Larsen And Toubro Case Summary

Group Members :

1) Abid Shaikh – 2017HB74005

2) G. Manohar Kumar – 2017HB74008

Problem Statement:

Write and prepare a case let of an Industry or a firm of your choice and analyze any one of the following in detail. The case and analysis of the any one of the following should be based on the facts, figures, actual data, calculation and estimation. You are expected to use different concepts which you have learnt from the course.

a) Collusion Activities

b) Product pricing strategies – Price discrimination, Two-part pricing etc.

c) Market structure and competition level –

d) Production technique and input pricing model

e) Strategies based on Game theory

f) Major characteristic of the product’s demand and measurement of different elasticities

Hence the management has planned to analyze and estimate the different types of cost and cost structure. The main objective is to control cost of the project to maximize the profit within the designated period with satisfactory quality of work.

Cost structure:

Cost structures for the construction, engineering and manufacturing firms have multiple characteristics. These are highlighted below;

Fixed Costs:

Fixed costs are business expenses which remain the same irrespective of the quantity produced by the business through its operations. These costs are generally time bound such as rent paid, monthly salaries and these can also be referred to as overhead costs. Construction businesses are typically characterized by high fixed costs due to the high investments required in renting the facilities and the equipment. However, it is important to note that fixed costs will not remain the constant ie. same forever. Instead, they may change with time but will remain stable over a period of time. Hence these fixed costs are also known as sunk costs for the relevant period of

This will drastically reduce the high construction material costs,

Presently witnessed in the construction industry. The alternative sources of construction materials will also help firm to complete the project with in stipulated deadline. In view of searching for alternative materials the management should not compromise on material quality which may lead to customer dissatisfaction.

The increase of fuel rates has significantly increased the cost of renting plants for the purpose of construction works. Huge amount of funds is spent by the firms on fuel subsidies without showing any significant reduction in fuel prices. Building of more refineries to meet up with the demand of her citizenry and maintenance of the existing ones to perform at its optimum capacity will influence the reduction in plant charges and also overall construction