A CASE PRESENTATION ON L&T STRATEGY

FOUNDERS

L&T was founded in Bombay (Mumbai) by two Danish engineers.

Henning Holck Larsen Soren Kristian Toubro

(4.7.1907 - 27.7.2003) (27.02.1906 - 4.3.1982)
The Yellow used by L&T symbolizes
wisdom, liberalism, hope, optimism,
imagination, curiosity and high
intellect.

Yellow because it provides a happy

balance between wisdom and
optimism. Additionally it is supportive
of expansion and diversification.

The unique yet simple configuration

of L&T using the combination of
yellow and black is a masterpiece of
balance and harmony.
 Company Profile
Type- Public

Industry-

Conglomerate

Founded-

Mumbai, India(1938)

Headquarters-

Mumbai, India

Area served-

Worldwide
 Introduction
Larsen & Toubro (L&T) is a technology, engineering, construction
and manufacturing company. It is one of the largest and most
respected companies in India's private sector
Seven decades of a strong, customer-focused approach and the
continuous quest for world-class quality have enabled it to attain
and sustain leadership in all its major lines of business
L&T has an international presence, with a global spread of offices.
A thrust on international business has seen overseas earnings grow
significantly. It continues to grow its overseas manufacturing
footprint, with facilities in China and the Gulf region
 Cont..
The company's businesses are supported by a wide marketing and
distribution network, and have established a reputation for strong

customer support.

L&T believes that progress must be achieved in harmony with the

environment. A commitment to community welfare and
environmental protection are an integral part of the corporate
vision.
 75 YEARS OF L&T
Early Days

In 1938, the two friends decided to forgo the comforts of working in

Europe, and started their own operation in India.
Their first office in Mumbai (Bombay) was so small that only one of
the partners could use the office at a time!
In the early years, they represented Danish manufacturers of dairy
equipment for a modest retainer.
Germany's invasion of Denmark in 1940 stopped supplies of Danish
products. Imports were restricted and they started a small work-shop
to undertake jobs and provide service facilities.
 Early Days
This crisis forced the partners to stand on their own feet and
innovate. They started manufacturing dairy equipment
indigenously. These products proved to be a success, and L&T
came to be recognised as a reliable fabricator with high
standards.

The war-time need to repair and refit ships offered L&T an

opportunity, and led to the formation of a new company, Hilda
Ltd., to handle these operations.

L&T also started two repair and fabrication shops - the

Company had begun to expand.
THE JOURNEY
Cont..
SECTORAL PRESENCE
BUSINESS STRUCTURE
ACHIEVEMENTS
OF L&T
 FINANCIAL
HIGHLIGHTS
Net Worth Profit after Tax
Rs in Crore Rs in Crore
4413
30000 4500
25223 3676
21846 4000
25000 3185
3500
18312
20000 3000
2500
15000
2000
10000 1500
1000
5000
500
0 0
2011-12 2010-11 2009-10 2011-12 2010-11 2009-10
VISION
 MISSION

To compete and grow in a globalised business

environment, L&T is implementing a strategic
plan (Lakshya) for 2010-15. The plan has been
drawn up in consultation with a leading
international strategy consultant. It has set
ambitious growth target for each business. Create
long term value for the customers through superior
product structuring by capitalizing on our
knowledge pool.
 CONGRUENCY BETWEEN VISION,
MISSION AND CORE VALUES

Core Value: Performance Driven

Vision: Attaining global benchmarks, constantly
creating value, meeting expectations of
employees, stakeholders and society, total
customer satisfaction, enhancing shareholder
value.
Mission: To compete and grow, ambitious target
setting for each sector
 Cont..

Core value : Customer Focus & Mutual Respect

Vision: Customer satisfaction, enhancing
shareholder value, fostering a culture of caring, trust,
meeting expectation of society, employees and
shareholders
Mission: Create long term value for our customer
through superior product structuring, partnering our
customer by offering solutions, deep understanding of
Indian sector and full range of financial products.
 Cont..
Core Value: Integrity
Vision: Entrepreneurial and empowered team,
professionally managed and committed, foster a
culture of caring, trust (show uprightness and honesty
as an important part of integrity).
Mission: Capitalizing on our knowledge.
 CORE
CORECOMPETENCY
COMPETENCY

These business offerings translate into the following core competencies:

Process Technology
: Cement and Mineral Process, Chemical Engineering, Material Science
and Corrosion Engineering, Mechanical Engineering, Ocean
Engineering and Water Technology.
Basic and Detailed Engineering Services
: Electrical and Instrumentation Engineering, Front-End Engineering and
Design, and specialized SBUs for Oil and Gas Engineering services.
Modular Fabrication
: Through one of Asias largest yards at Hazira
, capable of manufacturingseveral modules simultaneously.
 Cont..

Procurement
: An extensive set of suppliers from around the globe, networked through an
online procurement and an e-business platform.
Project Management
: L&T is one of the first companies in the world to implement the Enterprise
Resource Planning (ERP) software SAP R/3 in E&C business. This integrates all
the execution processes for the project and also provides to the project team
unique access to information at all stages - from proposal to project handing over.
Construction
: Through ECC - executing comprehensive construction projects in areas of power,
oil & gas exploration, refinery, fertilizer and petrochemicals, airports, townships,
hotels, public buildings, bridges, transmission lines, water treatment plants, hydro-
electric power stations and irrigation structures in various countries.
 A NATIONWIDE NETWORK

Manufacturing facilities in- 18 locations

Offices in - 19 cities

Management Development Centre Lonavala

Knowledge City -Vadodara

Logistic Advantages - Ability to optimize resources at various locations

GLOBAL PRESENCE
The company has manufacturing facilities in India, the Middle
East, South East Asia, China and Australia. Customers include
global majors in over 30 countries.
 SUSTAINABILITY IN
CHALLENGING TIMES
TQM CULTURE
 ENVIRONMENTAL SCANNING

EXTERNAL ENVIRONMENT
PEST ANALYSIS
PORTERS 5 FORCES ANALYSIS
INTERNAL ENVIRONMENT
SWOT ANALYSIS
 SWOT ANALYSIS
Opportunities
Major Infrastructure projects
coming up (govt.)
Renewable energy projects will bring
more projects
Financial support by Govt. & growth
in income level of people
Global economic recovery
Investment in Defense sector
Threats
Inflationary and cost pressures
Threat of a global Financial Turmoil
Vendor issues
Government policies
Competitors
Taxation policies
Lack of financial resources.
5 FORCE ANALYSIS
 PESTLE ANALYSIS

1. Political Factors

SEZ Act to Boost infrastructural Development.

Cement Prices Reduced for State Infrastructure

Projects.

FDI Liberalization to Augment Industry Growth.

REITs(Real Estate investment trusts) to Positively

affect real Estate Business.
2. ECONOMIC FACTORS
Growth in Construction Activity Stimulating GDP
Growth.

Rate Hikes Unlikely to Slow down Growth.

3. SOCIAL FACTORS

Shifting Consumption Pattern to Fuel industry Growth.

Rising Urbanization to Boost Industrial Growth.

Green Building in India

4. TECHNOLOGICAL FACTORS

Low Technology Adoption to Hinder Growth.

Construction As Per Indian Requirements.

Ready-Mix-Concrete being Experienced With.

5. ENVIORMENTAL FACTORS

Technological solutions helps in integrating the supply chain, hence reduce

losses and increase profitability.

With the entry of global companies into the Indian market, advanced technologies,
are used in engineering & Construction.

With the development or evolution of infrastructure sector, many of the MNC enter
into Indian market.

Infrastructure such as roads and bridges affect the many sector such as
automobile sector etc.

Environmental situation affect the infrastructure sector.

6. LEGAL FACTORS

Ensure a balanced transition to open trade at minimal risk to the Indian

economy and local industry.

Indian government infrastructure policy aimed at promoting an

integrated, phased and conductive growth of the Indian infrastructure
sector.

Confirms the governments intention on harmonizing the regulatory

standards with the rest of the world.

Legal provisions relating to safety measures.

 Business Strategy
The company was mainly into engineering, procurement and
construction segments. It also has a large exposure to commodity
businesses such as cement and ready-mix concrete. In the year 2000,
L&T began implementing its business restructuring exercise with its first
two five year plans.

The restructuring plans had set a target to reach a business volume of

Rs 35,000 crore annually which the company achieved and exceeded
by 15-20%. As per the restructuring plans.

L&T had divested its cement business in favour of the Aditya Birla
Group and its ready-mix concrete business in favour of Lafarge SA. The
third five-year plan of the company will be executed from 2010 to 2015.
 GROWTH STRATEGY
L&T is concentrating on hi-tech areas, vacating non-remunerative
product lines and focusing on the exports market.

L&T developed technology for manufacturing critical equipment for

process, nuclear and defence sectors.

It is also in talks with leading aircraft manufacturers in India and

abroad for supplying components.

Recently the company signed a joint venture with EADS Defence

and Security, for defence electronics in India..
 Risk Management Strategy

Doing business within India remains paramount. Vision is to become

an Indian multinational not just another multinational.

Investment made in the Middle East for training of workmen.

Showing a long term commitment to consolidating presence in select

geographies through setting up of offices, entering into alliance with
collaborators, developing marketing networks, brand promotion and
wherever feasible, setting up manufacturing facility .

Institutionalised a risk management culture and framework in the

Company.
 Future Strategy

A blueprint for the next phase of growth till 2015, named Vision
2015, at Larsen and Toubro Ltd is being drafted.
The first plan was devised by Boston Consulting Group, a leading
global management consulting firm.
L&Ts recent moves such as signing a slew of pacts with nuclear
engineering firms such as Westinghouse of USA, Atomic Energy
Commission of Canada and Russia's Atoms troy export for nuclear
plants, an entry into nuclear equipment forging, defence shipbuilding
and the latest joint venture make it clear that L&T is focusing more
on its core competencies
Its power business is also taking shape with 11 new factories making
various parts of power equipment.
 Its power business is also taking shape with 11 new factories making
various parts of power equipment.
It has put in place a nuclear equipment forging shop in Hazira in
Gujarat at an investment of Rs1, 500 crore.
As per plan, the company will create three operating companies to
look after defence, aerospace and nuclear power sectors for
effective operations.
 MCKINSEYS
MCKINSEYS7S
7SFRAMEWORK
FRAMEWORK

Structure
Strategy
System

Superordinate
Goals

Skills
Style
Staff
 MCKINSEYS 7S FRAMEWORK

Style
One of the seven levers which top management can use to bring
about organization Change.
With change of systems & procedures
- style of functioning changes
- Culture of organization changes Staff .
Update knowledge & skills to keep pace with change

Strategy
Includes purpose, mission, objectives, goal, action plans & policies
7S model emphasize - Development easy execution.
Systems
Procedures & methods framed by organization & followed by
operational personnel in the respective functional area
Traditional systems Change in view of advanced technology &
processes developed.

Structure
Relationship between/among various positions and activities
Design of structure - critical task for top mgmt.
Need based structural changes - to cope with specific strategic tasks
without abandoning basic structural divisions throughout the
organizations.

Skills
Acquainted with state of the art technology & improvised methods
& practices.
 Strategic Mantras Followed By L&T
Audacious in vision.

Focus on what know best.

Focus on achieving operational excellence.

Good governance made the business sense.

Innovate to create value for customers.

Give back to the society the Indian edge.

 Recommended Strategy
DTC is a cross-functional exercise requiring close coordination between sales,
engineering, manufacturing, supply chain, quality and finance functions. The main
driver for the same is product Target Cost. Addressing Design to Cost is a
complex task due to need to manage several aspects as described below.
 Development Strategy

L&T has established itself as a dominant player in the engineering and

construction through infrastructure development.

The company has an international presence with a global spread of

offices and joint ventures with world leaders.

Develop leaders from within.

 CONCLUSION
Ranked among 2009 'Leaders' in the prestigious Global 100 list by
International Association of Outsourcing Professionals (IAOP), and a wholly-
owned subsidiary of US $ 9.8 billion Larsen & Toubro, India's
leading engineering-to-financial services organization.

Their new emerging verticals include Media & Entertainment and Life
Sciences & Healthcare.
Larsen & Toubro Infotech Ltd. (L&T Infotech), one of the fastest growing
IT /Services companies, is ranked by NASSCOM among the top software &
services exporters from India in 2009.

Their other Service offerings are: Business Analytics, Legacy Modernization,

Applications Outsourcing, Architecture Consulting, PLM and Service
Oriented Architecture.