Businessmodel of Larsen & Toubro

Customer Segments

L&T has a niche market business model, with a specialized customer segment. The company targets its offerings at firms that operate in the industrial sector.

Value Proposition

L&T offers two primary value propositions: accessibility and brand/status.

The company creates accessibility by offering a wide variety of options. It is a multinational, diversified conglomerate, operating in numerous product/service categories including technology, engineering, construction, manufacturing, and financial services.

The company has established a strong brand due to its success. It is one of the five biggest fabrication companies in the world, with more than 130 subsidiaries and 15 associate firms. It bills itself as India’s largest engineering and construction company and one of its largest multinational firms. It has a sizable global footprint, maintaining offices and customers in over 30 countries, and manufacturing facilities in nine countries including India. It generated $16 billion in annual revenues in its most recent fiscal year. Lastly, it has won many honors, including the following:

• Recognition of L&T Technology Services as “Company of the Year” by IACC (2016)
• The Golden Peacock Award for Risk Management by the Institute of Directors (2015)
• The Economic Times India Manufacturing Excellence Award (2014)
• The Frost & Sullivan Excellence in Engineering Services Award (2014)
• A “Special Recognition Award“ for Most Attractive Employer in infrastructure by Randstad (2014) ### Channels

L&T’s main channel is its business development team. The company promotes its offerings through its website, social media pages, advertising, and participation in conferences.

Customer Relationships

L&T’s customer relationship is primarily of a personal assistance nature. The company provides comprehensive training to customers as well as extensive phone and e-mail support.

Key Activities

L&T’s business model entails designing, developing, and manufacturing its products, as well as offering services to customers.

Key Partners

L&T maintains technology alliances (e.g., joint ventures) with various firms to provide best-in-class services for its customers. The firms represent various sectors, including Power, Construction, and Hydrocarbon. Specific partners are GULF Interstate Engineering, Chiyoda Corporation of Japan, Mitsubishi Hitachi Power Systems (MHPS), Sargent & Lundy, and Valdel.

Key Resources

L&T’s main resources are its human resources, who include the engineering employees that design, develop, and manufacture its offerings and the customer service staff members who provide support.

It maintains important physical resources in the form of manufacturing facilities in nine countries, as well as the following technology hubs that conduct process design and simulation, mechanical design, analysis of computational fluid dynamics, failure analysis and troubleshooting:

• Engineering Design & Research Centers (ERDC) in Chennai & Kolkata
• Hydrocarbon Research & Development Center in Mumbai
• Upstream Technology Center in Mumbai
• L&T Hydrocarbon Engineering Centers in Faridabad, Mumbai, Vadodara, Bengaluru, and Chennai ### Cost Structure

L&T has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent product enhancements.

Its biggest cost driver is cost of goods, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

L&T has two revenue streams: revenues from the sales of its manufactured goods and revenues from contracts established for the provision of services.