Week 1 : Strategic Management : Application from GE Case

Roll No : EMP21/A/03 (ANKIT DALAL- L&T HED)

Title : Export Behavior Theoris

The GE case highlights organization building with a

congruence of action in areas like structure, systems, staffing,

culture, skills & leadership style. Reflect on these elements or any

specific practice in the GE case (work-out etc.) to assess the

effectiveness of the implementation approach in your firm

Organization: Larsen & Toubro Limited. L&T is a $10bn USD engineering

conglomerate and is setting global benchmarks in Engineering and Construction

space.

Unit: Refinery, cracker, Oil & Gas Equipment Business unit, Hazira, Surat.

I am part of RCOG unit located at Surat on bank of river tapi.

L&T’s business spectrum spans across Engineering, Construction, EPC, Heavy

Engineering, Shipbuilding, Power, Electrical business, Electronics, IT and has got

numerous subsidiaries and joint ventures in the related businesses. Its business

spans from China to North America and have got global presence with many units

located globally to cater to the diversified geographies and customers. L&T is on a

rapid growth path in the recent times with an exploding infrastructure and power

markets in India and abroad

I will discuss L&T’s overall strategy in period 1990 to 2008 under leadership of Mr A.

M. Naik.

Background :

Back in the 1990s L&T was at the cross roads. The stock prices remained

stagnant. The growth was negligible. Businesses spanned in many areas

from salt to leather. The company’s future was uncertain when another

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Week 1 : Strategic Management : Application from GE Case

corporate Reliance came up with an open offer to take over L&T. And the

Birlas had acquired almost 15% stake in L&T at the end of 1990s. L&T’s

order book in the core areas were drying up from the domestic markets.

The situation was almost imminent.

The organization building that followed had synergies among Structure,

Systems, People, culture and Leadership. There were some specific

practiced employed for the same. The same is detailed below.

1 ) Consolidation of Core Businesses : Similar to GE Case (Fix, Sell or

Close and three circle concept) our CEO Mr A. M. Naik also focused

attention on core business and leverage engineering and execution skills of

L&T.

Implementation :

L&T began with the selling off of its non-core businesses and sold of

leather, glass, shipping and de-merged the cement business. Many of the

related businesses were consolidated; LTM and Audco were merged with

HED. Also a restructuring exercise in the core businesses was carried out

by restructuring them in to various different and independent segments like

E&C, ECC, HED, EBG and MIPD with each segment headed by a VP and

having set its own growth and performance targets.

Effect :

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Week 1 : Strategic Management : Application from GE Case

As can been seen from Financial results, This strategy has been successful to

increase market cap and Profit book of Company in period of 1992 to 1999. Also SBU

culture made each division profit centre so that they have freedom and responsibility

to control revenue as well as cost.

Also by way of demerging to cement business to biral, L&T was successful in avoid

take over treat.

2 ) Stretched Performance Targets : Similar GE case L&T had

developed their strategic Plan LAKSHYA 2005-10 with very ambitious

targets. A rigorous program management approach was introduced to

implement the program and was later on launched as Project Lakshya. The

management supported growth decisions of Divisions and with

collaborative efforts we were actually able to achieve the targets which

were at one time not thought to be possible. The FAIR system for linking

performance with rewards was successfully implemented. This also helped

to retain high performers by suitably rewarding them.

3 ) Project Kiran : GE have utilized ‘workout’ sessions effectively to

improve ifs efficiency based on feed back of operational managers. L&T has

launched project Kiran in which Middle level Managers across inidia were

covered in two day sessions held at tourist locations in relaxing

environment. The Objectives of sessions was to co-create strategy and

restructuring methodology. The Results from this sessions were visible in

L&T is present plan LAKSHYA 2010-15.

4 ) Leadership pipeline for developing leaders: Jack Welch focused his

attention on Leadership pipeline and succession planning. In L&T we

have launched various leadership development programs like MDP, ELP &

TLP. Through this programs potential future leaders are highlighted and are

trained to take up highest leadership positions. Through this route L&T was

able to sustain its culture of organic growth.

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Week 1 : Strategic Management : Application from GE Case

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