STRATEGIC MANAGEMENT IN

LARSEN AND TOUBRO LIMITED

COLLECTED AND ANALYZED BY

R.ASHWIN
M.Tech - CONSTRUCTION TECHNOLOGY AND
MANAGEMENT
ROLL NO : CE 081611

LEARNING OBJECTIVE
 ✔ The learning objective for the industry analysis is to
determine the opportunities and threats that exist for firms
within a competitive environment.
✔ The learning objective for the firm analysis is to determine
the strengths and weaknesses of a firm and to determine the
core competence that can be built on to establish a
competitive advantage.
✔ The final step is to develop a sound business plan to ensure
the survival of their chosen firm within its competitive
environment.

STRATEGIC MANTRAS OF LARSEN AND TOUBRO LIMITED -A

WHOLE AND REALISTIC VIEW

Audacious in vision.
Focus on what know best.
Trim flab to achieve operational excellence.
Good governance made the business sense.
Develop leaders from within.
Forge stronger partnerships with supplier base.
Pursue quality with zeal.
Innovate to create value for customers.
Give back to the society
The Indian edge.

LARSEN AND TOUBRO-AN OVER VIEW

C Larsen and Toubro (L&T) one of the largest engineering
companies in India (and one of the top five private sector
companies) posted yet again a growth rate of over 27 percent.
Ducts Established Founder Global presence Production

If a particular project fails, it does not lead to a process of

recovering the money from L&T. This has been accepted by the
financial institutions as well as by the rating agencies, an L&T
source is saying.

1. Vision
✔ Excellence and professionalism
✔ Customer delight through service.
✔ Entrepreneurial leadership and creation of an organization
that is on the path of continuously learning by fostering
teamwork, trust, and care.
✔ Community service and environmental protection.
Company strongly drove by its global vision to become an Indian
Multinational Program ‘LAKSHYA’ which outlines a strategic plan
for 2005-10 will assist in this.

2. Core Competencies
Today the core competence of L&T lies in its ability to synthesize,
integrate and harmonize its diverse world-class engineering,
manufacturing, procurement, construction and fabrication skills
around turnkey projects (in core economic sectors) and people.
3. Business Leadership
With the Project and Construction business in the country growing
at a fast pace and expected to continue to do so with the countrys
emphasis on infrastructure, both L&T ECC (Construction group)
and L&T's Projects (EPC) businesses are being treated as thrust
areas. The ECC construction group has been responsible for
construction landmarks both in india and abroad.
L&T holds a leadership position in lndia in most of the areas in
which it operates. The first company to introduce hydraulic
excavators in the courtry, it still maintains its leadership status in
this and in the vibratory compactor segments.
It continues to be a leader in the manufacture of Z-Line petrol
pumps and its cement is considered to be of high quality. L&T has
pioneered the manufacture and supply of critical nuclear reactors
and space vehicles hardware in the country and so on.
4. Decision-making
Over the years, the company has implemented its vision through
various approaches. Foremost is the emphasis on empowerment.
Teamwork and continuous training of employees.
The company is decentralized for all practical purposes. Budgets
and allocations are made at the beginning of the year for
achieving the targets.
"Only through empowerment and decentralized decision making
can a highly diversified company like L&T be managed. Only in
major decisions involving capacity augmentation, business
divestment, diversification, and so on does the CEO personally
involve himself.
5. The Culture of TQM
Employees have realized that everybody in every department is a
supplier to somebody in the organization if not directly to an
outside customer.
Employees are being trained in multi-skills, including quality
transactions and market engineering, besides product
engineering.
6. Human Resource Management
With people being regarded as the 'prime movers', a strong HRD
culture pervades the organization’s personnel policies, and HRD
systems are designed to sustain motivation, encourage learning,
and achieve higher levels of quality and productivity through job
involvement.
Quality Training and Development of Human Resources is
realized through:
✔ Identifying training needs within the Organization and
designing and implementing those need based training
programmes to bring about continuous up gradation of
knowledge, skills and employee attitudes.
The following brief highlights ECC's training methodology for the
comprehensive development of its 7000-odd employees.
• Follow through after initial planning.
• Tracking of progress against plan.
• Adequate understanding of the internal resistance to
change.
• Sufficient information sharing among stakeholders.
• Inclusion of stakeholders and delegates

7. Contribution to Academics
L&T set up L&T Institute of Technology, a polytechnic in Mumbai.
In a short period, it has come to be widely regarded as one of the
best training institutions of its kind in the country, particularly for
the full-fledged workshops and laboratories that provide a strong
practical orientation to theoretical inputs. There is a good demand
i n engineering companies for the students passing out from this
Institute.

8. Environment Up gradation
L&T has been showing its commitment towards corporate
citizenship.
As one goes around the works and offices of L&T, one experiences
a soothing and refreshing ambience because of the rich foliage
and delightful floral blooms around these structures.
L&T has undertaken extensive tree plantation programme to
enhance ‘green’ concepts.
Over three lakh trees were planted in and around the factory in
1993-94 under the programme 'Trees for Life'.
The villagers have been given grafted saplings of fruit-bearing
trees and encouraged to plant them.
The success of this ongoing effort led to L&T being selected by
the Government of Maharashtra for the prestigious Vanashree
Award in 1990.

9. Marketing Audit
The financial results of L&T for the year 2007-08 are not too
encouraging as far as profits are concerned. The company has
reported profits of Rs. 1010 crore against the previous year’s
profit of Rs. 890 crore, thereby achieving a slim growth of five
percent. However, the turnover has recorded a sharp jump from
Rs. 8249 crore to Rs. 10304 crore.
From another perspective, the performance has been
commendable considering the slump and intense competition in
the cement industry and performance of other competitors during
the period.
L&T presently has a shareholder base of nearly 1 million and
employee strength of over 24,000. As a company, this multi-
dimensional engineering giant is actually the nucleus of a group
of companies involved in building complexes, worksites, offices,
and service outlets at different locations all over India and
abroad.
Over the years, L&T has acquired a commendable reputation for
capabilities for executing engineering related projects.

Some important strategic move by L&T:

AMBANI BROTHERS AND L&T

1989-90 - L&T under DH Ambani (as chairman)

1990-93 – Repeated takeover attempts by RIL

During 1991 - 93. As the country progressed towards

liberalisation, the company just emerged from a not-so-welcome
takeover threat from the powerful Ambanis of Reliance.

The Ambanis were themselves embarking upon massive

expansion in chemicals and petrochemicals business, and L&T
would have provided a real and logical synergy in terms of
executing turnkey projects for construction, engineering,
supplying machinery and, of course.
Offering suppliers credit (to the tune of Rs. 1,000 crore). Through
protracted investigation and litigation (in which the Reliance
Industries Ltd. was found to have collected forged proxies), the
company somehow remained in the hands of 'professionals'.
The big question mark as posed by an article in the Economic and
Political Weekly was, "Where does L&T go from where it has
reached now?"
However, it was obvious that a total new mindset and working
culture would be required if L&T was to grow and remain
competitive. Takeover attempts by RIL
dropped down.
In 1993-94, the company started adopting the principles of Total
Quality Management (TQM) by becoming customer focused,
reducing the costs and wastage, and adding value at all stages for
maximizing customer satisfaction.

L&T’S ALLAINCES WITH WORLD’S TOP CONSTRUCTION

EQUIPMENT MANAUFACTURING COMPANIES
L&T has also entered into alliances with several international
companies to strengthen its manufacturing portfolio, especially its
mining and construction equipment. It now manufactures a wider
range of products besides also being involved in the marketing
and servicing of certain products of their international
counterparts.
• L&T Komatsu Ltd., a joint venture with Komatsu Asia & Pacific
Pvt. Ltd., Singapore, manufactures hydraulic excavators and other
such components.
• L&T John Deere Pvt. Ltd., a joint venture with Deere & Co., USA,
is involved in the manufacture and sale of tractors. However, L&T
divested its stake in the latter as part of its strategy to exit non-
core businesses.
• L&T-Case Equipment Pvt. Ltd., a joint venture with CNH America
LLC manufacture earthmoving and construction machinery.

L&T AND SHIPBUILDING:

Shipbuilding represents a new thrust for L&T in the high

technology manufacturing space and is in line with its strategic
growth objectives. L&T is developing a shipyard capable of
constructing vessels of up to 150 metres in length and
displacement of 20000 tonnes at its heavy engineering complex
at Hazira near Surat on India’s west coast. The focus will be on
construction of commercial vessels, warships for the navy and the
coast guard.

L&T RESTRUCTURES ‘ECC’ CONSTRUCTION DIVISION

L&T has restructured its Chennai-headquartered Construction

Division (Engineering Construction Corporation) by transforming it
from the erstwhile complex model having 18 Strategic Business
Units (SBUs), seven Regional Offices in India and four abroad, into
a new structure with a functional 4x4 matrix.
Mr. A. Ramakrishna, L&T's Deputy Managing Director, explained
the restructuring thus: "From the earlier 18 SBUs, we have
regrouped the Divisions on a four-business sector-model, based
on four core-technology fronts: Buildings and factories, Civil and
Transport Infrastructure, Industrial Projects & Utilities and
Electrical & Instrumentation."
ECC is India's largest construction organization and backed by the
capabilities of L&T's allied Divisions, it offers EPC solutions with a
single-source project-execution responsibility, from concept to
commissioning. The Division is ranked 67th among the world's
100 top contractors and has an important role to play in achieving
L&T's Corporate Vision of becoming an Indian Multinational.

The Future of L&T

L&T continues to surge ahead in its quest for becoming a global
player. It has set itself a target of earning 25 per cent of its
revenues from its international operations by 2009-10. It is also
actively pursuing business opportunities in China, Middle East and
Africa as it sees immense potential in these regions. It seeks to
utilise China as a hub for the sourcing of cost-effective
components and materials.

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ANALYZES AND SUGGESTIONS

ADVANTAGES OBSERVED (Good strategies) IN FIRM
If we observe the vision statement
✔ Understood that management involved right from the start.
✔ Adequate or correct marketing research is done at each and
every level
✔ There is no lack of vision on the relationships between
processes, technology and organization.

If we observe the culture of TQM, and Decision Making

✔ There is sufficient company resources to accomplish task.
 ✔ New strategies are well explained to employees.
✔ Incentives given to workers to embrace the new strategy.
✔ Promoting the new employee and their management skills.
✔ There is a good employee commitment.
✔ Important strategies like collaboration with lead
manufacturing companies.
✔ Saved the company from Ambani brothers Undertook
proposal.

If we observe the Human Resource Management

Its observed that Company’s succeed in today's free market
economy, only because their employees perform to their fullest
potential. The governing theme in the organisation is the well
being of their employees strategies.
✔ Alive to this home truth
✔ Freedom to experiment
✔ Continuous learning and training.
✔ Transparency in all aspects.
✔ Quality in all aspects of work.
✔ Rewards based on performance and potential.
✔ The salary and benefits offered are on par with the best
available in Construction Industry.
✔ It is aimed at not only attracting but also retaining talent.

If we observe Financial aspects

✔ Because of this Economic crisis all over the world,the
company profit percentage gets reducing.
✔ To control this, There should be a meeting with all familiar
construction companies CEO to get their views on financial
crisis aspects and financial management.
✔ Speak to Equipment providers, Labour contractors, Material
providers to minimize the rent and rate at maximum extent.
 ✔ But, Reduced financial expenses have resulted in substantial
increase in the return on net worth as well as the capital
invested from them.

If we observe Enivironmental upgradation.

✔ India is witnessing tremendous growth in infrastructure and
construction development. The construction industry in India
is one of the largest economic activities and is growing at an
average rate of 9.5% as compared to the global average of
5%.
✔ This augurs well for the country and now there is an
imminent need to introduce green concepts and techniques
in this sector.
✔ Green concepts and techniques in the construction sector
can help address national issues like handling of consumer
waste, water efficiency, reduction in fossil fuel use in
commuting, energy efficiency and conserving natural
resources.
✔ Most importantly, these concepts can enhance occupant
health, happiness and wellbeing.
✔ So automatically enhance the mood of occupant and they
feel fresh throughout the day and in the mean time profit
also increases.

L&T EDRC - 1, Chennai

This is the office building of L & T Chennai with ‘green’ concepts
exclusively built for to get increased profit through employee’s
100% work efficiency and make them feeling well after more
working hours by 95% of workspaces have direct access to
outside view This is also a Excellent strategic feature of that
company.

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CONCLUSION
 • An independent survey named L&T to be one of the best
managed companies in Asia and another.
• Business Today showed that the company was one of the
most transparent and a leader on the issue of corporate
governance.
EXCELLENT MANAGEMENT SYSTEM

SYSTEMATIC APPROACH FOR EACH AND EVERYTHING

LOTS OF AWARDS

No.1 CONSTRUCTION COMPANY IN INDIA

“ Since last few years, L&T was becoming a lesson for companies
worldwide in managing explosive growth and developing internal
capabilities on a continuous basis. ”

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YOU…………………………………………………………………………