STRATEGIC MANAGEMENT IN LARSEN AND TOUBRO LIMITED
COLLECTED AND ANALYZED BY
R.ASHWIN M.Tech -
CONSTRUCTION TECHNOLOGY AND MANAGEMENT ROLL NO : CE 081611
LEARNING OBJECTIVE
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The The lear learni ning ng obje object ctiive for for the indus ndusttry anal analys ysiis is to determine the opportunities and threats that exist for firms within a competitive environment. The learning objective for the firm analysis is to determine the strengths and weaknesses of a firm and to determine the core comp ompeten etenc ce that hat can be bui uillt on to est establish a competitive advantage. The final step is to develop a sound business plan to ensure the the su surv rviv ival al of thei theirr chos chosen en firm firm with within in its its comp compet etit itiv ive e environment.
STRATEGIC MANTRAS OF LARSEN AND TOUBRO LIMITED -A WHOLE AND REALISTIC VIEW Audacious in vision. Focus on what know best. Trim flab to achieve operational excellence. Good governance made the business sense. Develop leaders from within. Forge stronger partnerships with supplier base. Pursue quality with zeal. Innovate to create value for customers. Give back to the society The Indian edge. LARSEN AND TOUBRO-AN OVER VIEW
Larse arsen n and and Toub Toubro ro (L (L& &T) one of the the larg larges estt eng engin inee eeri ring ng com compani panies es in Indi India a (and (and one one of the top five five priv privat ate e sect secto or compani companies) es) posted posted yet again a growth growth rate of over 27 percent percent.. C
Ducts Established Founder Global presence Production
If a particular project fails, it does not lead to a process of recovering the money from L&T. This has been accepted by the financi financial al ins instit tituti utions ons as well as by the rating rating agencies, agencies, an L&T L&T source is saying.
1. Vision ✔ ✔ ✔
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Excellence and professionalism Customer delight through service. Entrepr Entreprene eneuria uriall leaders leadership hip and creati creation on of an organiz organizati ation on that that is on the the path path of cont contin inuou uousl sly y learn learnin ing g by foste fosteri ring ng teamwork, trust, and care. Community service and environmental protection.
Company Company strongly strongly drove by its global vision to become become an Indian Multination Multinational al Program Program ‘LAKSHYA ‘LAKSHYA’’ which outlines a strategic strategic plan for 2005-10 will assist in this.
2. Core Competencies
Today the core competence of L&T lies in its ability to synthesize, inte integr grat ate e and and harm harmoni onize ze its its dive diverse rse worl worldd-cl class ass engin engineer eerin ing, g, manufacturing manufacturing,, procurement, procurement, constructio construction n and fabrication fabrication skills skills around turnkey projects (in core economic sectors) and people.
3. Business Leadership With the Project and Construction business in the country growing at a fast pace and expected to continue to do so with the countrys emphasis on infrastructure, both L&T ECC (Construction group) and L&T's Projects (EPC) businesses are being treated as thrust area areas. s. The The ECC ECC cons constr truc ucti tion on grou group p has has been been resp respon onsi sibl ble e for for construction landmarks both in india and abroad. L&T holds a leadership position in lndia in most of the areas in whic which h it oper operat ates es.. The The firs firstt comp compan any y to in intr trod oduc uce e hydr hydrau auli lic c excavators in the courtry, it still maintains its leadership status in this and in the vibratory compactor segments. It continues to be a leader in the manufacture of Z-Line petrol pumps and its cement is considered to be of high quality. L&T has pioneered the manufacture and supply of critical nuclear reactors and space vehicles hardware in the country and so on.
4. Decision-making Over the years, the company has implemented its vision through various approaches. approaches. Foremost is the emphasis emphasis on empowerment. empowerment. Teamwork and continuous training of employees. The company is decentralized for all practical purposes. Budgets and and allo alloca cati tion ons s are are made ade at the begi beginn nniing of the the yea year for for achieving the targets. "Only through empowerment empowerment and decentralize decentralized d decision decision making can a highly diversified company like L&T be managed. Only in major ajor deci decis sions ions invol nvolvi ving ng capa capaci citty aug augment mentat atiion, on, bus usin ines ess s divestment, diversification, and so on does the CEO personally involve himself.
5. The Culture of TQM Employees have realized that everybody in every department is a supp su ppli lier er to some somebo body dy in the the organi organiza zati tion on if not direc directl tly y to an outside customer. Empl Employ oyee ees s are are being being trai trained ned in mult multii-sk skil ills ls,, inclu includi ding ng qual qualit ity y transactions an d market engineering, besides product engineering.
6. Human Resource Management With people being regarded as the 'prime movers', a strong HRD culture culture pervades pervades the organization organization’s ’s personnel personnel policies, policies, and HRD systems are designed to sustain motivation, encourage learning, and achieve higher levels of quality and productivity through job involvement. Quality Quality Training Training and Developm Development ent of Human Human Resources Resources realized through: ✔
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Iden Identi tify fyin ing g trai traini ning ng need needs s with within in the the Orga Organi niza zati tion on and and desi design gnin ing g and and impl implem emen enti ting ng thos those e need need base based d train rainin ing g prog progra ramm mmes es to brin bring g abou aboutt cont contin inuo uous us up grad gradat atio ion n of knowledge, skills and employee attitudes.
The following brief highlights ECC's training methodology for the comprehensive development of its 7000-odd employees. • • •
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Follow through after initial planning. Tracking of progress against plan. Adeq Ad equa uatte unde unders rsttandi anding ng of the inte nternal rnal resi resis stanc tance e change. Sufficient information sharing among stakeholders. Inclusion of stakeholders and delegates
to
7. Contribution to Academics L&T set up L&T Institute of Technology, a polytechnic in Mumbai. In a short period, it has come to be widely regarded as one of the
best training institutions of its kind in the country, particularly for the full-fledged workshops and laboratories that provide a strong practical orientation to theoretical inputs. There is a good demand i n engineering companies for the students passing out from this Institute.
8. Environment Up gradation L&T has has been een sh show owiing its its com commitm itment ent towa towarrds corpo orpora rate te 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 L&T has undert undertak aken en extens extensiv ive e tree tree plant plantat atio ion n prog program ramme me to enhance ‘green’ concepts. Over three lakh trees were planted in and around the factory in 1993-94 under the programme 'Trees for Life'. The villagers have been given grafted saplings of fruit-bearing trees and encouraged to plant them. The success of this ongoing effort led to L&T being selected by the Governm Government ent of Maharas Maharashtra htra for the presti prestigio gious us Vanashre Vanashree e Award in 1990.
9. Marketing Audit The The finan financi cial al result results s of L&T L&T for the the year year 20 2007 07-0 -08 8 are are not not too too encouraging as far as profits are concerned. The company has report reported ed profi profits ts of Rs. Rs. 10 1010 10 crore crore agai agains nstt the the previ previou ous s year year’s ’s profit of Rs. 890 crore, thereby achieving a slim growth of five percent. However, the turnover has recorded a sharp jump from Rs. 8249 crore to Rs. 10304 crore.
From another perspective, the performance has been commendable considering the slump and intense competition in the cement industry and performance of other competitors during the period. L&T presently has a shareholder base of nearly 1 million and empl employ oyee ee stren strengt gth h of over over 24 24,0 ,000 00.. As a comp compan any, y, this this mult multiidimensional engineering giant is actually the nucleus of a group of companies involved in building complexes, worksites, offices, and and serv servic ice e outl outlet ets s at di diff ffer eren entt loca locati tion ons s all all over over Indi India a and and abroad. Over the years, L&T has acquired a commendable reputation for capabilities for executing engineering related projects.
Some important strategic move by L&T: AMBANI BROTHERS AND L&T 1989-90 - L&T under DH Ambani (as chairman) 1990-93 – Repeated takeover attempts by RIL
During 1991 - 93. As the country progressed towards liberalisation, the company just emerged from a not-so-welcome takeover threat from the powerful Ambanis of Reliance. The Ambani nis s were them hemselve elves s embarki rking upon mass assive expansi expansion on in chemic chemicals als and petroch petrochemi emical cals s busines business, s, and L&T woul would d have have prov provid ided ed a real real and and logi logica call sy syne nerg rgy y in term terms s of exec execut utiing turnk urnkey ey proje roject cts s for for cons consttruct ructiion, on, engi ngineer neerin ing, g, supplying machinery and, of course. Offering suppliers credit (to the tune of Rs. 1,000 crore). Through prot protrac racte ted d inves investi tiga gati tion on and and liti litiga gati tion on (in (in whic which h the the Reli Relianc ance e 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 Poli Politi tica call Week Weekly ly was, was, "Whe "Where re does does L&T L&T go from from wher where e it has has reached now?" However, it was obvious that a total new mindset and working culture woul uld d be required red if L&T was to grow and remain competitive. Takeover attempts by RIL dropped down. In 1993-94, the company started adopting the principles of Total Quali Quality ty Manag Managem ement ent (TQM (TQM)) by beco becomi ming ng cust custom omer er focus focused ed,, reducing the costs and wastage, and adding value at all a ll stages for maximizing customer satisfaction.
L&T’ L&T’S S ALLA ALLAIN INCE CES S WITH WITH WORL WORLD’ D’S S TO TOP P CONS CONSTR TRUC UCTI TION ON EQUIPMENT MANAUFACTURING COMPANIES L&T has also also entered entered into into allianc alliances es with with several several interna internatio tional nal 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 servi rvicing of certain prod roduct ucts of thei heir interna rnational nal 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 noncore businesses. • L&T-Case Equipment Pvt. Ltd., a joint venture with CNH America LLC manufacture earthmoving and construction machinery.
L&T AND SHIPBUILDING: Shi hip pbui uillding rep repres resents nts a new thrus hrustt for L&T in the high technology manufacturing space and is in line with its strategic grow growth th obje object ctiv ives es.. L&T L&T is deve develo lopi ping ng a sh ship ipya yard rd capa capabl ble e of
constructing vessels of up to 150 metres in length and displacement of 20000 tonnes at its heavy engineering complex at Hazira near Surat on India’s west coast. The focus will be on construction of commercial vessels, warships for the navy and the coast guard.
L&T RESTRUCTURES ‘ECC’ CONSTRUCTION DIVISION L&T has restruct restructured ured its Chennai Chennai-hea -headqua dquarter rtered ed Constr Construct uction ion 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 the rest restru ruct ctur urin ing g thus thus:: "Fro "From m the the earl earlie ierr 18 SBUs, BUs, we have have regrouped the Divisions on a four-business sector-model, based on four core-technology fronts: Buildings and factories, Civil and Tra Trans nspo port rt Infr Infras astr truc uctu ture re,, Indu Indust stri rial al Proj Projec ects ts & Util Utilit itie ies s and 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 sin gle-sou -source rce projec project-ex t-execut ecution ion responsi responsibil bility ity,, from from concep conceptt to commissioning. The Division is ranked 67th among the world's 100 top contractors and has an important role to play in achieving L&T's Corporate Vision of becoming an Indian Multinational.
The Future of L&T L&T continues to surge ahead in its quest for becoming a global player. It has set itself a target of earning 25 per cent of its revenues from its international international operations operations by 2009-10. 2009-10. It is also actively pursuing business opportunities in China, Middle East and Africa as it sees immense potential in these regions. It seeks to
utilise China as a hub hub for components and materials.
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ANALYZES AND SUGGESTIONS ADVANTAGES OBSERVED (Good strategies) IN FIRM
If we observe the vision vi sion statement ✔ ✔
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Understood that management involved right from the start. Adequate or correct marketing research is done at each and every level The There re is no lack lack of visi vision on on the the rela relati tion onsh ship ips s betw betwee een n processes, technology and organization.
If we observe the culture of TQM, and Decision Making ✔
There is sufficient company resources to accomplish task.
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New strategies strategies are well explained 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 w it h lead manufacturing companies. Saved aved the com company pany from from Amba Ambani ni brot rothers hers Under nderto took ok proposal.
If we observe the Human Resource Management Its Its obse observ rved ed that that Comp Compan any’ y’s s su succ ccee eed d in today oday's 's free free mark market et economy, only because their employees perform to their fullest potential. The governing theme in the organisation is the well being of their employees strategies. ✔ ✔ ✔ ✔
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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 ✔
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Beca Becaus use e of this this Econ Econom omiic cris crisis is all all over over the worl world d,the ,the company profit percentage gets reducing. To control this, There should be a meeting with all familiar constru constructi ction on compan companies ies CEO to get their their views views on financ financial ial crisis aspects and financial management. Speak to Equipment providers, Labour contractors, Material providers to minimize the rent and rate at maximum extent.
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But, Reduced financial expenses have resulted in substantial increase in the return on net worth as well as the capital invested from them.
If we observe Enivironmental upgradation. ✔
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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 augu ugurs wel well for the count untry and and now there ere 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 was waste, te, wate waterr effi effici cien enc cy, red reduct uction ion in fos fossil sil fuel fuel us use e in com commuti muting ng,, ener energy gy effi effici cien ency cy and and conse onserv rvin ing g nat natural ural resources. Most Most impo importa rtant ntly ly,, these these conce concept pts s can can enhanc enhance e occu occupa pant nt health, happiness and wellbeing. So automatically enhance the mood of occupant and they feel feel fresh fresh throu through ghout out the day day and and in the the mean mean time time prof profit it also increases.
L&T EDRC - 1, Chennai
This is the office building of L & T Chennai with ‘green’ concepts exclus exclusivel ively y built built for to get increas increased ed profit profit throug through h employe employee’s e’s 100% 10 0% work work effic efficie iency ncy and and make make them them feel feeling ing well well after after more more worki working ng hours hours by 95 95% % of wo work rksp spac aces es ha have ve di dire rect ct ac acce cess ss to outside outsi de view This This is also also a Exce Excell llent ent strat strateg egic ic featu feature re of that that company. ……………………………………………………………………………………… ………………………………
CONCLUSION
STRATEGIC MANAGEMENT IN LARSEN AND TOUBRO LIMITED
COLLECTED AND ANALYZED BY
R.ASHWIN M.Tech -
CONSTRUCTION TECHNOLOGY AND MANAGEMENT ROLL NO : CE 081611
LEARNING OBJECTIVE
