HUMAN RESOURCE MANAGEMENT

ASSIGNMENT

Submitted by

Group 12
Rahul Sasimohan K 215117057
Souganth Sugathan M 215117058
Fuad Rasheed 215117059
Abhay Vishnu V S 215117060
Deepayan Biswas 215117061

NATIONAL INSTITUTE OF TECHNOLOGY, TIRUCHIRAPPALLI

 INTRODUCTION

Larsen & Toubro Limited is an Indian multinational conglomerate headquartered

in Mumbai, India. The company has business interests in engineering, construction,
manufacturing goods, information technology and financial services. L&T is India's largest
engineering and Construction Company, with a dominant presence in India's Infrastructure,
power, hydrocarbon, machinery, shipbuilding and railway sectors. More than seven decades of
a strong, customer-focused approach and the continuous quest for world-class quality have
enabled it to attain and sustain leadership in all its major lines of business.

Larsen & Toubro (L&T) is a technology driven company that infuses engineering with
imagination. L&T has an international presence, with a global spread of offices. A thrust on
international business has seen overseas earnings grow significantly. It continues to grow
its global footprint, with offices and manufacturing facilities in multiple countries.

Larsen & Toubro was established in the year 1938 by two Danish engineers, Henning
Holck-Larsen and Soren Kristian Toubro. Their first office was set up at Bombay, India. Both of
them were strongly committed to develop India's engineering capabilities to meet the demands
of industry. Beginning with the import of machinery from Europe, L&T rapidly took on
engineering and construction assignments of increasing sophistication. Today, the company sets
global engineering benchmarks in terms of scale and complexity

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 ORGANIZATIONAL STRUCTURE OF LARSEN & TOUBRO

Larsen & Toubro’s organizational structure is one of the factors contributing to the
company’s successful innovation. A firm’s organizational structure can create opportunities
for business growth. However, it can also impose limits on how the firm develops.

DIVISIONAL STRUCTURE

Divisional Structure is defined as an organizational structure that clubs together various

functions on the basis of product lines and regional divisions.

Figure 1: Divisional Structure of Larsen & Toubro

In January 2011, its Chairman A M Naik announced that the company would
be restructured into nine independent virtual companies. with a CEO, CFO and HR head, its
own profit and loss account, and board with at least three independent directors. Each board
does not have any legal or statutory standing, but merely advises management.

The original nine virtual companies which operated in different segments were
subsequently increased to 12, for which the companies formed are: Building and Factories,
Transportation & Infrastructure, Metallurgical & Material Handling, Power Transmission and

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Distribution, Hydrocarbon and Chemicals, Water, Smart World & Communication, Geo-
Structure, Power, Infotech, Finance, Heavy Civil Engineering, and Engineering Services.
Hydrocarbon and Chemicals later became a real company, with independent standings and
stocks.

The following are the divisional structure of Larsen & Toubro

i. Construction
L&T covers varied disciplines of construction, civil, mechanical, electrical and
instrumentation. It provides consultancy, design and total engineering solutions to its
customers. It carries out basic and detailed design for both residential and commercial
projects also.
ii. Heavy equipment
They manufacture and supply custom designed and engineered critical
equipment and systems to the needs of core-sector industries and the defense sector.
iii. Power
L&T-Power focuses on opportunities in coal-based, gas-based and nuclear
power projects. They provide turnkey solutions for setting up utility power plants as
well as co-generation and captive power plants on an EPC (Engineering, Procurement
and Construction) basis. It also provides power plant engineering services. They offer
turnkey solutions for large i.e. up to 1,000 MW coal-based power plant projects based
on supercritical standards. It also offers the same capability in gas-based power plants.

iv. Ship building

L&T has a shipyard capable of constructing vessels of up to 150 meters long
and displacement of 20,000 tons. This is to cater the needs of growing global demand
for construction of specialized oceangoing vessels.

v. Financial services
L&T has a spectrum of financial products and services for corporate, construction
equipment’s etc. They also provide Mutual Fund schemes for investors in India.

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 vi. IT Services
L&T Infotech focuses on information technology and software services. Their
clients include industry leaders like Marsh & McLennan, Standard Life, Travelers,
Chevron, Rescale, Hitachi, Ingram Micro, Infineon, Sanyo, Lafarge, P&G, Johnson and
Johnson, HD Supply, Citi Group, Barclays, eCORPUS, Marathon, Texas Instruments,
Qualcomm, LG and Samsung among others- offers services and solutions for the
following industries: banking and financial services, insurance, energy and
petrochemicals, manufacturing.
vii. Engineering services
It also provides services in the embedded intelligence and Engineering space.
There are 150+ customers globally with more than 27 Fortune 500 Companies. Their
clients include Unilever, Covidien, Rockwell Automation, Danaher, United
Technologies, Cooper, P&G, Wartsila, etc.

FUNCTIONAL STRUCTURE

The functional structure is described as an organisational structure wherein; the

employees are classified on the basis of their area of specialisation. An organisational structure
so designed that it is bifurcated into semi-autonomous divisions on the basis of product, service,
market, etc., is known as the divisional structure.

The success or failure of an organization depends upon the effective and efficient
functioning of its different department. If the working and communication between the
departments is good, then the company will make profit. A different system is followed by
L&T IES (Integrated Engineering Services) as compared with other industries. Instead of
departments they have Verticals and for supporting the functioning of verticals there are
horizontals.

Verticals and Horizontals

Verticals are industry specific focus groups that will be useful to align the industry
domain specifics and to align with the clients belonging to this industry. Horizontals are the
specific capabilities or skills(technical or non technical) that span across two or more industry
verticals.

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The verticals in L&T IES are:

 Medical devices vertical

 Industrial products and consumer electronics vertical
 Trucks and off highway vehicles vertical
 Auto and aero vertical
 Telecom and high tech vertical
 Plant engineering vertical

The horizontals in L&T IES are:

 Mechanical Design and Validation

 Electronics and Software Engineering
 Product Life cycle Management
 Engineering Process Services

On the top is the Executive Chairman, Mr. A.M. Naik who is the head of L&T. Under
him is the Board of Directors. They report to the Executive Chairman, in case of any problem
or for taking major decisions. Then comes the MD and CEO of L&T Mr. S. N. Subrahmanyan.
Most of the decision-making process is done by him. Under the MD and CEO is Mr.
V.K.Magapu, Director of IT and Engineering Services. The next in command is Mr. Dr.
Keshab Panda, the Chief Executive of L&T IES. Mr. Girish Wardadkar, the Chief Operating
Officer of L&T IES reports to the Chief Executive.

Under him comes the vertical heads of various verticals. There are Sub Vertical Heads
under each vertical but in certain cases verticals may not have sub verticals, so there need not
be Sub Vertical Heads. The Project Managers are responsible to their Vertical or Sub Vertical
Heads. Under Project Managers there are Project Leaders for each project who leads each team.
And under each Project Leads comes their Team Members.

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 Functional structure of Larsen & Toubro

Executive Chairman (A M Naik)

Board of Directors
K.Venkataraman

MD and CEO of L&T Ltd

Director (IT&ES)

Chief Executive

Chief Operating Officer

Sales Head Platinum Accounts

P&G
Sales Managers Vertical Heads
Danaher and
UTC
Sales Engineers
Sub Vertical Heads

Project Manager

Project Leader

Team Members

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 ORGANIZATIONAL STRATEGIES

ANALYZER STRATEGY

Larsen & Toubro follows an analyzer strategy, in Miles and Snow Typology. Larsen &
Toubro maintains market share and seeks to be innovative, although usually not as innovative
as an organization that uses a prospector strategy. L& T uses this strategy to protect their base
of operations and to create new market opportunities.

CORPORATE BRANDING CAMPAIGN IMAGINEERING

L&T launched a corporate Branding campaign where it projected its capabilities in

every category as “IMAGINEERING”. As part of corporate brand building plans, L&T has
produced a series of TV commercials on its business verticals. Each commercial show some of
its business offerings, and highlights the role that plays in everyday lives. The commercials
were telecasted on CNBC- India’s leading business channel till December 26, 2008. The
advertisements focus on two core values of the organization:
• Innovativeness
• Customer focus and development focus

PRICING STRATEGY

Price management is the disciplined method to understand the various cost components
of transaction and to enforce a process to eliminate unstructured decision, thereby lead to
improve the bottom line growth. Companies today are under great to increase the value for
their shareholder on one hand and to satisfy continuous demand for the customers on the other
hand.

LOW-COST LEADERSHIP & PREDATORY PRICING

In cost leadership, a firm sets out to become the low-cost producer in its industry. In business
and economics, predatory pricing is the practice of selling a product or service at a very low
price, intending to drive competitors out of the market, or create barriers entry for potential

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new competitors. If competitors or potential competitors cannot sustain equal or lower prices
without losing money, they go out of business or choose not to enter the business.
Biggest competitor of L&T is BHEL which takes part in all the bids of construction
deals. L&T’s aggressive pricing strategy not only outbid BHEL but other overseas players also
such as Chinese and Koreans, who are known for low pricing strategies.

PENETRATION STRATEGY
L&T acquired TAMCO switch gear in Malaysia. After the acquisition the switch gear
products were sold at a very low price so as to attain a significant market in Malaysia.

GRASIM AND L&T DEAL

LNT and Grasim deal lead to increased consolidation in the cement industry. This deal
leads to increase in consolidation in the cement industry and considerable improvement in the
cement prices. Demand has been growing consistently and on the other there is less increase in
capacity. Demand growth, driven by construction demand such as roads and housing, was over
8-9 per cent per annum over the medium term, lifting cement demand to 125 million tonnes in
FY05 from the 107 million tonnes in FY03. As the giants have consolidated they enjoyed
monopoly to a certain extent and increased the cement prices to some extent.

Multinational players would become marginal players. In fact, the biggest MNC player
in India, Lafarge, had only a 3 per cent market share. Five Indian companies owned 55 per cent
market share and the rest of the market were shared by 44 players of median capacity of 1.2
million tonnes. Any potential player would have to make several acquisitions to gain market
shares comparable with the top Indian players.

WATERFALL STRATEGY

A popular strategy followed by L & T Ltd. is the price waterfall strategy (also called
Pocket price waterfall). It is the set of prices, price adjustments and cost elements that defines
how list price gets to net price and how net price gets to net margin. Price waterfall depicts the
buildup of L & T ltd.’s engineering products prices from a base price to the list price and then
the discounts that are given to the dealers to get to the Invoice price, the rebates terms, bonuses
and other Discounts that affect the Pocket Price, the Pocket margin based on Cost of Goods

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sold and the Net margin based on the other fixed costs. The Price Waterfall Strategy shows the
different prices that are included in the pocket price to get to the dealer’s price for the L.

ORGANIZATIONAL LIFE CYCLE

The Organizational Life Cycle goes through specific stages as a result of the company’s
success (or possibly lack of) in the market. Publications on this topic set the number of stages
organizations go through anywhere from three to ten, with most settling on a basic set of four
or five. Not surprisingly, the major stages are Start-up (or Birth), Growth, Maturity and
Decline. A fifth stage, called Revival (or Diversification), can also occur between the Maturity
or Decline stages.
The Larsen & Toubro is an established firm and the aim for the manufacturer is now to
maintain the market share they have built up. This is probably the most competitive time for
most products and businesses need to invest wisely in any marketing they undertake. They also
need to consider any product modifications or improvements to the production process which
might give them a competitive advantage

It is clear that Larsen & Toubro has grown in many fold and in diverse sectors and is
in its maturity phase.

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 Figure 2 – L&T financials

RESOURCE DEPENDENCY OF LARSEN & TOUBRO

Resource dependency theory examines the relationship between organizations and the
resources they need to operate. Resources can take many shapes or forms, including raw
materials, workers, and even funding. If one company maintains the majority of a resource,
then another company will become dependent on it in order to operate, creating a symbiotic
relationship. Too much dependency creates uncertainty, which leaves organizations subject to
risk of external control.

In case of Larsen & Toubro, it is dependent on American conglomerate GE on technical

know-how for manufacturing subsea equipment for future deep water projects. It is a symbiotic
partnership which brings together the manufacturing and technological excellence of two
leading companies in the oil and gas space.

L &T is one of India's leading companies for supply of Defence Equipment and Systems
in the private sector. But Government of India is the only customer of Larsen & Toubro and
hence is depended on Government of India for 80% of their defence equipment sales.

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 ORGANISATIONAL CULTURE

Organisational culture is a system of shared assumptions, values, and beliefs, which

governs how people behave in organizations. These shared values have a strong influence on
the people in the organisation and dictate how they dress, act, and perform their jobs.

 L&T has a strong heritage of professionalism that places the highest value on merit
and integrity.
 L&T’s strong, customer-focused approach and the continuous quest for world-class
quality have enabled it to attain and sustain leadership in all its major lines of
business.
 A commitment to community welfare and environmental protection are an integral
part of the corporate vision.

People Orientation

 Highly people oriented company.

 Celebrating occasions which are dear to an employee like birthdays, promotions,
anniversaries.
 L&T values performance and there are various initiatives like Employee of the month,
fast track growth programmes and high bonus to star performers are part of
company’s culture.
 L&T invests a lot in development of its employees.
.

Attention to detail

 L&T follows a culture of high commitment and high growth.

 It is a contract based company where the key performance indicators are on time
delivery and Customer satisfaction.
 Creating a culture of continuous learning, competitiveness and excellence.
 Recruitment approach to hire the most qualified and valuable employees and puts a
strong emphasis on retention.

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  Professionalism is a way of life, talent is encouraged and skills honed, where
individual and organizational goals blend for mutual success.

Team Orientation

Team Building Workshops: Employees are taken to an outdoor location and undergoes a
series of experiential exercises that reinforce the skills & attitudes that facilitate synergy in
teams.

Aggressiveness

Employees are given competitive compensation & rewards. Hence core organizational cultural
values of L&T are Performance Driven growth, Innovation, Integrity, Excellence, Customer
Focus & Mutual Respect.

CONCLUSION

The Organisation Structure and strategies of Larsen & Toubro was studied deeply.
Larsen & Toubro’s organizational structure is one of the factors contributing to the
company’s successful innovation. The organisational life cycle of L&T was studied and it is
in its maturity phase. L&T has a strong heritage of professionalism that places the highest
value on merit and integrity.

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