1.What is the source of Lincoln's competitive advantage?
Lincoln derived its competitive edge through a combination of its unique management technique and incentive compensation method. These were based on the belief's of the founder, that a person can reach his fullest potential through a system of proper incentives designed to encourage competition as well as team work, complemented by faith in individual by management and equality of management & workers.
The Incentive system had four key components -
Piece work - There was no base salary. Workers were paid on the basis of what they produced. Each worker would ensure his own quality. There was no limit on how much one could produce.
Annual Bonus - This was not a gift, rather it was a means to share the profits with the workers based on their contribution in earning that profit. The contribution was determined by semiannual merit ratings based on dependability, quality, output and ideas & cooperation.
Guaranteed Employment - If a worker is assured of his job, he would work more efficiently. Further the cost of hiring & training people outweighs the savings by downsizing.
Limited benefits - Company just gave the basic benefits. There were no frills attached. Managers believed in giving workers more cash wages & bonuses than fixed benefits as this helped them maximize there choice.
The Management did not believe in hierarchical distinctions. Management was approachable and had an 'open door' policy. Workers trusted the management & recognized that the management worked as hard as they did. The workers were un-unionized.
All these created an environment of trust, where workers could innovate; bring forth ideas that would help the company. These actions resulted in higher efficiencies and better profit margins.
2.Despite this advantage, why did Lincoln's attempt to expand internationally fail in...