring performance of the operating (i.e., product) departments. The Measurements Project The measurements project was established in 1952. Responsibility for the proj¬ect was assigned to accounting services, one of the corporate functional services divisions. A permanent organizational unit, initially called measurement ser¬vice, was set up to carry out this......

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Lincoln Electric Case Analysis

...Lincoln Electric Case Analysis Situation: Through the year 1974, the Lincoln Electric Company experienced rapid growth in net income and overall sales. Though a small company, Lincoln Electric was able to dominate the welding market by focusing on reducing costs and raising quality. These goals were achieved by rewarding employees with an innovative financial incentive program. Lincoln Electric paid their employees a base salary that was slightly lower than market. However, all employees were included in a merit-based profit sharing program. This program rewarded hard-working, efficient, and quality-conscious employees with big bonuses that could potentially equal up to 100% of their full-time salary. After having gone through an initial work probation period, all employees were guaranteed employment. One of the founders of the company, James F. Lincoln, believed that competition was a fundamental foundation of employee development. He set up a system that would reward the hardest working and most efficient workers with large financial prizes. The workers were encouraged to skip smoking breaks, take short lunches, and work as quickly as possible, while still paying attention to quality standards. Though challenging, the work environment was viewed favorably by the employees who were interviewed for this case. All respondents admitted that there were serious deficiencies in the system, but that it was generally favorable. The employees accepted that...

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Issuing debt in New Zealand is not necessary a nonstarter. Although it has a required coupon rate as high as 18.55%, the inflation rate has been floating freely and thus causing the CPI surprisingly high. Therefore, the purchasing power parity is proportional compare to the one in the United States or in Swiss. When paying out coupon, the high inflation rate has offset the high coupon rate. The cost of debt of New Zealand in its own currency is 4.6% in 1987/88(according to Government issued Treasury bill). Therefore, in their own currency, to raise $65 million US dollars in New Zealand with a 2-year bond, the bond’s price should be 114.53. The first coupon payment is $21.2 in NZD, and the second payment would be the sum of second coupon payment plus the principle—135.7 million in NZD. The cost of debt in Switzerland is 4.0%. In the Swiss currency, $65 UDS converted to Swiss franc is 99.5 million in CHF. The first coupon payment should be 4.5 million and the second payment is roughly about 104 million in CHF. If the company were to raise USD debt in the EURObond market, the first payment is 5.62million in USD and the second payment is $70.62 million.

However, if convert all the currencies back to USD, the results are different due to the interest rate difference in different countries. In New Zealand, the first coupon payment is 10.7million USD (by using CIP) which is different from 5.62million USD if the debt is issued in USD. Likewise, the second payment is to be 62 million USD which is less than the second payment if issued in USD. Therefore, the NPV of the debt if it is to be issued in New Zealand, would be 2 which is greater than if the debt is issued in USD, in which case the NPV would simply equal to 0. In CHF, the first payment made in CHF converted to USD would be 3.1 million USD. And the second payment would be equal to 0.33 million USD. In macroeconomics view, the forward rate depends on people’s expectancy about certain countries’ interest rates and inflation rate. In this case, New Zealand would be a better choice because, although its inflation rate has been floating high, there is a decreasing tendency throughout these years. The NPV is also positive and realizable.

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