Sei sulla pagina 1di 51

Question Bank

MBA III Sem


FT 301C Strategic Management

Unit’s Name No. of Questions


An Overview of Strategic management 11
Strategic Intent 16
The General Environment 35
Corporate Level Strategies 54
Business Level Strategies 23
Strategic Analysis and Choice 22
Strategy Implementation 40
Strategic Evaluation & Control 17

Unit 1: An Overview of Strategic management

Q1. Mention any six characteristics of Strategic Management?

Q2. State the importance of strategic planning for a business firm.

Q3 ‘strategy includes the determination and evaluation of alternative paths to an already


established mission or objective and eventually choice of the alternatives to be adopted’ Explain
the statement underlining the process of strategy formulation.

Q4 Explain various stages in strategic management process in a single business firm.

Q5 Briefly discuss the benefits of strategic management for a business organization

Q6. Discuss the historical evolution of business policy and the process of strategic management
with suitable examples

Q7. What are the various paradigm shifts Business policy has seen in the course of its historical
evolution?

Q8. What is the concept of strategy? Point 2 limitations of the concept of strategy. What are the
different levels at which strategy operates?

Q9. What is strategic decision making? Explain the process of Strategic Management?

Q10. Enumerate the elements of in strategic management process. Discuss them in detail.

Q11. Make a comparative assessment of different schools of strategy thought.


Unit 2: Strategic Intent

I. Short Answer Type Questions:

Q1. (a) What is Strategic Intent? Define the following terms:


i. Vision
ii. Mission
iii. Business Definition
iv. Goal
v. Objectives
(b) What are the possible pitfalls in not having a vision for an organization?

Q2. Mention the characteristics of a good mission statement. What problems can an imprecise
and unclear mission create for organization?

Q3. Explain 3 dimensions of business definition.

Q4. Define objectives. What are its characteristics? Identify its role in strategic management.

II. Detailed Answer Type of question:

Q5 Distinguish b/w mission, vision and objectives. Explain the importance of these components
in an organization.

Q6. Why do firms need to have specific set of objectives? Do objectives form an integral part of
strategic management? Critically evaluate the importance of objectives taking into
consid4eration any organization of your choice

Q7. Discuss the following terms:


(a) Policy (b) Strategy (c) Vision and Mission (d) Objectives (e) Mission Statement

Q8 Why should a company have Mission Statement ? Discuss its role and functions. Give
examples of mission statements in relation to any three of the following organisations:

1. A corporate hospital in the private sector


2. A specialised professional educational and training institution in the Government sector
3. A technical and management consulting firm in the private sector.
4. A electric supply undertaking in the Government sector

Q9. Discuss the importance of ‘mission’ statement in strategy formulation. What does a mission
statement convey? Give examples of mission statements for the following organisation:
(a) An organisation providing internet and related telecommunication services.
(b) A corporate hospital in private sector.
(c ) A company manufacturing heavy machinery in public sector.
Q10. Illustrate and explain various levels of strategic management in an organization. Give
examples

Q11. Explain in detail various components of ‘strategic intent’.

Q12. ‘A vision is too abstract to be of any practical value’. Do you agree with this statement?
Why?

Q13. Cleartrip, an online travel service company (www.cleartrip.com), has its mission as
‘making travel simple’. Analyze the mission statement from the viewpoint of characteristics of
mission statements.

Q14. Here are five mission statements of pharmaceutical companies in India. Which is the best
statement in your opinion and why?
a) Cipla Ltd.: ‘To provide excellent quality health care facilities at reasonable cost’.
b) Dr. Reddy’s Labs: ‘To become a global pharmaceutical company and produce quality
drugs at competitive prices’.
c) Glaxo India ltd. : ‘ To augment the parent company’s efforts to become to be a global
player based on research and development’
d) Lupin labs: ‘To develop the welfare of mankind through development of relevant
technology in chemistry related sciences’.
e) Wockhardt ltd. : ‘Pursuit of growth with excellence in the field of pharmaceuticals’.

Q15. Consider any organization of your choice. Attempt to define its business along the
dimensions of customer group, customer functions and alternative technologies. What insight
does such a definition offer to you for the strategic management of your chosen organization?

Q16. Assuming yourself to be the chief executive of an organization, relate the difficulties you
face in choosing and setting the objectives for your organization.
Unit 3: The General Environment:

I. Short Answer Type Questions:

Q1. What is the concept of environment in strategic management?

Q2. What aspects does an environmental appraisal deal with?

Q3. Mention some of the important characteristics of environment.

Q4. Distinguish between general and relevant environment.

Q5. Differentiate clearly between internal and external components of environment

Q6. What is rational behind performing a SWOT analysis? Enumerate the pitfalls of using the
SWOT analysis.

Q7. How does a particular environment affect the strategic management process?

Q8. Name some important institutional publications in India which could serve as a source of
Environmental information.

Q9. What impact do organizational resources and behavior have on the internal environment of
an organization?

Q10. What is a distinctive competence and how is it important for strategy formulation?

Q11. Why are strategies interested in determining organizational capability?

Q12. Mention the important factors that influence the capability of organization in each of the
following areas:
a) Finance
b) Marketing
c) Operations
d) Personnel
e) Information Management
f) General Management

Q13. What sources of information can be used for appraising an organization?

Q14. What is value chain analysis?

Q15. How can Industry norms and benchmarking be used be used for organizational appraisal?

Q16. Explain the manner in which the techniques of Balanced scorecard can be used to perform
an organizational appraisal?
Q17. How is Strategic Advantage profile prepared?

Q18. What is meant by organizational appraisal?

II. Detailed Answer Type of question:

Q19. Much of the business environment today is dynamic in nature. What does it mean for
organizational management and how can the latter go about scanning the environment ?

Q20. What are the different criteria for classifying organizational elements into strengths and
weaknesses ? Illustrate with suitable example. Are different criteria exclusive?

Q21. What is meant by ‘competitive advantage’? How can a company build competitive
advantage? Explain giving suitable examples.

Q22. Enumerate the different components of environment that affect management of an


organization

Q23. Technological factors represent major opportunities and threats, which must be taken into
account while formulating strategies. Discuss. How a firm build a sustainable technology can
based competitive advantage?

Q24. Briefly explain the impact of economic environment on business. Give suitable examples.

Q25. Analyze the trends and extrapolate their implication for strategy formulation within
companies:
a) Growing size of middle class in India
b) Rising population of aged people
c) Crisis in the higher education sector
d) Spread of Internet culture

Q26. A small scale Industrialist recently attended a seminar on strategic management. He is quite
enthusiastic but does not understand exactly how to use the SWOT analysis for his company. Act
as a consultant and advice him on how to use the SWOT analysis.

Q27. Choose any industry and outline the factors that could either create opportunities or threats
for companies within that industry in the near future. Is it possible that the same factor could be
an opportunity for one company and threat for another? How?

Q28. Considering any organization of your choice, define its relevant environment by dividing it
into convenient and capable of being analyzed sectors. What major factors and influences are
currently operating in each of the sectors of relevant environment of your chosen organization?
Q29. Which sectors of environment are currently relatively more important, in general, in Indian
context? What sectors are likely to gain importance in near future?

Q30. What different types of factors affect the process of Environmental Appraisal?

Q31. Select any organization of your own choice. Identify the high priority environmental
factors in relevant environment. Use this information to prepare a summary of ETOP for the
organization.

Q32. Explain different techniques that can be used by strategist to appraise organization?

Q33. Explain the different aspects of the internal environment, emphasizing the nature of their
impact on the capability of an organization and ultimately on its strategic advantage.

Q34. Considering different functional areas in any organization of your choice, determine the
important factors within each functional area which influence the capability of that organization
to implement its strategies.

Q35. Consider any organization in an industry of your choice. Prepare an organizational


capability profile and summarize the results in the form of a strategic advantage profile, clearly
indicating the nature of impact of the different capability factors.
Unit 4: Corporate Level Strategies

I. Short Answer Type Questions:

Q1. What do corporate strategies deal with?

Q2. What are various corporate level strategies?

Q3. Specify the conditions under which each of this corporate level strategy is adopted:
a) Stability
b) Expansion
c) Retrenchment
d) Combination

Q4. Provide reasons as to why this corporate level strategy is adopted:


a) Stability
b) Expansion
c) Retrenchment
d) Combination

Q5. Explain briefly the 3 types of concentration strategies.

Q6. Under what condition are firms motivated to adopt integration strategies?
Q7. How can a firm use Horizontal integration to expand in the same industry?

Q8. What is the difference between backward and forward integration?

Q9. Why is a concentric or related diversification strategy adopted?

Q10. Why is conglomerate or unrelated diversification strategy adopted?

Q11. How do firms decide which International markets to enter and when to enter?

Q12. Why have mergers and acquisitions strategies gained popularity in India?

Q13. Why do Buyer firms wish to merge? Why do seller firms wish to merge?

Q14. Under what conditions are joint ventures created?

Q15. Why are Strategic Alliances ‘Strategic’

Q16. What are the reasons of for using strategic alliances?

Q17. Explain the term Digitalisation.


Q18. What can be the likely impact of digitalisation on the business definition of an
organization?

Q19. Does a no-change stability strategy involve doing nothing? Why?

Q20. List the conditions that indicate a turnaround is needed.

Q21. List the reasons for adopting divestment strategies.

Q22. Explain the terms ‘Restructuring’ and ‘Liquidation’

II. Detailed Answer Type of question:

Q23. The record of M&As world over has not been impressive. What can be the reasons of
failure of M&A discuss?

Q24. Differentiate between Strategic alliance and joint venture. Give examples.

Q25. Short notes on following


a) BCG matrix
b) balanced scorecard
c) Joint ventures
d) Competitive strategies

Q26. Explain the concept of corporate strategy. What kinds of people in a company are
responsible for strategic decisions and their implementation? Is strategic planning the same as
strategic management ?

Q27. Distinguish between related and Unrelated diversifications. Examine the merits and
demerits of each. What kind of trend, in this context, has been dissemble over the recent past?

Q28. Differentiate between Concentric and Conglomerate diversifications, citing examples for
each.

Q29. Briefly explain the grand strategies adopted by Airtel in a highly competitive telecom
sector

Q30. Briefly explains the factors which contribute towards the success of a strategic alliance.
Illustrate with a recent example of strategic alliance.

Q31. What is value chain analysis? Explain.

Q32. Critically evaluate the pros and cons of corporate growth through mergers and
acquisitions with special reference to any two Indian co’s?
Q33. What do you understand by ‘Mergers and Acquisition’? What are various types of
mergers? What are the issues in implementing ‘merger strategy’ successfully? Cite latest Indian
and global examples relevant to merger strategy.

Q34. Identify and explain the different types of strategies under stability, expansion,
retrenchment and combination corporate level strategies. Quote examples to explain each of
these strategies.

Q35. Discuss concentration strategy and describe and describe its advantages and limitations.

Q36. Discuss the benefits and risks in adopting a horizontal integration strategy.

Q37. What are the benefits in becoming a fully integrated firm? What are the risks involved?

Q38. Discuss the statement “Related diversification is the best strategy as it offers the best of
both the worlds”

Q39. Describe the reasons why related and unrelated diversification is adopted? What are the
risks involved in diversification?

Q40. Discuss whether Diversification or Concentration is better for Indian Companies at present.

Q41. Describe the four types of International strategies.

Q42. Discuss the advantages and disadvantages of expansion through Internationalization.

Q43. Suggest the strategies that Indian companies can use to compete global companies within
India.

Q44. Discuss the different types of mergers and acquisition strategies.

Q45. Discuss the strategic, financial, managerial an legal issues involved in mergers in India.

Q46. Discuss the conditions under which joint ventures are created, what strategic issues are
involved and the benefits and drawbacks in joint ventures.

Q47. Discuss the 4 types of Strategic Alliances. What are the pitfalls in strategic alliances how
they can be avoided?

Q48. Explain the manner in which digitalisation can transform the value chain and value system.

Q49. Explain the 3 types of Stability strategies.

Q50. At what point does an organization decide it needs to adopt a turnaround strategy? What
actions are required to adopt a turnaround strategy?
Q51. The CEO of a textile mill is convinced that his loss making company can be turned around.
Suggest an action plan for a turnaround to the CEO.

Q52. Under what conditions can organization decide to adopt divestment strategies? What
approaches can be adopted?

Q53. Some organizations are forced to adopt liquidation strategies, howsoever undesirable it may
be to do so? Explain the reasons of liquidation in Indian context.

Q54. Discuss how combination strategies can be adopted.


Unit 5: Business Level Strategies

I. Short Answer Type Questions:

Q1. Explain what is meant by business strategy.

Q2. How is business strategy related to corporate level strategy?

Q3. What is the importance of Business Strategies?

Q4. Explain the terms – Competitive advantage and Competitive scope.

Q5. On which competencies does an organization’s ability to adopt low cost approach depend?
On which competencies does an organization’s ability to adopt differentiation approach depend?

Q6. What does broad target and narrow target mean in the context of competitive scope?

Q7. Explain following Business Strategies:


a) Cost Leadership
b) Differentiation
c) Focus

Q8. Under which conditions are these business used:


a) Cost Leadership
b) Differentiation
c) Focus

Q9. What is the danger of being a company having neither cost leadership nor differentiation?

Q10. Is it possible to have cost leadership and differentiation simultaneously? Justify.

Q11. How can digitalisation help an organization attain cost leadership?

II. Detailed Answer Type of question:

Q12. What are the five generic strategic suggested by Michael Porter? Explain with examples.

Q13. How do you use Porters five force model in analyzing car manufacturing industry?

Q14. Mention any three generic strategies?

Q15. what do you understand by tangible and intangible components of differentiation? Explain.
Give 5 examples of each tangible and intangible component and give reasons for their
classification
Q16. The cost leadership strategy at times enables the firm to defend itself against each of the
five competitive forces. Explain.

Q17. Discuss the importance of differentiation strategy in present competitive environment.


Explain taking into consideration its advantages and disadvantages.

Q18. Discuss Michael Porter’s approach of defining generic and competitive (or business)
strategies.

Q19. For each of these business strategies, how they are used, under which conditions are they
used and the associated risks and benefits:
a) Cost Leadership
b) Differentiation
c) Focus

Q20. What is meant by first mover and late mover in an Industry? What are the advantages and
disadvantages in being a first mover and late mover in an Industry?

Q21. What is meant by Market location tactics of Business strategy? Explain following Market
location tactics of Business strategy:
a) Market Leadership
b) Market challenger
c) Market follower
d) Market Nicher

Q22. “Good timing is crucial for a successful business strategy” Comment.

Q23. Identify the features of Business strategy that would be appropriate under the following
Industry conditions:
a) Introduction
b) Growth
c) Maturity
d) Decline
Unit 5: Strategic analysis and Choice:

I. Short Answer Type Questions:

Q1. What does the process of strategic choice essentially deal with?

Q2. Explain the two dimensions used to build a GE nine cell Matrix.

Q3. In general, regarding portfolio analysis, what are its advantages and drawbacks?

Q4. How can the concept of Experience curve help in exercising strategic choice at business
level?

Q5. What is purpose of doing a competitor analysis?

Q6. What is meant by the term ‘Strategic Group’?

II. Detailed Answer Type of question:

Q7.Why is competitive analysis needed for as business enterprise ? Explain how porter’s
framework to analyze industry structure can be helpful in competitive analysis. Explain the
relevance of the model

Q8. Explain BCG Matrix highlighting its merits and demerits. Can you draw its interrelationship
with PLC

Q9. What factors cause Experience Curve Effect? Explain experience curve in detail.

Q10. Explain how portfolio matrices are helpful in strategic analysis. 1-low does the GE
Planning Grid differ from BGG matrix?
Q11. Explain how portfolio matrices are helpful in strategic analysis. 1-low does the GE
Planning Grid differ from BGG matrix?

Q12. Critically examine the efficiency of BCG matrix as a tool of strategy management

Q13. Describe the BCC (Boston Consulting Group) and GE (General Electric)
Approaches of portfolio analysis, How can this concept be used to develop
strategies for international markets?

Q14. In what ways do the BOG Matrix GE Planning Grid, and Shell’s Directional policy Matrix
differ from each other / Explain how such portfolio matrices are helpful in strategy formulation.

Q15. Describe the manner in which the process of strategic choice works.
Q16. A large business group wishes to identify strategies for various businesses in its portfolio.
How can it go about doing this?

Q17. Describe the GE nine cell matrix technique used for analyzing corporate portfolio.

Q18. Critically comment on the use of corporate portfolio analysis for examining the objective
factors involved in existing strategic choice.

Q19. Explain the following:


a. Hofer’s Product/Market Evolution Matrix
b. Directional Policy Matrix
Q20. What do you mean by competitor analysis? How and why is it done?

Q21. Discuss in detail Strategic group analysis.

Q22. Discuss in detail Porter’s Five Forces Model of Industry Attractiveness. What is its
significance?
Unit 7: Strategy Implementation:

Q1. Explain the following:


(a) Types of resources
(b) Strategic importance of resources

Q2. Would you recommend a divisional structure for a medium sized bank? Why? Explain with
example.

Q3. “Structure follows strategy” Critically examine the statement

Q4. Explain the role of leadership in strategic management

Q5. Corporate culture plays an important role in the success of an organization. Explain giving
suitable examples.
Q6. (a)What is SBU?
(b). Explain the relation between business strategy and organization structure?

Q7. It is often said that strategy; implementation is much more difficult land challenging than the
strategy formulation. Why is it so? What would you suggest to a company for effective
implementation of strategies?

Q8. Leadership style, corporate culture, values and ethics play a crucial role in effective
implementation of a strategy. Comment.

Q9. 'The different market structures have different viewpoints with respect to competition.'
Explain the statement with respect to the market structures and sustainable competitive
advantage

Q10. "Strategic management without effective implementation has no meaning." Discuss. How
would you ensure successful implementation of strategies?

Q11. How does formulation affect the implementation of strategies? Why formulated strategies
do not get implemented as intended?

Q12. How does the pyramid of strategy activation operate?

Q13. What role does project management play in strategy implementation?

Q14. What does resource allocation deal with?

Q15. Describe the characteristics of strategy implementation to highlight its essential nature.

Q16. Describe the major barriers to strategy implementation and discuss the means available to
overcome such barriers.
Q17. Do you agree with the statement: ‘Strategy implementation is essentially management of
change’?

Q18. Describe the manner in which an organization can align its resource allocation with its
strategies.

Q19. (a) Distinguish between Vertical and horizontal structures.


(b) Differentiate between tall and flat structures

Q20. What are the distinctive advantages and disadvantages of following:


a) Functional structure
b) Divisional Structure
c) SBU Structure
d) Matrix Structure
e) Network Structure

Q21.Illustrate and explain the organizational structure of a multiproduct company. Give suitable
examples

Q22. Mention the steps involved in organizational design.

Q23. How do structural changes differ from behavioral changes?

Q24. Point out characteristics of organization structure that could suit the requirements of a
differentiation strategy.

Q25. What are the features of organization structure used to implement diversification strategies?

Q26. Describe the manner in which structural mechanism operate in the organization.

Q27. Discuss the different types of Structures? Mention the advantages and disadvantages of
each type of structure discussed from the viewpoint of strategy implementation

Q28. Write a descriptive note on the emerging forms of organizational structures.

Q29. Describe the characteristics of structures for different type of corporate strategies.

Q30. A Non Resident Indian wishes to apply in the country and plans to set up an Industrial unit
in a high growth, high technology industry. How should he go about designing the organizational
structure for his company? After a few years, he plans to diversify in unrelated areas. Now how
should he initiate organizational changes so that the company structure is in line with strategic
changes?
Q31. How can a strategist undertake:
a) A definition of corporate culture
b) Assessment of corporate culture
c) Creation of a strategy- supportive culture

Q32. The top manager in a professionally managed company was overheard as sying:’I believe
in being responsible only to my boss and to the board of directors. Social responsibility is their
responsibility, not mine’. Do you agree? Why?

Q33. What do functional plans and policies essentially deal with? What is a need for it and how
does the development of functional plans and policies take place?

Q34. What is operational implementation? What is operational effectiveness?

Q35. What factors do marketing plans and policies deal with? Why are they important for
strategy implementation?

Q36. What are the concerns of operational plans and policies? Why are these plans and policies
significant for strategy implementation?

Q37.What are the concerns of personnel plans and policies? Why are these plans and policies
significant for strategy implementation?

Q38. Write a descriptive note on the nature, need and development of functional plans and
policies.

Q39. Describe the major concerns of financial, marketing, operations and personnelplans and
policies. Point out the significance of each functional area’s plans and policies for strategy
implementation.

Q40. Explain:
i. Behavioral Inplementation
ii. Structural Implementation
iii. Functional Implementation
Unit 8: Strategic Evaluation & Control:

Q1. Explain any 3 methods/techniques used in strategic control systems, giving examples.

Q2. Discuss in detail:


i. Strategic control
ii. Barriers in strategic evaluation

Q3. Explain the need of strategy control. How return on investment can be used of strategic
control?

Q4.Why is Strategic Evaluation and Control important to an organization?

Q5. Highlight the role that the board of directors and the CEOs play in strategic Evaluation.

Q6. Differentiate between strategic control and operational control.

Q7. What basic approach can be adopted for setting standards?

Q8. “Companies should evaluate performance on the basis of a combination of qualitative and
quantitative criteria” Why is it so?

Q9. What issues are important in measuring performance?

Q10. In what different forms may deviation between actual performance and standard occur?
How can they be checked?

Q11. Write a short explanatory note on evaluation techniques for strategic control.

Q12. Write a descriptive note on the nature and importance of strategic evaluation.

Q13. Which individuals and groups participate in process of evaluation, what difficulties do they
face and how they overcome them?

Q14. Describe the different elements that constitute the evaluation process for operational
control.

Q15. Describe the application of techniques for strategic control.

Q16. How can the conventional financial accounting system be made to serve the purpose of
operational control? Discuss.

Q17. Discuss different types of techniques used for Operational Control.


CASES

Case 1: Peekay Steels

Case 2: Mysore Foods Limited

Case 3: L&T

Case 4: Associated Business Corporation

Case 5: Benetton

Case 6: The Downsizing Decision


CASE STUDY

Peekay Steels

Pravin Kumar flicked the TV off as he saw, for the nth time that night, the second tower of
the World Trade Centre in New York come crashing down. "What kind of people would plot
so meticulously to take thousands of innocent lives ?" he wondered, as a chill went down his
spine. "lt hasn't been a good day for me and lots of others in the US," Kumar muttered,
switching on a lamp next to his king-sized chair, and pulling out a file from his expensive
Piene Cardin portfofio.

A few hours earlier, the 48-year-old CEO of Peekay Steels, which had four other subsidiaries
dealing in aluminium, power, oil exploration, and telecom, had emerged from a gruelling
four-hour session with Dalal Street analysts. It seemed the analysts thought there was
nothing right with his diversified group. The hundreds of crores of rupees that the flagship
had mised to fund forays into new growth sectors were proving be a mill round Peekay's
neck. The bottomline was bleeding not because the steelmaker was inefficient; rather, the
culprit was the staggering interest Peekay had to pay month after month.

Kumar flipped a few pages of his file and got to a section titled 'Competitive Analysis'. He
put a finger on the column that read production cost and traced it down to the row where
Peekay's prices were given : $260 per tonne. Moving his gaze further down, he looked at
the global benchmark , $280 per tonne. Feeling bitter, he picked up a pen and circled the
number under the financial charges column. "We are paying $81 as interest charge for
every tonne of steel that we make," he said it aloud for the words to sink in. "So, by the
time my steel leaves the factory it cosls $341 per tonne."

In another few hours, Kumar knew he would be seated in the back of his black Mercedes
Benz along with three of his key elecutives, on a four-hour drive outside the city to Peekay's
steel plant. But before hitting the sack for a few winks, Kumar decided to call Anirudh Desai,
Peekay's director of finance. Desai was watching CNN too when Kumar called him on his
mobile. "Do you think our US exports are going to be affected if there's a war ?" Kumar
asked Desai wiihout bothering to say hello or expressing his shock over the attacks.

"It could go either way," replied Desai. "lf there's a war, the US may step up imports. But if
the business sentiment worsens, purchases may actually fall., "Let's talk about it later
today," said Kumar. "But, Ani, the reason I called was to find out something specific. Can
we lower our interest costs without losing control of any of our subsidiaries? "

"l think so," replied Desai. "But given the complicated shareholding pattern within the
group, individual spin-offs might be tricky. The joint venture route is an option we could
look for all our non-steel businesses. Even if we were to forfeit the controlling stake, we
could still retain a major holding in each subsidiary. I have done some scenario building, but
I don't think I can take you through that over the phone. May be I could do that on our way
to the plant tomorrow ?"

"l guess you could," said Kumar, wishing Desai good night, and putting the cordless phone
back into its cradle.

Kumar had slept for all of an hour when the electronic clock on the table by his bedside
beeped. By quarter to seven, Desai and two other senior execs were at Kumar's house,
waiting for Kumar to join them for a quick breakfast before setting out on the ride. "What's
the update on the attacks ?" Kumar asked no one in particular, but Desai replied. "No news
yet on how many dead, but it seems the fatality could run into a few thousands." Over the
next 15 minutes, the terrorist attack dominated the conversation at the breakfast table.

Getting into the car, Kumar switched to the business at hand. "We simply have to get our
financial costs down," he said, turning to Desai. "Yes, but the question is how ?" countered
Desai. "In the past, we have used the flagship as an investment vehicle for setting up
projects in power, oil, aluminium, and telecom. Not only are these businesses capital
intensive, but they have been hit by time and cost over-runs. That has sent our interest
costs into a spiral."

''But aren't we trying to swap expensive debt with cheaper funds from abroad ? "
questioned Kumar.

"Yes, but this may not be the best of time to do that," said Desai. "Besides, let's face it, our
track record at repaying loans isn't exactly blemishess. More than once we've had our loans
rescheduled."

"But can't we convert our inter corporate borrowings into convertible debentures ?" said
Kumar.

"l'm noi confident of this happening," Venkatesh Krishnan, a nominee on Peekay's board,
butted in. "For one, your stock price has taken a severe beating on Dalal Street, and
investors are aware of the financial problems you are facing. Also, where is the market for
IPOs ?"

"So, what is the solution ? Should we, like the analysts want, spin off our low projects into
companies and offload the borrowings from our boots ?" Kumar asked. "This would sharpen
Peekay's business focus What do our institutional shareholders think about this ?" continued
Kumar, looking to Krishnan.

Mulling Over The Break-Up

Why it Helps...

Sharpens business focus to just steel-making


Rids the balance-sheet of expensive borrowings
Helps leverage cost leadership in steel manufacture
Raises investor interest and, hence, shareholder value

...And Why it Doesn't

Lowers the promoters stake precariously


Throws the company open to takeovers
Reduces asset strength in the balance-sheet
Limits growth opportunities for individual managers

"The consortium does not favour a break-up," the nominee-director replied. All your lenders
see merit in a large balance sheet that comes with a diversified portfolio. But, frankly, my
own view is different. True, your operational efficiency in steel is comparable to the best in
the world. But the profitability - and indeed the survival - of the group is at stake because of
its conglomerate nature. And the only option is for you to stick to what you are good at and
divest areas that are marginal to your core business of steel."

"But a break-up has its flipside," argued Kumar. "A single business company could attract
the attention of predators with an eye on synergy and cost savings. Our power unit, for
instance, which has a capacity to produce 1,000 MW of power might interest a larger power
unit. A pure play is more likely to invite a take-over bid which may be good for shareholders
- since such acquisitions occur at a substantial premium to the market price - but bad for
the incumbent management, because it reflects poorly on their past performance."

"lf we break up," Desai added, "the group would shrink in size. The growth opportunities for
individual managers would be reduced. But the overriding rationale against a break-up is
that we need balance in our portfolio. We are good at steel, but the future lies in emerging
areas like telecom. So, we should be in telecom".

"And let us not forget," pointed out Kumar, "that our shareholders invested in us because
we are a diversified company. I don't think we should be concerned about focus because
that is not the reason why investors came to us in the first place." As the sprawling steel
plant loomed into sight, Kumar knew that answers would be hard to find. Just the same, he
had to find them quickly.

Questlons :

(a) What strategic alternatives, you think, are available to Peekay Steel and which
alternative would you recommend and why ?

(b) Is it possible for Peekay to lower interest costs without losing control of any of its
subsidiaries? If yes, how ? lf no, why ?
MYSORE FOODS LIMITED

Mysore Foods Limited produces and distributes packaged food products such as cereals,
biscuits, spices, jams and jellies, syrups, etc. The company has a national market and also
exports small quantities to neighbouring countries. It conducts a large national advertising
campaign. It has 75 plants located all over the country and markets 70 different products,
each under its own trade mark. Though its products are all food products, they are not
otherwise closely related. They vary from long margin specialities with comparatively small
volume to large-volume items with smal profit margins. Different raw materials and other
articles are used in their processing and packing. All products are, however, sold through
the same channel. i.e., retail and provision stores. Gross sales are Rs. 25 crore and total
assets exceed Rs. 12 crore.

The management of Mysore Foods Limited is centralised. The Chairman of the Board, the
President and four Vice-Presidents who are responsible for sales, production, purchasing
and law make up the topmost executive level of the company and operate as a committee
on all general policy matters.

Sales, advertising and sales promotion come under the Sales Vice-President. All plant
operations as well as the research and engineering department report to the Production
Vice-President. Purchasing is the responsibility of its Vice-President who also governs traffic.
Public relations, law and corporate functions fall under the General Counsel. Financial
responsibilities are handled by the President and employee relations are covered by each
Vice-President in his own area of responsibility.

The company was set up by combining several food products organisations and it has
acquired others since One of the theories of the organisers was that there would be great
advantage in wholesale distribution if one salesman could cover an entire line on one call as
against a number of salesmen, each calling to sell a single line. Saving in time alone would
be of great value to the distributor. This principle has been retained and has proved
successful as the company has grown. One sales organisation handles all the products. Each
product is given specific time and attention by the sales organisation in accordance with its
demands.

The head of the field sales organisation reports to the Vice-President. The Advertising
Manager and the Sales Promotion Manager take care of advertising and sales promotion for
the entire line but each product has its own advertising campaign and appropriation. The
Sales Promotion Manager is in-charge of the missionary salesman who contacts retailers.

To avoid neglect or error, single product or a group of products are assigned to one of the
20 Product Managers. Each Product Manager is responsible for seeing that his product
receives due attention from the sales organisation, the production department, and the
advertising and promotion departments. He specialises in the pricing and sales appeal
questions of his product. He reports, however, to the Sales Vice President, who has the
overall control. The Sales Vice-President can curtail any efforts of the Product Managers if
he is using his sales force for special efforts on some other product or products. There is no
institutional advertising. All advertising is coordinated and placed by the Advertising
Manager while the final authority rests with Sales Vice-President.

Each plant is operated by a superintendent who is in-charge of wages, maintenance, cost,


output, quality, hiring, inspection and other normal plant operation responsibilities.
Superintendents report to eight Regional Production Managers who are responsible to the
Production Vice-President. The volume of production in each plant is scheduled by the
production control group reporting to the Operating Vice President. Final schedules are set
after consulting the Sales Vice-President.

The business has more than doubled in the last ten years and profits, both gross and net,
have increased. The number of plants has also more than doubled. Purchases have
increased proportionately. New taxes and new reports to the government have added to the
complexity. The management feels that certain problems are potentially dangerous and
should be solved before they become serious.

There have been periods in which a product has got into difficulty because of loss of favour
with the public, bad management or even neglect. Attention of the Sales Vice-President to
the problems of some products has caused him, at times, to fail to recognise difficulties in
other products even though the Product Manager of such products had recognised them and
brought them to his attention. The burden on the present officers is becoming too heavy to
ensure proper attention to all their responsibilities. Employment of assistants erodes the
personal touch of the top group that is necessary for sucessful management.

Opportunities for increasing product-lines and expanding the business are being lost
because of lack of executives' time to study them or to manage new products. In any
business where specialities are sold under trade marks and brands are the major business
of a company, it is necessary for the company to continually bring out new products and to
study old ones to determine the point of no return regarding promotion and advertising
expenses.

Once the top executives group has approved the idea of a new product, it is put under one
of the Vice Presldents. He develops an organisation and brings it along. At first, the
advertising appropriation for a new product is not the responsibility of the Sales Vice-
President but of the Developing Vice President. Eventually, if the product proves to be
successful it is turned over to the regular line of organisation. With new products and
growth in the old ones, the weight, complexing and number of decisions that have to be
taken by the very few men at the top, mean a heavier burden for them.

The management feels that in addition to the lost opportunities, market poiential and the
need for development of present products are not being fully recognised. The business may
have grown too big for the form of management. Executives require more responsible
attention for each product. At the same time they wish to retain the advantages of central
management in purchasing, traffic, institutional reputation and minimum sales approach
and to maintain the high-calibre advice and experience now present in law, advertising,
accounting and public relations.

Questions :

(i) How far is the existing organisational structure effective in the changed conditions of the
company ?
(ii) Indicate : (a) How the desired product responsibility can be achieved ?, (b) Any changes
in line authority, and (c) The use, if any, of staff. functional authority or committees.

(iii) What policy and organisational structure changes do You recommend, and why ?

ASIAN PATNTS (INDIA) LIMITED


The siege is over, and the time has come for the leader to sally forth into greener pastures.
Even as the paints industry is emerging from the shadow of recession, the Rs. 560 crore
Asian Paints (India) Limited (APIL), is mixing new shades to emerge with winning colours.

Says managing director Atul Choksey : "With proper planning and a comprehensive
approach to issues, we intend to keep pace with the growth of the industry".

APIL is actually targeting a growth rate that is higher than the 9 to 10 per cent that the
industry has been averaging recently. In the year to March 1994, the company notched up a
gross sales turnover of Rs. 559.96 crore (net sales : Rs. 401.96 crore), a growth of 10.8 per
cent over the previous year. Net profit also registered a healthy growth of 31.5 percent to
Rs. 25.61 crore. The results have tidied up the company's balance sheet, which had begun
to look a bit ragged.

APIL's approach is multipronged : expansion of its product range and introduction of value
added, niche products in the industrial paints area; line extensionos of existing products to
target lower income market segments both in rural and urban areas; expansions of
production capacity and continuous modernisation to keep pace with the growing demand;
and diversification in to the unrelated but synergistic area of ceramics.

All these strategies are part of what the company's top management terms "harnessing our
full potential", or the challenges that lie ahead. They are also aimed at retaining leadership
in a recession-free industry over the next few years.

APIL is the leader in the entire industry, comprising both organised as well as unorganised
players, with a market share of about 19 per cent. The company is confident of the fact that
its share of industry sales is twice as much as that of its nearest competitor, Goodlass
Nerolac. APIL also dwarfs the others in size, its net sales nearly twice that of Goodlass
Nerolac, well over twice that of third-placed Berger Paints, and nearly four times that of
fourth-placed Jenson and Nicholson (see Exhibit-I).

It is only wary of the expanding unorganised sector which seems to be eating up the share
of firms in the organised sector. Nevertheless, given the multiplicity of shades it is capable
of, APIL reckons it can look forward to a compound growth in its market share.

Exhibit I

How They Compare

(Figures in Rs. crore for 1993 - 94)

Net Profit/Sales
Company Net sale Net Profit
(%)
Asian Paints 401.96 25.62 6.36
Goodlass Nerolac 205.88 8.05 3.91
Berger Paints 174.95 3.24 1.85
Jenson & Nicholson 110.33 1.97 1.72
*
Garware Paints 106 2.57 2.33
**
Shalimar Paints 102.59 1.60 1.56
Bombay Paints** 37.81 0.03 0.08

* 18 months to September 1993


**12 months to March 1993

But though the good times are back, the company is not content to sit back and relax. The
last three years, during which the paints industry went through a trough, saw APIL taking a
beating (though it remained the market leader all through), with its paints division showing
a negative growth of 3.5 per cent in terms of volume.

With the rupee having been progressively devalued during the years 1989-92, and with high
rates of inflation also rampant over this period, excise duties and other levies too exerted
upward pressure on paint prices, and this served to depress demand. An additional
complication, reinforcing this trend, was created by the difference in the selling prices of
paints made by the organised and unorganised sectors.

The first signs of recovery came with the Union Budget of 1993 which cut exercise and
custom duties, Excise duties were reduced to 30 per cent and customs duties were cut from
85 to 65 per cent- This provided a respite to the industry by facilitating a rolling back of
prices, and it began to grow at about 2 per cent a year. In spite of intermittent social
disturbances in 1993, the industry gradually responded and so did the demand for its
products. Simultaneously, the automobile industry, which is a major user industry for
paints, also began to emerge from the two-year recession.

A gradual revival of the industry brought along a new threat for the seven major players
from the organised segment. Uneven prices during the recession years had the unorganised
competitors grabbing at a significant chunk of the market.

Budget concessions brought relief to the organised sector, but its constituents also found
themselves having to compete with an unorganised sector that had grown to become a
significant threat, even as the prospect of competition from imports began to worry the
organised sector.

APIL'S largest new venture will be a diversification into ceramics, though the project is still
at the planning stage. The decision to enter a new field is fuelled by the management's
perception that the ceramics industry has tremendous potential for growth.

Even though the company has no experience in the production and technology aspects of
ceramic tiles manufacture, it has opted for ceramics because the marketing will involve
utilisation of its existing distribution network for paints. The rationale is that since paints
and ceramics are both building materials, APIL'S existing customer base (which can serve as
a ready-made market) will be targeted for its ceramics products.

"With our extensive distriution network and stocking points, we can reach even the remote
markets. So marketing ceramics is not likely to be a problem," says Choksey. The plan is to
penetrate ihe market as quickly as possible, and grab a substantial chunk of industry sales.
The company will initially start with ceramic tiles, but these is no plan to restrict itself to any
specific market segment.
The project involves a Rs. 70 crore initial investment in the first phase, which involves
installation of a capacity of 23,000 tonnes per year. This will be followed in a couple of years
by the second phase, which will see an increase in the capacity to 50,000 tonnes.

The new project is scheduled for completion by the end of 1996, and it will, in all
probability, be located in Gujarat. This is because any location in that state will have the
advantage of proximity to the raw material supplying areas in Gujarat and Rajasthan. APIL
is currently negotiating with foreign collaborators for the technology, which will have to be
imported. The technology will also have to be adapted to Indian conditions.

While putting a few eggs in a new basket to ensure that fluctuating fortunes in the paint
industry do not have the effect of hurting the company's bottomline yet again, APIL is not
ignoring its bread-and-butter buslness - that of paints. Over the past year, a variety of new
brands have been added to its product range. The company has made an attempt to extend
its marketing and distribution beyond the country's major towns, to which its activities were
hitherto confined.

'Utsav', an economically priced brand, was launched last year and is targeted at small
households with limited budgets. This project concentrated mainly on consumers in Tamil
Nadu, Maharashtra and Gujarat, thus widening the accessibility of its products to all
consumer levels.

General Manager Mr. P.M. Murthy says that "the degree of penetration concentrates on how
economical it is to do business." He says that though this new product has performed
favourably, it has not contributed much to the profits of the year. "Of course, it promises to
be a very good and attractive segment for future business," he adds, when asked about its
future growth and profit potential.

Other new products also include powder paints to be used for both auto and non-auto
appliances. There are other products like wood finishings (Touch-wood) that takes care of
refinishings on furniture.

To strengthen its industrial product base, APIL has collaborated with PPG industries, an
American firm, and thus enjoys the use of cathode electro deposition primer (CED). The
company has concluded a tie-up with Nippon Paints for original equipment paint products
and with Sigma Coatings of Holland for corrosion coatings. The technology that has been
brought home as a result of these ventures is modified at the company's plant at Bhandup,
so as to make it suitable for the Indian climate.

With a better product range on offer now, APIL is just waiting for a greater awareness of
industrial paint applications to develop in the Indian market; the presumption is that the
demand for this particular product is still latent. For its decorative paints, the company has
gone in for differential pricing to encourage all segments of the market.

The company is intent on a continuous modernisation and upgradation of its technology and
its assets, so as to keep in tune with the changing requirements of the marketplace. In
addition, it is also working on plans to increase production capacity owr the next few years.

Besides the activity on the domestic front, APIL is increasing its overseas presence as well.
One of the few indian companies with overseas subsidiaries in the South-Pacific region, APIL
is now setting up a new subsidiary in Australia. Its existing ventures abroad too have
reported healthy results : Asian Paints (South Pacific) has registered a 12 per cent growth,
Asian Paints (Tonga) grew at a rate of five per cent, Asian Paints (Solomon Islands) at over
10 per cent and Asian Paints (Nepal) at over 18 per cent.

With a new subsidiary at Vanuatu (New Hebrides) and a joint venture unit in Townsville
(Australia), APIL has established at least a foothold in the international markets.

When asked about the threats facing the company, Choksey chuckles and says he prefers to
call them challenges. "We need to meet the demands of this growing organisation- of our
workforce, our technology and our assets. A major point to be tackled is to be able to meet
the growing demand for our product and to create a greater awareness for our newer
products," he says.

Over the first few months of the current financial year, sales volume has been growing at a
rate of 14 per cent, well above the industry average. With the recession firmly behind it and
government levies no longer inflating its prices, the paint industry seems to be on an
uptrend. But the APIL management has its work cut out for it : it will not merely have to
gear up to meet the burgeoning demand, but will also have to work hard at retaining and
then increasing its market share.

Questions :

(a) What corporate goal has the compary adopted for the next few years and with what
strategies does the company propose to realise the above goal ?

(b) What threats is the company facing or/and might face in future ? What has it done
and/or what could it further do to safeguard itself from threat(s)?

(c) Evaluate the new strategies of Asian Paints (India) Limited. particularly its proposed
foray into ceramics.

(d) What action plans has the company proposed to strengthen its product base ?

(e) Classify all the strategic plans or proposed strategic actions of the company for
achieving growth against suitable headings, e.g., Diversification, Joint Ventures, etc.,
Case: L&T
We are shivering in our paints, as we grope against new competition from firms from USA and
Korea. - A very senior L&T executive to the author at a Management Development Programme
at IIM (Ahmedabad) in 1993 The competition we have faced till now is nothing is compared to
what lies in store for us. Till now, the period (post-liberalisotion) was one of learning and
assessment for the big global competitors
- Sudhakar Divokar Kulkarni, CEO. to the case author in April 1997.
In 1997 Larsen and Tubro (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 20 per cent. This
happened for the fourth consecutive year despite acute liquidity crisis in the market, political
instability, and uncertainty about execution of power projects of foreign companies (e.g. Enron),
and so no. 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.
Simultaneously, it was setting new challenges for the academics in defining core competencies
and core capabilities. An independent survey named L&T to be one of the best managed
companies in Asia and another by Business Toda, showed that the company was one of the most
transparent and a leader on the issue of corporate governance. During 1995-96 and 1996-97, the
company achieved an incredible growth in sales of nearly Rs. 1,000 crore per annum over the
previous years, crossing the landmark turnover of Rs. 5,000 crore in the process.

The Evolution
L & T was set up in 1938 as a partnership trading firm by two Danish engineers, Henning Holck
Larsen and Soren kristian Toubro, who had quit their jobs. In 1946, it became a private limited
company and by 1950 reached the status of a public limited company. Table 1 gives the
evolutionary picture in brief. 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, worksheets,
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.
Table 1 L&T Business History: The Milestones

• 1938 - Incorporation as a partnership firm


• 1946 - Incorporation as a Private Ltd Co.
• I950 - L&T goes public Powai Works set up
• 1961 - Audco India incorporated for manufacturing valves
• 1962 - Retirement of Soren Toubro; EWAC Ltd. set up for manufacture of welding alloys
• 1963 - TENGL founded to manufacture crawler undercarriage parts for caterpillars
• 1969 - Agency business abolished, formation of L&T Bottle Closure division
• 1971 - L&T McNeil set up for manufacturing Presses for tyre industry
• 1974 - Management Organization Structure and Management Planning and Control
System introduced
• L&T Bangalore Works commences production of hydraulic excavators
• 1978 - Larsen retires. L&T Faridabad commences production of switchgear
• 1982 - ECC merged with L&T; L&T enters shipping business with two ships
• 1983 – L&T enters cement manufacturing with Awarpur plant commencing production
• 1987 – L&T enters computer hardware with floppy discs and printers; L&T Gould for
electronic test and measured instruments
• 1988 – Cement capacity enhanced to 2.2 m tons per annum
• 1989 – 90 L&T under DH Ambani (as chairman)
• 1990 - 93 - Repeated takeover attempts by RIL
• 1993 - 95 Series of strategic alliances and tie-ups resulting in formation of L&T-Niro.
L&T-Chiyoda, L&T Sargent & Lund9, L&T Finance, and so on.

The Takeover Attempt


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. 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 maximising customer satisfaction.
In 1994, Mr. S.D. Kulkarni took over as the CEO of L&T and confidently promised that the
company would reach its mission of being a Rs. 10,000 crore ($3 bn.) - company by the end of
the century. He also declared that the company would strive to maintain and develop leadership
positions in all its businesses or else it will quit. Simultaneously, zero retrenchment was
promised. The philosophy of TQM was embraced with added emphasis on 'customer delight',
that is, delivering more value than expected by the customer.
Vision, Core Values, and TQM
Infrastructure - being a key bottleneck for Indian industry - was identified as the engine of
Growth for the company's ambitious plans. But before that, the company needed an ambition
statement, which every employee could own and share. A massive companywide exercise for
finding out what the company stood for and what its core values were was embarked upon. The
emergent statement though not sounding much different from several other organisations vision,
however, came to be owned and understood by almost every employee because of the process of
identifying the mission and peoples involvement. The key elements of L&Ts vision f focussed
towards a world class company dedicated to:
• excellence and professionalism
• customer delight through service
• entrepreneurial leadership and creation of an organisation that is on the path of
continuously learning by fostering teamwork, trust, and care
• Community service and environmental protection.

Core Competencies
According to a senior executive, today the core competence of L&T lies in its ability to
synthesise, integrate and harmonise its diverse world-class engineering, manufacturing,
procurement, construction and fabrication skills around turnkey projects (in core economic
sectors) and people. This is made possible through a world class vendor base and quality
technological alliances, excellent IT infrastructure (CAD,/CAM systems, PMIS etc.)
sophisticated fabrication facilities for plant and machinery in the core sector.

Business Leadership
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. L&T's switchgear products enjoy a dominant
position in Indian as well as the international markets. 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. It has to its credit many firsts in the Indian industry - from the indigenously
manufactured hydrocracker reactor, naptha - run power plants, the world's largest curing press, to
the first vertical dairy in the country and so on.
With the Project and Construction business in the country growing at a fast pace and expected to
continue to do so with the country s 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, for
instance, the Bahai house of worship in Delhi, an international airport terminal in Abu Dhabi,
bridges in Malaysia, hotels in Uzbekistan, and so on. Its major projects have been building of
cement plants for Grasim Industries, Gujarat Ambuja Cements, and ACC Ltd., construction of
bridges and railway tunnels for the Konkan Railway project. In projects business, L&T EPC
group successfully executed orders from ONCC (for piping and oil platforms), Tata Chemicals
{for captive co generation power plant) and Gandhinagar Dairy. In shipping and international
business too, the company has made significant progress to become one of the leading players in
their line of business.
L&T has a long and enviable record of high-tech fabrication. The workshops in Powai with CNC
precision machines house large-size precision fabrication facilities. Its major heavy engineering
complex at Hazira also caters to such needs. L&T's units and its links with globally reputed
organisations have contributed much in developing manufacturing excellence.

Decision-making at L&T
Over the years, the company has implemented its vision through various approaches. Foremost is
the emphasis on empowerment, teamwork, and continuous training of employees. In terms of
structure, the company has decentralised decision-making, and according to Mr. Kulkarni, CEO,
the concept of Strategic Business Units (SBUs) is being actively encouraged. The company is
decentralised for all practical purposes. Budgets and allocations are made at the beginning of the
year and SBUs undertake the responsibility for achieving the targets. Only in major decisions
involving capacity augmentation, business divestment, diversification, and so on does the CEO
personally involve himself. According to Mr. Kulkarni, "only through empowerment and
decentralised decision making can a highly diversified company like L&T be managed". For
example, though the decision to divest the Dot Matrix Printers (DMPs) business was first
proposed by the concerned department, yet the decision was taken ai the MD/Board level as it
agreed that product and technological obsolescence and synergy of DMPs with other businesses
was indeed low.

The Culture of TQM


The TQM journey, initiated in 1993, has now taken firm roots in L&T. The efforts put in training
a large number of employees has resulted in the launch of many quality improvement initiatives.
A large number of employees have participated in continuous improvement (Kaizen) and small
group activities. Several cross-functional teams regularly function in the areas of manufacturing,
design, marketing and services. L&T has created an environment for increased empowerment to
further improve customer services. The TQM Awareness Programmes have also been extended
to the stockists and vendors to achieve improvement in the operations and customer service.
L&T strongly believe in the concept of internal customers. With TQM knowledge spreading
widely inside the company, employees have realised that everybody in every department is a
supplier to somebody in the organisation if not directly to an outside customer. One employee
says, "even though it is difficult to oblige everybody, I believe that we should go a step forward
to understand the real requirements of the customer, which he himself may not be fully aware of,
and delight the customer through total quality and service. Such an attitude should be our guiding
force". A value strongly sought to be inculcated in the employees is that people can confront
competition better by moving from a product-oriented philosophy to a customer-oriented
philosophy. For this, employees are being trained in multi skills, including quality transactions
and market engineering, besides product engineering.
With people being regarded as the 'prime movers', a strong HRD culture pervades the
organisation's personnel policies, and HRD systems are designed to sustain motivation,
encourage learning, and achieve higher levels of quality and productivity through job
involvement. The embracing of TQM philosophy.and implementation of ISO 9000 systems by
almost all divisions has led people to work towards common goals with a customer oriented
approach.

Social Commitments
Corporate Citizenship The Mumbai Chamber presented the Good Corporate Citizen Award for
the year 1994 -95 to Larsen and Toubro Limited for its contribution to Larsen and Toubro
Limited for its contribution to the corporate world, but more importantly for its conspicuous
achievements in improving the quality of life in the community.

Award for most Outstanding Concrete Structure


The ECC Division of L&T received the ICI-Mc-Bauchemie Award presented by The Indian
Concrete Institute for the most outstanding concrete structure for the year 1995 - 96 for Sree
Kanteerava Indoor Sports Complex is Bangalore. The structure is considered to be an
engineering marvel. The citation for the award reads 'Sree Lanteerava Indoor Sports Complex is
designed in the shape of an ellipse using 120 'V' shaped precast folded plate elements. Each
element is 43 m long and weighs 55. t. The thickness of the plate is just 40 mm, but strengthened
by ribs throughout its length. Since the folded plate springs from the ring beam along the outer
periphery and connected by the compression ring at the crown, the entire roof is self supporting,
providing an unobstructed column-fee space of 119 m x 91 m with a playing arena of 65 m x 45
min the centre.'
Environment Upgradation 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. 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.
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 in engineering
companies for the students passing out from this Institute. L&T also contribute financially
towards Upgradation of facilities in several polytechnics. It regularly interfaces with academic
institutions to promote quality education and has established research chairs for faculty in several
institutions including ai IIM, Ahmedabad. Within the company, one of the most invaluable and
lasting investments made by L&T is the establishment of a Management Development
Programme Centre at Lonavala (near Mumbai). According to Mr. CM Srivastava, Joint General
Manager (JGM) (HRD), the management development centre has been visualized as a 'temple of
learning where people would come with the sole purpose of enhancing knowledge, learning
through experience, self-study, and introspection. The emphasis, therefore, is on providing an
ambience for learning rather than training'. The centre has modern learning facilities like
computer-added packages, a library, and outdoor training facilities.
Manufacturing Facilities
Some important manufacturing facilities of L&T are shown in Table 2. Table 2 Important
Manufacturing Facilities of L&T

Location Product/Plants
Powai, Madh Plant and heavy
(Maharashtra) equipment switchgears,
Petrol pumps, Bothell
closures, control and
automation, welding
alloys, undercarriage
components
Thane (Maharashtra) Electronics and Inputs for
undercarriage
components
Awarpur (Maharashtra) Cement
Nashik (Maharashtra) Light–weight glass
containers
Faridabad (Haryana) switchgears
Ankleshwar (Orissa) Welding Alloys
Kansbajal (Orissa) Plant and equipment for
steel paper and pulp,
material handling and
mineral processing
industry
Mysore (karnataka) Medical electronic
equipment computer
peripherals,
telecommunications, test
and measuring
instruments
Bangalore (Karnataka) Earth–moving and
construction equipment,
hydraulic equipment and
diesel engines, Gen. Sets
Hazira (MP) Heavy equipment’s
Hirmi (MP) Cement manufacturing
unit
Chennai (TN) Valves, rubber and
plastic processing
machinery
Kandla (Gujarat) Export oriented
fabrication
Pondicherry Transmission towers
Kalol (Gujarat) Export footwear
Jharsuguda (Orissa) Cement grinding unit

The Future
The financial results of L&T far the year 1996 - 97 are not too encouraging as far as profits are
concerned. The company has reported profits of Rs. 410 crore against the previous years profit of
Rs. 390 crore, thereby achieving a slim growth of five percent. However, the turnover has
recorded a sharp jump from Rs. 4249 dare to Rs. 5304 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 is firmly
consolidating itself in four major business areas engineering, construction cement, and
equipment manufacture, Presently, cement accounts for 15 per cent of the total revenue. lt has
embarked on a major expansion programme that will double the capacity to 12 m tons per
annum, which will make it the largest cement manufacturer in India. A Euro-issue of $135
million has been planned to fund this expansion. Having defined EPC as a thrust business for the
future, it will be relevant to take a look into the competitive structure of the EPC business. In the
domestic business, L&T has a handful of competitors among whom BHEL. Punj and Lloyd, and
RITES are the major ones. The peculiar nature of EPC business is that it is not a sector specific
industry. The core infrastructure activities such as power, telecom, and roads will become key
focus areas for the country. Most players in this industry have specific competencies which cater
to specialised areas, L&T is perhaps the only company which competes in almost every sector by
virtue of its diversified technical competence and expertise. L&T's EPC business takes the form
of competitive bidding for executing projects from start to finish for third parties, part execution
of projects as sub contractors to other bidders, and autonomous bidding for setting up its own
projects in the core sectors.
In the global EPC business, however the company faces stiff competition from the global
construction and engineering giants like Hyundai, Saipern, Mcdermoft, Caterpiller, to name a
few. In such a highly competitive environment with technology being a handicap (that most
Indian companies suffer from), the logical step is to enter into strategic and technological
alliances. Most Indian EPC players follow this route and L&T is no exception. Some of its
alliances are with its competitors, for instance, Caterpillar, Marubeni. Like most Indian EPC
players going global, L&T s overseas EPC operations are concentrated in the developing and
developed countries of South-and Middle-East Asia such as Thailand and Malaysia, Vietnam,
Burma, Bangladesh, Sri Lanka, and Gulf countries like Qatar, Saudi Arabia. Bahrain, Oman, and
so on.
Though L&T has attained impressive achievements, the productivity of several businesses are
alarmingly low on the international benchmark level. In an environment of high interest rates and
tight liquidity position, the efficient management of working capital will form the key to future
L&T successes. Some of the areas of concern for L&T in the short-term would be: the need to
attain faster delivery standards, customer satisfaction, continuous cost reduction, productivity
improvement and operating with low working capital, and aiming at least to be a regional player
of repute and recognition.

Questions:
(a) Carry out a SWOT Analysis of L&T.
(b) Explain the Decision-making process at L&T and how does it contribute to performance of
the company.
(c) What are the various strategies that you recommend for L&T's EPC division in domestic and
foreign markets?

Potrebbero piacerti anche