STRATEGIC MANAGEMENT IN LARSEN AND TOUBRO LIMITED

Submitted to: Mr. Prashant DuttaguptaSubmitted by: Vivek Pandya12131052TY.BBA

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

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.

2. Core CompetenciesToday 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 LeadershipWith 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 India in most of the areas in which it operates. The first company to introduce hydraulic excavators in the country, 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. Team-work 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 TQMEmployees 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 ManagementWith people being regarded as the 'prime movers', a strong HRD culture pervades the organizations 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 Resourcesis realized through: Identifying training needs within the Organization and designing and implementing those need based training programmes to bring aboutcontinuous 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 AcademicsL&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 in 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 programs to enhance green concepts.Over three lakhs trees were planted in and around the factory in 1993-94 under the program '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 AuditThe financial results of L&T for the year 20012-13 are too encouraging as far as profits are concerned. The company has reported profits of Rs. 5,849 lakhs against the previous years profit of Rs. 2530 lakhs thereby achieving a slim growth of five percent. 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&T1989-90 - L&T under DH Ambani (as chairman)1990-93 Repeated takeover attempts by RILDuring 1991 - 93. As the country progressed towards liberalization, 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 RILdropped 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&TS ALLAINCES WITH WORLDS TOP CONSTRUCTION EQUIPMENT MANAUFACTURING COMPANIESL&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 Indias 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. SWOT AnalysisStrength1. Market leadership providing competitive edge - The company can leverage its strong brand name and market leadership position to gain competitive advantage and also expand into international markets.2. Strong technical expertise reinforce leadership position - L&T has set up an engineering and project management centre in Abu Dhabi to undertake oil and gas related projects as well as engineering and consultancy services3. Diversified revenues providing resilience - In FY2011, the companys revenues were distributed among business divisions as follows: engineering and construction, electrical and electronics, machinery and industrial products, financial services, developmental projects and others. This enables L&T to alleviate its business risk as fluctuations in a single offering have lesser impact on diversified offerings and provide resilience to its revenues4. Over 45,000 employees form a part of its workforce.5. It has offerings like Construction, Heavy equipment, Electrical equipment, Power, Shipbuilding, Financial services and IT Services

Weakness1. Dependence on domestic operations for revenue generation - In FY2011, the company's domestic (India) operations contributed more than 80% of the total revenues.2. Increasing debt impacting financial flexibility - L&Ts interest and brokerage expenditure over the period increased

Opportunity1. Strategic joint ventures strengthening business - L&T has formed a strategic partnership with Cyan Holdings plc, a UK-based integrated system design company. L&T and Cassidian entered into a partnership in February 2011, to become an electronics house for defense and security2. Strong project pipeline ensures revenue growth3. Growing Indian construction & engineering industry - In 2015, the Indian construction & engineering industry is forecast to grow

Threats1. Rise in cost of construction may affect margins - The rise in crude prices, will increase the cost of transportation.2. Challenges in land acquisition likely to affect business - in 2011, Indian government introduced The Land Acquisition, Rehabilitation and Resettlement Bill, 2011. As per the bill, compensation for the owners of the acquired land shall be four times the market value in rural areas and twice in urban areas.3. Intense competition may reduce profitability few competitors have substantially greater resources and superior capabilities than L&T.

Competitors1. ABB2. Bechtel3. Hindalco4. Sundaram Fasteners5. Gammon India6. Lanco Infratech

ANALYZES AND SUGGESTIONSADVANTAGES OBSERVED (Good strategies) IN FIRMIf 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 a sufficient company resource 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 ManagementIt is observed that Companys 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 There should be a meeting with all familiar construction companies CEO to get their views on financial crisis aspects and financial management if there is any crisis in the market. 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 the 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 employees 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.

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.