Strategic

Management
Report

Larsen & Turbo

 Group 4

Santhosh Tibirisetty - 20A1HP094

Rheeya Malhotra - 20A1HP028
Tejaswini Marreddy - 20A1HP076
Sai Priya Kallepu - 20A1HP046
Vasisht Goboori - 20A1HP003
CONTENTS

02 About The Company

04 Organizational Structure

05 Advantages and Disadvantages of Division Structure

06 Mindtree's Takeover Strategy

08
Recommendations and Conclusions

09 References

LARSEN & TURBO

ABOUT THE
COMPANY
WHO WE ARE
Larsen & Toubro is a global conglomerate that specializes in
technology engineering, building, manufacturing, and financial
services. It is one of India's largest and most well-known private
companies. Engineering & Construction, Electrical & Electronics,
Machinery & Industrial Products, and Others are the three
segments in which the corporation operates

VISION
L&T was found with a vision to create a company driven
to provide an exceptional, unrivaled level of service. In
order to do so we set out to hire the best and brightest
minds in the Industry.

MISSION
.The company will drive upward the standards that
support and reward talented consultants. Motivated
people provide superior service to clients.

PAGE 02
Company Introduction

Larsen & Toubro Ltd was established as a private limited corporation in 1946.
Previously, the company was created in Mumbai as a partnership by two Danish
engineers, Henning Holk Larsen and Soren Kristian Toubro. The company became a
public corporation in December 1950, with a paid-up capital of Rs.2 million.

Larsen & Toubro is a global conglomerate that specializes in technology engineering,

building, manufacturing, and financial services. The corporation is one of India's largest
and most well-known private companies. Engineering & Construction, Electrical &
Electronics, Machinery & Industrial Products, and Others are the three segments in
which the corporation operates. The following are the diversified business lines of L&T:

Construction
Hydrocarbon Engineering
Power
Metallurgical and Material Handling
Heavy Engineering
Defense
Infrastructure Development
Technology Services
Financial Services
Realty
Mindtree

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L&T ORGANIZATIONAL STRUCTURE

Figure: L&T's Subsidiaries Figure: Example of L&T's divisional structute

L&T, as a conglomerate, follows a divisional structure as it has a set of 16

subsidiaries/divisions, and each subsidiary is a relatively autonomous unit governed by
a central corporate office but has its own functional specialists who provide products
and services different from those of other divisions. L&T board consists of the CEO and
Managing Director S N Subrahmanyan, Chairman of the board Mr AM Naik, and the
board of directors. The 16 divisions have their own management in the form of Board
of Directors, CEO, CFO, and various functional heads. Each of these boards does not
have any legal or statutory standing but merely advises the management.

L&T follows the divisional structure as it has diversified products/service lines,

covering broad geographic areas while utilizing unrelated market channels and serving
heterogeneous customer groups. This structure at L&T has allowed the corporate
management to delegate authority for the strategic management of the various
divisions. By following a divisional structure, L&T would be able to expedite the
decision-making process in response to varied competitive environments, and the
corporate management can invest time and resources on corporate-level strategic
decisions. This can be seen when L&T acquired Mindtree.

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Advantages of
Divisional Structure
At L&T, each division serves as an independent unit and gets enough freedom.
The divisional structure at L&T creates opportunities for a better strategic
management training forum and skills development.
It eliminates the need for direct separation guidance by company executives.
Separation of strategies and performance control is an advantage.
Timely and effective decisions can be made and work performance within each
category is maintained at L&T.
Divisional structure at L&T frees' chief executive officer in border decision-
making.
It focuses sharply on performance response with a quick response to a change
in market situation.
Allow easy addition of a new product or region and strong control and attention
to products, customers, and/or regions.

Disadvantages of
Divisional Structure
• The L&T Headquarters may find it difficult to control each phase.
• Repetition of tasks is possible in various stages.
• It can be very expensive, when each category applies to the cost of private service
can increase
• When each section manager defends his or her own interests, he or she ignores
the same purpose of the organization.
• Differences in image and quality are possible in all variations.
• In this structure, all divisions at L&T try to show better performance sometimes
even if it costs other categories. This shows their selfish attitude.
• So, it requires a comprehensive control system.
• In this structure, competition between classes can be so intense that it does not
work.
• This structure can lead to a limited sharing of ideas and resources.

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MINDTREE’S TAKE OVER
STRATEGY BY L & T
THE BACKGROUND:
L&T has found itself in the situation of having a large quantity of cash on hand. This
money will be used to boost the company's growth rates. The software industry in
India has one of the highest rates of return. This is why L&T decided to acquire a
software company, which is how Mindtree came into the picture.

REASON FOR THE TAKEOVER OF MINDTREE:

L&T has been growing at an incredible rate. In 2016 and 2017, the company pursued
an inorganic development strategy, making several extremely targeted and pure-
play acquisitions. In 2016, L & T acquired AugmentIQ Data Sciences, a Big Data firm.
Syncordis SA was bought in 2017 to implement core banking.

Mindtree's portfolio is comparable to L & T in terms of skills and clients. Mindtree's

strong position in the Media and Technology industries, where L & T had yet to
make a mark, was a significant draw for L&T. Mindtree's presence in areas such as
consumer packaged goods, retail, travel, and hospitality could lead to a synergistic
relationship with the L & T portfolio.

LTI has a strong presence in the United States but not in Europe. The acquisition of
Mindtree would provide them with access to European markets. Because both
companies were based in India, cultural differences would make integration easier.

THE PLAN TO TAKEOVER MINDTREE:

L&T learned about Mindtree when a strategic investor tried to sell a 20% stake in
the company. L&T leapt at the opportunity and initiated talks with VG Siddhartha,
the founder of the popular Indian coffee shop chain Café Coffee Day. VG Siddhartha
decided to sell his $600 million stakes in the firm. When it became clear that L&T
could easily buy 20% of Mindtree's business, it decided to go for the entire company.

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As a result, a three-fold strategy had been devised.

·L&T wanted to buy VG Siddhartha's 20% stake in the firm.

·The company would then buy a 25% stake in the company on the open market.
·Finally, it would make a Rs 980 per share offer to all shareholders to sell its shares
to L&T. The objective would be to control as many free float shares as possible.

L&T thinks that, given the current situation and expectations, Mindtree is the most
clear acquisition bet and, consequently, the best alternative for increasing short-
term return on equity.

HOW DOES THIS ACQUISITION HELP:

The L&T group of companies and Mindtree are a perfect combination. When it
comes to digitalization, Mindtree is well ahead of L & T. It will help L&T's
digitalization initiatives while also bringing in a significant amount of money.

Because of the merger, a more extensive staff in many disciplines will be an extra
benefit. Given the prominent experts associated with these firms, a merger also
gives a larger leadership bandwidth. After combining the cumulative revenue, the
merged company's financials enhance its standing among the listed Indian firms in
the information technology industry.

The only area where L&T needs work is in the workplace culture. Mindtree
employees have a lot of flexibility and independence, but L&T employees have a
more conservative work culture. However, Mindtree has benefited from this
acquisition, given L&T's customer base and reputation in its core business.

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RECOMMENDATIONS
AND CONCLUSIONS
L&T as a whole is using a divisional structure because of its
various product lines and services. This aligns with the company's
strategy and has reaped advantages where each division is able
to take autonomous decisions based on their needs and has the
freedom to operate in a structure of their choice. This has led L&T
to successfully manage and cater to its wide product line.

Citing L&T's acquisition - Mindtree, which is an IT company that

was added in front of L&T's own pre-existing IT line. It is because
of the divisional structure that L&T follows, Mindtree and L&T's
IT line are able to work simultaneously without a conflict of
interest or structural issues. The efficiency of the structure has
given both the product divisions space to get accustomed to a
change in management and functioning.

Additionally, to make the acquisition successful and efficient

L&T's upper management needs to align its interest and
leadership style with the employees of Mindtree that have come
along in the said acquisition. This is crucial since Mindtree's upper
management stepped down after the acquisition. This makes it
essential for L&T to effectively lead, train and develop the
acquired staff to the company's goals and strategies in the
coming years. Failure of this might result in a huge loss of
resources and finances to the company otherwise.

PAGE 08
REFERENCES
https://www.managementstudyguide.com/story-behind-the-l-
and-t.htm

https://www.researchtrend.net/ijet/pdf/L%20&%20Ts%20Ac
quisition%20of%20Mindtree%20Whether%20a%20Strategic
%20Fit%20Vishal%20Srivastava%202183j2.pdf

Strategic Management - Mc Graw Hill

https://www.moneycontrol.com/news/business/companies/mi
ndtree-will-continue-to-have-independent-management-
unique-culture-4208651.html

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