During 1991 – 93, as the state progressed towards liberalization, the company merely emerged from a not-so-welcome coup d’etat menace from the powerful Ambanis of Reliance. The Ambanis were themselves shiping upon monolithic enlargement in chemicals and petrochemicals concern, and L & A ; T would hold provided a existent and logical synergism in footings of put to deathing turnkey undertakings for building, technology, providing machinery and of class, offering providers recognition ( to the melody of Rs. 1.000 crore ) . Through drawn-out probe and judicial proceeding ( in which the Reliance Industries Ltd. was found to hold collected bad placeholders ) , the company someway remained in the custodies of ‘professionals ‘ . The large inquiry grade as posed by an article in the Economic and Political weekly was “ Where does L & A ; T go from where it has reached now? ”
However, it was obvious that a entire new mentality and on the job civilization would be required if L & A ; T was to turn and stay competitory. In 1993 94, the company started following the rules of Entire Quality Management ( TQM ) by going client focused, cut downing the costs and wastage, and adding value at all phases for maximizing client satisfaction.
In 1994, Mr. S.D. Kulkarni took over as the CEO of L & A ; T and confidently promised that the company would make its mission of being a Rs. 10,000 crore ( $ 3 bn. ) – company by the terminal of the century. He besides declared that the company would endeavor to keep and develop leading places in all its concerns or else it will discontinue. Simultaneously, zero retrenchment was promised. The doctrine of TQM was embraced with added accent on ‘customer delectation ‘ , that is, presenting more value than expected by the client.
Vision, Core Values, and TQM
Infrastructure – being a cardinal constriction for Indian industry – was identified as the engine of Growth for the company ‘s ambitious programs. But before that, the company needed an aspiration statement, which every employee could have and portion. A monolithic companywide exercising for happening out what the company stood for and what its nucleus values were was embarked upon. The emergent statement though non sounding much different from several other administrations vision, nevertheless, came to be owned and understood by about every employee because of the procedure of placing the mission and peoples engagement. The cardinal elements of L & A ; Ts vision degree Fahrenheit focussed towards a universe category company dedicated to:
excellence and professionalism
client delight through service
entrepreneurial leading and creative activity of an administration that is on the way of continuously larning by furthering teamwork, trust, and attention
Community service and environmental protection.
Core Competences
Harmonizing to a senior executive, today the nucleus competency of L & A ; T lies in its ability to synthesize, integrate and harmonize its diverse world-class technology, fabrication, procurance, building and fiction accomplishments around turnkey undertakings ( in nucleus economic sectors ) and people. This is made possible through a universe category seller base and quality technological confederations, first-class IT substructure ( CAD, /CAM systems, PMIS etc. ) sophisticated fiction installations for works and machinery in the nucleus sector.
Business Leadership
L & A ; T holds a leading place in India in most of the countries in which it operates. The first company to present hydraulic excavators in the state, it still maintains its leading position in this and in the vibratory compactor sections. L & A ; T ‘s switchgear merchandises enjoy a dominant place in Indian every bit good as the international markets. It continues to be a leader in the industry of Z-Line gasoline pumps and its cement is considered to be of high quality. L & A ; T has pioneered the industry and supply of critical atomic reactors and infinite vehicles hardware in the state. It has to its recognition many number ones in the Indian industry – from the indigenously manufactured hydrocracker reactor, naptha – run power workss, the universe ‘s largest bring arounding imperativeness, to the first perpendicular dairy in the state and so on.
With the Undertaking and Construction concern in the state turning at a fast gait and expected to go on to make so with the state s accent on substructure, both L & A ; T ECC ( Construction Group ) and L & A ; T s Projects ( EPC ) concerns are being treated as thrust countries. The ECC building group has been responsible for building landmarks both in India and abroad, for case, the Bahai house of worship in Delhi, an international airdrome terminus in Abu Dhabi, Bridgess in Malaysia, hotels in Uzbekistan, and so on. Its major undertakings have been edifice of cement workss for Grasim Industries, Gujarat Ambuja Cements, and ACC Ltd. , building of Bridgess and railroad tunnels for the Konkan Railway undertaking. In undertakings concern, L & A ; T EPC group successfully executed orders from ONCC ( for piping and oil platforms ) , Tata Chemicals { for confined carbon monoxide coevals power works ) and Gandhinagar Dairy. In transportation and international concern excessively, the company has made important advancement to go one of the taking participants in their line of concern.
L & A ; T has a long and enviable record of hi-tech fiction. The workshops in Powai with CNC preciseness machines house large-size preciseness fiction installations. Its major heavy technology composite at Hazira besides caters to such demands. L & A ; T ‘s units and its links with globally reputed administrations have contributed much in developing fabrication excellence.
Decision-making at L & A ; T
Over the old ages, the company has implemented its vision through assorted attacks. Foremost is the accent on authorization, teamwork, and uninterrupted preparation of employees. In footings of construction, the company has decentralised decision-making, and harmonizing to Mr. Kulkarni, CEO, the construct of Strategic Business Units ( SBUs ) is being actively encouraged. The company is decentralised for all practical intents. Budgets and allotments are made at the beginning of the twelvemonth and SBUs undertake the duty for accomplishing the marks. Merely in major determinations affecting capacity augmentation, concern divestment, variegation, and so on does the CEO personally involve himself. Harmonizing to Mr. Kulkarni, “ merely through authorization and decentralized determination devising can a extremely diversified company like L & A ; T be managed ” . For illustration, though the determination to deprive the Dot Matrix Printers ( DMPs ) concern was foremost proposed by the concerned section, yet the determination was taken ai the MD/Board degree as it agreed that merchandise and technological obsolescence and synergism of DMPs with other concerns was so low.
The Culture of TQM
The TQM journey, initiated in 1993, has now taken house roots in L & A ; T. The attempts put in developing a big figure of employees has resulted in the launch of many quality betterment enterprises. A big figure of employees have participated in uninterrupted betterment ( Kaizen ) and little group activities. Several cross-functional squads regularly map in the countries of fabrication, design, selling and services. L & A ; T has created an environment for increased authorization to further better client services. The TQM Awareness Programmes have besides been extended to the stockists and sellers to accomplish betterment in the operations and client service. L & A ; T strongly believe in the construct of internal clients. With TQM cognition distributing widely inside the company, employees have realised that everybody in every section is a provider to person in the administration if non straight to an outside client. One employee says, “ even though it is hard to compel everybody, I believe that we should travel a measure frontward to understand the existent demands of the client, which he himself may non be to the full cognizant of, and delight the client through entire quality and service. Such an attitude should be our steering force ” . A value strongly sought to be inculcated in the employees is that people can face competition better by traveling from a product-oriented doctrine to a customer-oriented doctrine. For this, employees are being trained in multi accomplishments, including quality minutess and market technology, besides merchandise technology.
With people being regarded as the ‘prime movers ‘ , a strong HRD civilization pervades the administration ‘s forces policies, and HRD systems are designed to prolong motive, promote acquisition, and accomplish higher degrees of quality and productiveness through occupation engagement. The embrace of TQM philosophy.and execution of ISO 9000 systems by about all divisions has led people to work towards common ends with a client oriented attack.
Social Committednesss
Corporate Citizenship The Mumbai Chamber presented the Good Corporate Citizen Award for the twelvemonth 1994 -95 to Larsen and Toubro Limited for its part to Larsen and Toubro Limited for its part to the corporate universe, but more significantly for its conspicuous accomplishments in bettering the quality of life in the community.
Award for most Outstanding Concrete Structure
The ECC Division of L & A ; T received the ICI-Mc-Bauchemie Award presented by The Indian Concrete Institute for the most outstanding concrete construction for the twelvemonth 1995 – 96 for Sree Kanteerava Indoor Sports Complex is Bangalore. The construction is considered to be an technology wonder. The commendation for the award reads ‘Sree Lanteerava Indoor Sports Complex is designed in the form of an oval utilizing 120 ‘V ‘ shaped precast folded home base elements. Each component is 43 m long and weighs 55. t. The thickness of the home base is merely 40 millimeters, but strengthened by ribs throughout its length. Since the folded home base springs from the pealing beam along the outer fringe and connected by the compaction ring at the Crown, the full roof is self back uping, supplying an unobstructed column-fee infinite of 119 m x 91 m with a playing sphere of 65 m x 45 min the Centre. ‘
Environment Upgradation L & A ; T has been demoing its committedness towards corporate citizenship. As one goes around the plants and offices of L & A ; T. one experiences a soothing and refreshing atmosphere because of the rich leaf and delicious flowered blooms around these constructions. L & A ; T has undertaken extended tree plantation programme. Over three hundred thousands trees were planted in and around the mill in 1993-94 under the programme ‘Trees for Life. The villagers have been given grafted saplings of fruit-bearing trees and encouraged to works them. The success of this on-going attempt led to L & A ; T being selected by the Government of Maharashtra for the esteemed Vanashree Award in 1990.
Contribution to Academics L & A ; T set up L & A ; T Institute of Technology, a engineering school in Mumbai. In a short period, it has come to be widely regarded as one of the best preparation establishments of its sort in the state, peculiarly for the fully fledged workshops and research labs that provide a strong practical orientation to theoretical inputs. There is a good demand in technology companies for the pupils go throughing out from this Institute. L & A ; T besides contribute financially towards Upgradation of installations in several engineering schools. It regularly interfaces with academic establishments to advance quality instruction and has established research chairs for module in several establishments including ai IIM, Ahmedabad. Within the company, one of the most priceless and permanent investings made by L & A ; T is the constitution of a Management Development Programme Centre at Lonavala ( near Mumbai ) . Harmonizing to Mr. CM Srivastava, Joint General Manager ( JGM ) ( HRD ) , the direction development Centre has been visualized as a ‘temple of larning where people would come with the exclusive intent of heightening cognition, larning through experience, self-study, and self-contemplation. The accent, hence, is on supplying an atmosphere for larning instead than developing ‘ . The Centre has modern larning installations like computer-added bundles, a library, and out-of-door preparation installations.
Fabrication Facilities
Some of import fabrication installations of L & A ; T are shown in Table 2. Table 2 Important Manufacturing Facilities of L & A ; T
Location
Product/Plants
Powai, Madh ( Maharashtra )
Plant and heavy equipment switchgears, Petrol pumps, Bothell closures, control and mechanization, welding metals, undercarriage constituents
Thane ( Maharashtra )
Electronicss and Inputs for undercarriage constituents
Awarpur ( Maharashtra )
Cement
Nashik ( Maharashtra )
Lightaa‚¬ ” weight glass containers
Faridabad ( Haryana )
switchgears
Ankleshwar ( Orissa )
Welding Alloys
Kansbajal ( Orissa )
Plant and equipment for steel paper and mush, stuff handling and mineral processing industry
Mysore ( Karnataka )
Medical electronic equipment computing machine peripherals, telecommunications, trial and measurement instruments
Bangalore ( Karnataka )
Earthaa‚¬ ” traveling and building equipment, hydraulic equipment and Diesel engines, Gen. Sets
Hazira ( MP )
Heavy equipmentaa‚¬a„?s
Hirmi ( MP )
Cement fabrication unit
Chennai ( TN )
Valves, gum elastic and plastic processing machinery
Kandla ( Gujarat )
Export oriented fiction
Pondicherry
Transmission towers
Kalol ( Gujarat )
Export footwear
Jharsuguda ( Orissa )
Cement crunching unit
The Future
The fiscal consequences of L & A ; T far the twelvemonth 1996 – 97 are non excessively encouraging every bit far as net incomes are concerned. The company has reported net incomes of Rs. 410 crore against the old old ages net income of Rs. 390 crore, thereby accomplishing a slender growing of five per centum. However, the turnover has recorded a crisp leap from Rs. 4249 daring to Rs. 5304 crore. From another position, the public presentation has been applaudable sing the slack and intense competition in the cement industry and public presentation of other rivals during the period. L & A ; T is steadfastly consolidating itself in four major concern countries technology, building cement, and equipment industry, Presently, cement histories for 15 per cent of the entire gross. lt has embarked on a major enlargement programme that will duplicate the capacity to 12 m dozenss per annum, which will do it the largest cement maker in India. A Euro-issue of $ 135 million has been planned to fund this enlargement. Having defined EPC as a push concern for the hereafter, it will be relevant to take a expression into the competitory construction of the EPC concern. In the domestic concern, L & A ; T has a smattering of rivals among whom BHEL. Punj and Lloyd, and RITES are the major 1s. The curious nature of EPC concern is that it is non a sector specific industry. The nucleus substructure activities such as power, telecom, and roads will go cardinal focus countries for the state. Most participants in this industry have specific competences which cater to specialised countries, L & A ; T is possibly the lone company which competes in about every sector by virtuousness of its diversified proficient competency and expertness. L & A ; T ‘s EPC concern takes the signifier of competitory command for put to deathing undertakings from start to complete for 3rd parties, portion executing of undertakings as bomber contractors to other bidders, and independent command for puting up its ain undertakings in the nucleus sectors.
In the planetary EPC concern, nevertheless the company faces stiff competition from the planetary building and technology giants like Hyundai, Saipern, Mcdermoft, Caterpiller, to call a few. In such a extremely competitory environment with engineering being a disability ( that most Indian companies suffer from ) , the logical measure is to come in into strategic and technological confederations. Most Indian EPC participants follow this path and L & A ; T is no exclusion. Some of its confederations are with its rivals, for case, Caterpillar, Marubeni. Like most Indian EPC participants traveling planetary, L & A ; T s abroad EPC operations are concentrated in the development and developed states of South-and Middle-East Asia such as Thailand and Malaysia, Vietnam, Burma, Bangladesh, Sri Lanka, and Gulf states like Qatar, Saudi Arabia. Bahrain, Oman, and so on.
Though L & A ; T has attained impressive accomplishments, the productiveness of several concerns are alarmingly low on the international benchmark degree. In an environment of high involvement rates and tight liquidness place, the efficient direction of working capital will organize the key to future L & A ; T successes. Some of the countries of concern for L & A ; T in the short-run would be: the demand to achieve faster bringing criterions, client satisfaction, uninterrupted cost decrease, productiveness betterment and runing with low working capital, and taking at least to be a regional participant of reputation and acknowledgment.
Questions:
( a ) Carry out a SWOT Analysis of L & A ; T.
( B ) Explain the Decision-making procedure at L & A ; T and how does it lend to public presentation of the company.
( degree Celsius ) What are the assorted schemes that you recommend for L & A ; T ‘s EPC division in domestic and foreign markets?
Paper-2
Section-A
1. ‘Strategy includes the finding and rating of alternate waies to an already established mission or nonsubjective and finally, pick of the options to be adopted. ‘ Explain the statement underscoring the procedure of scheme preparation.
2. Technological factors represent major chances and menaces, which must be taken into history while explicating schemes. Discuss. How can a steadfast physique a sustainable engineering based competitory advantage?
3. The low-priced leading scheme at times enables the house to support itself against each of five competitory forces. Explain.
4. Briefly explain the factors which contribute towards the success of a strategic confederation. Illustrate with a recent illustration of strategic confederation.
5. Explain any three methods/techniques used in strategic control systems, giving illustrations.
Section B
6. Read the instance carefully and reply the inquiries at the terminal.
Rupbani Beverage Limited
Rupbani Beverage Limited entered the Indian vino industry in 1975 by geting the Mastana Wine Company of Shimla and two other smaller vino companies at Kalka for Rs. 50 hundred thousand. Despite ill will expressed by other vino shapers and anticipations that Rupbani would really shortly fail as other foreigners such as Parminder Wine Company had, the entry succeeded. Rupbani Limited performed the unheard of effort of set uping a volume of 30 lakh instances within two old ages and taking the market portion off from premium trade names such as the National Wine Company of Bombay, Pearl Drink Limited of Pune and Syndicate Cola Limited of Madras.
Rupbani advertised to a great extent and incurred Rs. 10 hundred thousand in one twelvemonth and standardised the gustatory sensation of its vinos with considerable success. It besides invested Rs. 48 hundred thousand in a big, new wine maker at Ahmedabad. A Rupbani Executive said, “ By 1995, ingestion of vino in India will be a litre per capita, compared with half a litre today. ”
The industry reacted to Rupbani ‘s presence by duplicating and trebling advertisement outgo. ABC and Company began a dearly-won run to market premium and varied vinos while cut downing marketing accent on its inexpensive vinos such as Nahan Drinks and the Gola Beverage. ABC maintained its 25 per centum market portion but had to fall back to some heavy monetary value discounting to make so.
In 1982 Pearl Drinks formed a particular vino unit to unite attempts for all its trade names. Mr. Sailesh Kumar former Vice President of the National Wine Company had directed a undertaking to organize Pearl ‘s global vino concern and develop a universe broad scheme. The new unit was, in fact, a consequence of his work.
In1983, vino ingestion changed from growing at a rate of 5 per cent to no growing. The authorities besides lifted the prohibition on imports of vino. This presented an even greater challenge because imported vinos were cheaper every bit good as superior in quality.
In1984 Mr. Ranganathan took over as Managing Director of Rupbani. He reviewed the recent public presentation of the company and its competitory place. He noted that the company was losing its clasp over the market and it was non acquiring the return as expected. He besides found that the company ‘s public presentation in the sirup concern was first-class. He, hence, idea of selling out the vino concern to Pearl Drinks, He convened an executive meeting and apprised the executives of his proposal. He besides informed them that Pearl Drinks had offered the company to recapture its investing in the vino concern which was about Rs. one crore. Mr. Arun Mehta, General Manager, observed that Rupbani was in and out in the past six old ages and has joined different administrations in seeking the vino concern. The finance Manager, M. Subhash Ghai said, “ The return on assets in the vino concern is non the 30 to 35 per cent, which Rupbani is used to acquiring in the sirup concern. Deriving portion and seeking to vie with ABC and Company left Rupbani with, finally, the figure two place in the vino industry with net incomes of Rs. 60 hundred thousand on Rs. 220 hundred thousand in gross revenues. The shareholders wanted immediate return and hence, the company could non afford to do long-run investings necessary to popularize the trade names. Had they stayed for five more old ages, they would hold been a cardinal leader in a big and profitable industry. ”
Pearl Drinks instantly went from the 6th place in the industry to a strong 2nd topographic point with an 11 per cent market portion. The Chairman of Pearl Drinks stated: “ We believe you can do money in this concern in two ways — remain a little dress shop wine maker or go big and achieve economic systems of graduated table. ”
Mr. Harish, Marketing Manager of Rupbani said, “ It is no usage selling out our concern to Pearl Drink and acquire back what we have invested. We can vie with our rivals successfully and better our market portion if we manufacture vinos of changing qualities to accommodate the varied penchants and pockets of diverse subdivisions of society. We should besides offer monetary value price reductions to pull the consumers. There should be broad promotion of our trade names throughout the state. ”
Questions:
( a ) Perform SWOT analysis of Rupbani.
( B ) In the visible radiation of chances and menaces of Rupbani Beverage and its strengths and failings, what scheme should it explicate to better its public presentation and beef up its competitory place?
( degree Celsius ) Should Rupbani pass on advertisement in line with its rivals? Discuss.
( vitamin D ) What other schemes would you propose for Rupbani for increasing their portion of the market?
Paper-3
Section-A
1. Explain the assorted stairss involved in Strategic Management procedure in a individual concern house.
2. Explain the followers:
( a ) Types of resources
( B ) Strategic importance of resources
3. Discourse the importance of distinction scheme in the present competitory environment. Explain taking into consideration its advantages and disadvantages.
4. Every strategic confederation incurs certain costs and comes with a set of hazards. Explain any five costs/risks of come ining into a strategic confederation.
5. Corporate civilization plays an of import function in the success of an organisation. Explain giving suited illustration.
Section B
NEECO LIMITED
At the terminal of the recent five-year program, it was estimated that there would be a considerable demand in the fabrication capacity of power transformers in the state. It was further projected that the spread between demand and the fabrication capacity would be even larger in the subsequent programs. Therefore, expecting the state ‘s demand in future, Neeco Limited decided to put up a new unit for fabricating transformers. This was in add-on to the fabrication capacity already built up at one of the bing mills.
Formal Planning Procedure
Formal planning was introduced in the really first twelvemonth of the beginning of activities at the new unit. The planning procedure at Neeco Limited included the puting up of wide aims and the readying of the three-year prognosis. In a missive addressed to departmental caputs, the General Manager, Mr. S.K. Patel said, “ The clip has come to set down on paper the aims and ends of our administration and to develop a proper model whereby we can take a more systematic expression at the hereafter we are heading for. This, I believe, can be achieved by engagement and cooperation of all the departmental caputs in seting into pattern a civilization of planning. ” The duty for developing a three-year program was entrusted to the planning cell, which reported straight to the General Manager. There was a separate accountant ‘s office, which looked after budget readying and the subsequent monitoring of existent public presentation.
Goal Puting
Process Planning began each twelvemonth in the month of April with the constitution of ends by the top direction. The top direction group consisted of the General Manager and his assorted functional caputs. The ends were set both in qualitative every bit good as quantitative footings. The quantitative ends were in footings of growing in gross revenues and net incomes. Commenting on the quantitative ends, Mr. Patel observed that: “ Net income is the primary end ” .
The planning cell, after roll uping dl the information, amalgamate and integrated the informations and prepared operating consequences and hard currency flow projections for the three-year period.
Exhibit-I
NEECO LIMITED
Date
Stairss in planning
1st Week of April
Planing call sends relevant formats to departmental caputs, with elaborate accounts.
4th Week of April
By the 4th hebdomad, the assorted departmental direct the formats back to the planning cell, punctually filled.
1st Week of May
Planing officer compiles all the informations and puts it in an incorporate signifier.
2nd Week of May
The first bill of exchange of the program is discussed in a direction group meeting, wherein several suggestions emerge and the bill of exchange is exhaustively revised by deciding the conflicting aims of assorted sections.
1st Week of June
The concluding bill of exchange of the program is ready and is sent to corporate central office.
( B ) Duty for Plan Preparation
Section of the Plan
Duty
Sale Plan ( Order Book Position )
Manager Selling
Production Plan
Manager ( Production )
Materials Plan
Materials Manager
Manpower Plan
Forces Manager
Township Development Plan
Manager ( Projects )
Plan and Final Plan Document
Planing Officer
Before finalizing the programs as prepared by the assorted functional/department caputs, a elaborate treatment was held. During these treatment was held. During these treatments assorted departmental caputs explained the footing of their several programs. The concluding program was arrived after deciding the conflicting aims of assorted sections.
The Planning-Budgeting Linkage
Immediately after the program was approved b9 the Management Group, the procedure of fixing a elaborate budget for the following twelvemonth was initiated. The three-year program set out the wide aims for the first twelvemonth and projections for the following two old ages. A elaborate exercising had already been conducted in fixing the wide aims, which served as a footing for the readying of a elaborate budget for the resulting twelvemonth. Thus the first twelvemonth of the program papers, with necessary alterations, became the budget for the following twelvemonth. The three – twelvemonth program papers and the budget were, hence, closely inter-related. It was said that the readying of a three – twelvemonth program was, in a manner, a procedure of making an organizational clime for a strict and clip devouring procedure of budgeting.
Chemical reactions of Executives
A few executives from the production section had the undermentioned remarks to do with respect to the formal program: “ The signifiers are lime-consuming and boring. Here, when we are already overburdened with our day-to-day modus operandi, who has got clip to make full in figures in these drawn-out signifiers. We are more disquieted about daily jobs, instead than about the 3rd twelvemonth from now. ”
Executives from other sections commented: “ Planning has led to greater engagement in the direction procedure and therefore, has created a civilization of direction by engagement. The engagement of all of us in the planning procedure has given us an chance to take a wider position and has broadened our skyline. Some of us now understand each other ‘s jobs in a better manner. This has paved the manner for better common coordination. ”
“ Some of us now feel more confident of taking up higher duties in future. Planning has helped to prepare leaders. It has turned us from technocrats to directors and has prevented us from going administrative officials. ”
“ Figures by themselves are non really of import. Figures without understanding the procedure of how to obtain them are irrelevant. What is of import is the procedure of planning, instead than make fulling the figures in prescribed formats. This procedure had led to greater direction engagement in determining the hereafter. Planning has become a frame of head and a manner of thought. It has become portion of our direction procedure, ”
Questions:
( a ) Evaluate the formal planning procedure at Neeco Limited.
( B ) Critically examine the reactions of the assorted executives as stated in the instance.
( degree Celsius ) Discuss the importance of a three – twelvemonth program.
