Larsen and

Toubro
Ideas for today and tomorrow

Strategic Capability

Strategic capability refers to a business' ability to successfully employ

competitive strategies that allow it to survive and increase its value over time.
While strategic capability does take into account the strategies a business uses,
it focuses on the organization's assets, resources and market position, projecting
how well it will be able to employ strategies in the future. There is no single
method or universal metric for measuring or noting strategic capability.

Many elements can potentially contribute to a business' strategic capability.

Assets such as cash, property and patents all contribute to a business' ability to
formulate and employ strategies. Other elements of strategic capability include
human resources and organizational structure, since employee skills and
leadership mechanisms all contribute to a business' competitiveness. Pricing can
also be a part of strategic capability, with businesses that understand how to
manipulate prices to maximize profits likely to enjoy strategic advantages over
competitors that have trouble arriving at profitable price points for their
products.

L&T Strategies

The organization divides services into divisions based on underlying

technology and application domain.

Due to it being a conglomerate, many instances exist where it has an

upper edge as it does provide services to underlying technologies
developed by the parent group of companies.

Restructuring of companies for better performance, for e.g. ChennaiheadquarteredConstruction 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 afunctional 4x4 matrix.

5 Year Plan System

L&T forms 5 year plans which decide group focus, strategies, areas of growth and
reduction areas.

Since 2000, L&T has charted two five-year plans to reposition the company

2010-15 Plan:

Previous plan indicated creating three operating companies to look after defense, aerospace
and nuclear power sectors for effective operations.

Focus on segments traditionally dominated by foreign defense equipment makers and

state-owned companies.

2016-2021 Plan:

Make L&T a leaner company by reducing complexities and improve ease of doing business

Strategy ( Cont. )

L&T is concentrating on hi-techareas, vacating non-remunerative

product lines and focusing on the exports market.

L&T developed technology for manufacturing critical equipment

forprocess, nuclear and defence sectors

It is also in talks with leading aircraftmanufacturersin India and

abroad for supplying components.

Strategic Alliances

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 non-core businesses.

L&T-Case Equipment Pvt. Ltd., a joint venture with CNH America LLC
manufacture earthmoving and construction machinery.

L&T CASSIDIAN LTD. is a Joint Venture between L&T and Airbus

Defence and Space, GmbH. Both partners contribute their technology
and expertise in Radar, Avionics, Electronic Warfare and Mobile Systems
for military applications.

Expansion into growth areas

Utilizing existing business expertise to expand into new areas:

Defense Systems

Smart Cities and Communication

Renewable Energy

Water and Effluence Management

Shipbuilding and Aerospace