MBA (IB) 19-21 GROUP D

Strategic Management
IIFT Kolkata (Batch of 2019-21)

Strategic Profile of L&T

Tools: Porter’s Five Forces, TOWS, Value Chain

Submitted To: Dr. Naman Sharma, 9th March 2020

Submitted By: Group D, Section A

Aashi Bansal (1)
Shariya Shaikh (42)
Yashkumar Brahmbhatt (56)

Website Address: https://www.larsentoubro.com

MBA (IB) 19-21 GROUP D

(1) Mission, Vision and Values of L&T :

Mission

• Be responsive to customer needs, delivering optimal solutions and value-added services

• Ensure sustainable growth and professional excellence sing state-of-the-art technology, process-
driven approaches, eco-friendly solutions and IT enabled tools
• Foster a culture of mutual trust, respect, teamwork, continuous learning, innovation, challenge and
employee empowerment to provide a growth-oriented workplace
• Adhere to fair, transparent and ethical practices in interaction with all stakeholders, in keeping the
tenets of good corporate citizenship
• Remain flexible and agile, continually adapting to the changing business environment

Team Members’ ratings on the Mission Statement:

Team Core Purpose Philosophy and Values

Member No of core
Defines core purpose in terms of
purpose
Product/Service Provided
discussed
Eco friendly product & Services with
IT excellence as per the changing
2 for the project by extremely
Roll No environment along with the happiness
01 of employee and stakeholders
Innovative and process driven
Roll No approaches for the Product and
3 4
42 services with high employee
empowerment
Techno driven solution with
Roll No
2 sustainability and at the same time
56
flexible in nature for new adaption
No
Defines core purpose very well statements of Statements Clear
in terms of customer needs Philosophies/ are vague Expression
Values
Optimality with value addition
5 1 4
customer oriented approach
Delivering the specific
requirement efficiently
0 4
considering the change in
customer
Strong ethics and trust makes a
strong attachment with the
4 1 3
customer and also makes them
feel reliable with a brand

Vision

• L&T shall be a professionally-managed Indian multinational, committed to total customer

satisfaction and enhancing shareholder value
• L&T-ites shall be innovative, entrepreneurial and empowered team constantly creating value and
attaining global benchmarks
• L&T shall foster a culture of caring, trust and continuous learning while meeting expectations of
employees, stakeholders and society

Values

• Every aspect of L&T's businesses is characterized by professionalism and high standards of

corporate governance. Sustainability is embedded into our long-term strategy for growth
• L&T believes in inclusive growth by empowering communities & accelerating development
• L&T leverages its inherent strength and capabilities to implement sustainable CSR programs towards
‘Building India’s Social Infrastructure’
MBA (IB) 19-21 GROUP D

(2) Porter’s Five Forces Analysis :

Threat of New Entrants (+)
o Firms producing large capacities have a cost advantage because economies of scale are difficult to
achieve in engineering industry. Production is costlier for new entrants.
o Firms in the industry sell differentiated products. There is a strong emphasis on advertising and
customer service. Thus, it is difficult for new firms to enter.
o There are high capital requirements in the industry. Capital expenditure is also high.
o The government policies within the industry require strict licensing and legal requirements. This
makes it difficult for new entrants to join the industry.

Bargaining Power of Suppliers (+)

o The number of suppliers in the industry in which Larsen Toubro operates is a lot compared to the
buyers. This means that the suppliers have less control over prices.
o The product that these suppliers provide are fairly standardised, less differentiated and have low
switching costs. This makes it easier for Larsen Toubro to switch suppliers which makes the
bargaining power of suppliers weaker.
o This industry’s profits are closely tied to that of the suppliers. These suppliers, therefore, have to
provide reasonable pricing. This makes the bargaining power of suppliers a weaker force within the
industry.

Bargaining Power of Buyers (+)

o The number of suppliers in this industry is a lot more than the number of firms producing the
products. Thus, the buyers have a few firms to choose from, and therefore, do not have much
control over prices.
o The product differentiation within the industry is high, thus the buyers are not able to find
alternative firms producing a particular product thus weakening their power.
o The income of the buyers within the industry is low. This means that there is pressure to purchase at
low prices, making the buyers more price sensitive and making their bargaining power weak.

Threat of Substitute Products or Services (+)

o There are very few substitutes available for the products that are produced in the industry. There is
no ceiling on maximum profit that firms can earn in the industry.
o The very few substitutes available are of high quality and expensive, thus, come with a high
switching cost. Threat of substitutes is thus weak.

Rivalry among Existing Firms (-)

o There are few competitors which engage in competitive actions to gain position and become market
leaders. This makes the rivalry among existing firms high.
o The fixed costs are high. Thus, companies push to their full capacity. Companies reduce their prices
when demand slackens. Thus, high rivalry exists.
o The industry is prone to disruptions in the supply-demand balance, often leading to overproduction
i.e. cutting down prices to ensure sales. Thus, high rivalry exists.
o The strategies of the firms within the industry are diverse that results in them running head-on into
each other regarding strategy.
MBA (IB) 19-21 GROUP D

(3) TOWS Matrix :

TOWS Matrix can be defined as the tool to analyze, generate, compare, and select the business
strategies to attain the overall goals and objectives of the company such as higher sales, increased
profits, and enhanced brand value amongst other crucial ones.

TOWS Matrix for L&T is as below:

INTERNAL FACTORS

Strengths (S) Weakness (W)

TOWS MATRIX 1) Brand name
2) Reliable Suppliers
3) Manufacturing facilities
4) Strong distribution network
5) Quality Consistency
6) Technical Expertise
1) Overdependence on domestic
market
2) Increasing debts
3) Failure to merge firms with
different work culture

SO Strategies WO Strategies
Opportunities(O) S1.3-O1: Use brand name & manufacturing W1-O3: Venture into new
1) Govt. spending capabilities to gain projects emerging from overseas market by leveraging
on infrastructure govt. spending on infrastructure FTAs to reduce dependence on
2) Online Platform S2.4-O2: Exploit online platforms by using domestic markets
3) Govt. free trade strong distribution networks & reliable W2: Reduce funding projects on
EXTERNAL FACTORS

agreements suppliers credit

S5.6-O3: Venture into new countries W3-O2: Use online platforms
through FTA using technical expertise & for merging products of new
quality consistency firms

Threats (T) ST Strategies WT Strategies

1) Environmental T2-S6: Use technical expertise to keep a W1-T4: Use the emerging
Regulations check on laws of different overseas markets technologies to expand into
2) Law changes T3-S1: Use strong brand name to move overseas markets & tackle W1
with countries labor into overseas market & tackle T3 in T2-W2: Keep a check on law
3) Lack of skilled that market changes in different countries to
workforce T4-S6: Use technical expertise for R&D on reduce the chances of lawsuits
4) New tech. the emerging technologies & reduce debts
T1-S1: Use S1 to buy available carbon
credits in the market & keep a check on T1
MBA (IB) 19-21 GROUP D

(4) Value Chain Analysis :

Value chain analysis is a strategy tool used to analyze internal firm activities. Its goal is to
recognize, which activities are the most valuable (i.e. are the source of cost or differentiation
advantage) to the firm and which ones could be improved to provide competitive advantage

Value Chain Analysis for L&T is as below:

Firm Infrastructure
- Total 59 Buildings across India with 17 Green Buildings (USGBC Certified) *
SUPPORT ACTIVITIES

Human Resource Management

- 50,958 Permanent Employee in which 3060 R&D Engineers
- Median age of all employee is 32 years

Technology Development
- Maintaining green products and services which contributes 25% of its revenues

Procurement M
- Large Number (44116568) of electrical and automation products and heavy engineering A
Equipment to sustain magnanimous projects like Statue of Unity, Motera Stadium R
G
Inbound Operations Outbound Marketing Service I
Logistics Logistics & Sales N

1) – 80% of 3) - Dedicated Engineering - Transportation - L&T want - Strong AMC

PRIMARY ACTIVITIES

raw design centers Infrastructure to penetrate (Annual

materials 4) - One business’s group business leverages in further Maintenance
are procured output is operation unit for its vast experience markets and Contract) and
from local Second business group i.e. in Project have kept a PMS
vendors 5) Construction equipment Management penetration (Preventive
2) – 709 Sub-6) - Unique in-house especially via pricing Maintenance
contractors capabilities include one of Train route for its strategy Services)
got trained the world’s largest tower machinery
by group as manufacturing and testing
on FY19 stations

*USGBC – The U.S. Green Building Council

o UCGBC Certified 17 Green buildings. In which 6 are LEED Platinum and 6 are LEED Gold
o 986 Patents filled &148 patents granted, E&A Division acquired 143 Patents, 309 Designs, 189 Trademarks & 12 Copyrights
o Total 3951 MSME Suppliers for group as of 31st March 2019
o Personalizing the training experience of tech -savvy employees with ‘ATL Next’, An extension of ‘Any Time Learning
(ATL)’
MBA (IB) 19-21 GROUP D

(5) Existing Strategies :

L&T group has successfully implemented the change in their eco system at regular interval.
Their 4- tier governance structure (i- Strategic Supervision, ii- Executive Committee, iii-
Strategy and Operational Management, iv- Operational Management) builds and ensure greater
management credibility and accountability.

The L&T Group has anticipated the future challenges like scarcity of water, climate change,
Implementation of AI in process and already started taking necessary steps to mitigate risk i.e. (i)
12.45% reduction in domestic water consumption (ii) Reduction in total energy consumption
intensity by 5% in FY19. (iii) Reduction in direct greenhouse gas (GHG) emission intensity by
5% and etc.

L&T group has the strong and masculine brand image in consumer’s mindset, and they have
delivering their responsibility towards society as well with Rs 1667 Million in CSR Activity.

L&T has put in place a nuclear equipment forging shop in Hazira in Gujarat at an investment of
Rs 1500 crores.

L&T, as per plan will create three operating companies to look after defense, aerospace and
nuclear power sectors for effective operations.

Showing a long-term commitment to consolidate 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 and institutionalized a risk
management culture and framework in the company

We can’t imagine a growth of nation without L&T Group’s presence because

it’s all about “Imagineering”
MBA (IB) 19-21 GROUP D

(6) Suggested Strategies :

L&T can focus on innovation to differentiate its products and spend on differentiate its products
and spend on marketing to build strong brand marketing to build strong brand identification.
This will help it retain its identification

It can have multiple suppliers within its supply chain. For example, it can have different
suppliers for its different geographic locations. This way it can ensure efficiency within its
supply chain

It’s highly unlikely for a group like L&T to have a negative foreign currency reserve (INR -
0.17bn) financial capability determine the company’s future approach for expansion. So L&T
should take into account Foreign Currency Exchange Risk

L&T should use its reputation and core competencies to win and complete more and more projects
abroad and thus gaining the revenues maximized in those geographies also

With the government spending more and more on infrastructure & smart cities. It is the golden
time for the L&T to raise capital for winning more and more contracts and using its core
competency to increase their revenue

L&T needs to build a large customer base, as the bargaining power of buyers is weak. It can do
this through marketing efforts aimed at building brand loyalty

“To Improve is to Change, to be perfect is to change often”- Winston Churchill

References: -

o https://www.larsentoubro.com/
o https://www.mbaskool.com/brandguide/conglomerates/7954-larsen-a-toubro.html
o http://sustainabilityreport.larsentoubro.com/SupplyChain.asp
o http://annualreview.larsentoubro.com/transportation-infrastructure.html
o https://www.linkedin.com/company/larsen-&-toubro-limited/life/campusengage/
o https://www.lntsustainability.com/integrated-report/