Strategic Management – Assignment 2 Submitted By : J Karthik Ganesh Program : EPGP Class :Sep 2009 Roll No:EPGP10-0909155 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 1. Discuss how your company has attempted to develop a competitive strategy to protect its business level strategy. For example, if your company is operating in an embryonic industry, discuss the ways it has attempted to increase its competitive advantage overtime. If it operates in a mature industry, discuss how it has tried to manage the five forces of industry competition.
L&T being in a infrastructure industry which is in growth stages in India. L&T Has developed a competitive strategy to protect its business level strategy by concentrating in building block of distinctive competencies. It has a strategy of being first in innovate process that leads to increase the ease of production, increase the quality and reduce the cost of production. It has a strategy of Excel in Quality of Production and adopted many international standards in process as well as product. Also created Quality cell for continual improvement in the system. It has a strategy of faster Delivery i. execute the project as Quick as possible by deploying more resource and also increase the efficiency of resources deployed so that can have lesser Customer Responsive Time. It has a strategy of automate every value chain process by implementing superior available technology. and implemented this in supply chain management process so that all the process is automated by information technology including its supplier uses this to increase the efficiency. L&T has managed the five force of industrial competition by the following Risk of Potential competitor :- a) Economy of Scale
Production cost can not be reduced by mass production because quantity is freezed and most of the projects are bided in public. price reduction is possible with superior management of operation gained through experience which the new entrant can not do because they have no previous local market experience. This is an oppoutunity. L&T capitalize this opportunity by efficient operation management and innovation. b) Brand Loyalty L&T Tackle this problem by up keeping their quality and adopting international standards which the local player does not currently adopting to attract the MNC Clients. ) Switching cost Switch cost is very less in the industry, customer can switch between the companies . almost there wont be any switching cost at all. This is an threat to companies.
L&T Tackle this threat by Differentiating themselves from other player by Faster Execution with low price, with Superior Customer relationship. d) Govt Regulation Recent FDI Norms in infrastructure industries allows Foreign institution to have Joint venture with Indian Local Players. This is an Thread to L&T. L&T Has no plan to tackle this problem , since this is related to Govt Decision Rivalry Among Established Companies ) Industry Competitive Structure Industry is fragmented industry has many small , mid sized local player. This is an threat to L&T. L&T Tackle this threat by concentrating on Bigger Projects where only Larger Player can compete with them. Exit barrier Industry has higher exit barrier , since the industry required High fixed cost for Machineries and Highly Labour intensive industry. Exist will be costlier for the company. This is a Threat to L&T. L&T has superior Asset management system for acquire , operate and Dispose the same which operates depend upon the industry condition.
Also L&T Has Strategies of Shifting the Permanent Employee between the Business Unit and Employs almost temp employment in Unskilled & Unskilled Operations. This Will help L&T to tackle the threat. Bargaining Power of Buyer Infrastructure Industry has lesser Bargaining power because of the Industry Demand and Most of the Time the price is bided by the companies. L&T has a strategy of differentiator and differentiate it from other competitor by adopting Superior Quality and Less customer response time . so that its even a powerful buyer can think of giving orders to L&T even though the prices are bided higher.
Bargaining Power of Suppliers Infrastructure Industry has higher Bargaining power of Suppliers because of recent industry growth created scarcity for Skilled Labor force , Material and Services. This is an Threat to L&T. L&T Has Created Own Training Institute in place to train People in the Market to meet the demand. L&T also has a strategy of vendor development so that it has more number of supplier for particular input to create competition among the suppliers . also it has strategy of mass order so that they can have bargain against the cost of purchase. Substitute Product
Infrastructure Industry has very lesser substitute, most of the time the substitutes are process substitute not the product one. L&T is already an market differentiator by providing substitute or alternate process or product in the market. 2. Find an example of a multinational company that in recent years has switched its strategy from a multidomestic, international, or global strategy to a transnational strategy. Identify why the company made the switch and any problems that the company may be encountering/encountered while it tries to change its strategic orientation.
Uniliver is recently shifted its global strategy into transnational strategy. Unilever has become a transnational company in the most basic sense: they think globally as well as act locally. The reason why uniliver changed into transnational strategy are the very nature of our products requires proximity to local markets; economies of scale in certain functions justify a number of head-office departments; and the need to benefit from everybody’s creativity and experience makes a sophisticated means of transferring nformation across our organization highly desirable.
All of these factors led to our present structure: a matrix of individual managers around the world who nonetheless share a common vision and understanding of corporate strategy. While changing its strategies uniliver encountered numourous problem . its evolved into transnational by Darwin system of retaining what is useful and rejecting what is no longer worked on other words responding through actual practice as a business responding to the marketplace. One common problem faced by unilever is managing people in incorporating both unity and diversity, with common culture among many scattered units.
Also it faced problem while placing control system among the units. 3 What is your company’s corporate? level strategy? How does this affect the way it uses organisational structure, control and culture. Explain how the use of organisational design has impacted the implementation of your company’s corporate level strategy L&T Corporate level Strategies are the following Audacious in vision. Focus on what know best. Trim flab to achieve operational excellence. Good governance made the business sense. Develop leaders from within. Forge stronger partnerships with supplier base. Pursue quality with zeal.
Innovate to create value for customers. Give back to the society The Indian edge. L&T’s corporate level Strategies has significant impact on organisational structure. Its Focus on what know best enabled L&T to disinvest from its Cement business and enable L&T to Restructure its business. It restructured its business into small indivistual Business units with resources having speciation in that area. These business units has end to end responsibility of its operation , this enables L&T to have more control over its business unit for monitoring and enables to decide about its further continuation of its operation in that area.
Its Forge Stronger partnership with supplier enabled its restructure its manufacturing units to out source the parts in which they have executed directly also developed the strong vendor base for L&T. Its Pursue quality with Zeal strategy allowed its employees to have culture of producing quality product to improve the customer value and also its Give Back to society Strategy enabled its employee to be more environmental and social conscious in nature. The Use of Organisational Design impacted the L&T Corporate Level Strategy for successful implementation.
L&T’s Organization structure is designed such that it’s Focus on what know the best has been successfully implemented and had better control system than the previous control system which could not be able to identify which sector is performing well which sector is performing poor. The Culture of Quality consciousness impacted significant implementation of its Strategy of Pursue Quality with Zeal. Its Culture of training and development of Employees with in the organization enabled to L&T to Have own Leaders with in the Company and allowed to successfully implement the strategy of Create Leaders with in.