As Sanjay Sharma (Strategy Consultant from Corn & Cherry, Abu Dhabi), we were asked to make a presentation to Corn & Cherry panel.

1. 1
Image source: L&T annual report
Juggling Hypercubes: Long-Term EPC
Business Strategy for Hydrocarbon
Sector
L&T OutThink 2017 – Round 2
Team: ShootingStars
October 15th, 2017
This case is developed by L&T Institute of Project Management, Vadodara. Case solution is given by the team ShootingStars of IIM Rohtak
All the recommendations related to the business problems, as mentioned in the case, are based on the assumption that DGHE is similar to LTHE of L&T Group

2. 1Source: Case study, Team analysis.
Executive Summary & the Approach
Note: 1 In our analysis we have assumed that DGHE business is very much similar to LTHE business of L&T Group
1
 Strategy & Sub-Strategy
 Resource Based Ideas
 Type of Control
 Co-creation Strategy
SWOT, Porter’s Generic Strategy and Company analysis
suggests that DGHE should focus on differentiation
Resource based view suggests to align strategy to gain
competitive advantage and organizational capabilities
Control system analysis suggest to follow decentralized
control; centralized in case of improving desired qualities
Stakeholder co-creation leads to exploitative and
exploratory knowledge and satisfied customers
Gap
Identification
Building
Organizational
Competency
Table of Contents
1. Recommendation for DGHE’s Strategy
2. Sub-strategy recommendation for various activities
3. Gaps in DGHE Competency
4. Organizational issue in 20th Century Organizations
5. Sub-strategies for efficient workflow
6. DGHE’s top 5 risks for project execution
7. Centralized & De-Centralized Controls
8. Ideal Individual Competencies/Skills/Mindsets of
DGHE’s Employees
9. Ideal competencies/skills/mindset for DGHE project
teams
10. Skill/Mindset challenges for construction industry
11. Making DGHE a project friendly organization
12. Co-Creation Strategy for DGHE
13. Strategic Decision Making Model for DGHE project
teams
14. Insight on strategic element in Indian Context

3. 2
Porter’s Generic Strategy suggests DGHE should go for a successful Product differentiation
Strategy to gain market share & create brand loyalty among customers
1. Recommendation for DGHE’s Strategy
4
3
33
3
Bargaining Power of
Buyers
Industry Rivalry
Bargaining Power of
Suppliers
Threat of New
Entratnts
Threat of Substitutes
Note: Rating is based on qualitative Analysis. Higher the number, more good it is. Source: Team Analysis; Porter’s Generic Strategy. Please refer to slide #23 in appendix to
check area-wise porter’s analysis
Cost Leadership
S Increasing Profits, Efficient Logistics
W
High Investment in New Technologies,
Charging lower prices
O
Digitalization, Operational Cost
reduction
T
China: a low cost competitor, Europe:
with better technologies
S
Diverse Service under one name,
Attractive and Unique Products
W High Costing, Low Asset Base
O
Specialization in certain features,
Highly Valued Customer Service
T
Creative and Innovative Competitor,
Entry of other players in Long term
0
1
2
3
4
5
6
7
S W O T
Differentiation
S
Cheaper price, Acquire market Share
in low cost
W
Not suitable for long term, High
upgradation cost
O
Access to new market/customers,
Can help in scaling up the products
T
Failure because of cost focus,
Cannibalization 0
1
2
3
4
5
6
7
S W O T
0
1
2
3
4
5
6
7
S W O T
Cost Focus
SCOPEBROADNARROW
S
New product development,
Differentiated Product Portfolio
W
Additional cost involved, R&D
investment for customer needs
O
Gain of Market Share, Increase in
Employability
T Entry of Big Players, Product Might Fail
Differentiation Focus
SOURCE OF COMPETITIVE ADVANTAGECOST DIFFERENTIATION
0
1
2
3
4
5
6
7
S W O T

4. 3
2. Sub-strategy recommendation for various activities
-
5
10
15
20
25
2015 2020 2030 2040 2050
PHWR LWR (Russia) EPR (France) FBR AHWR AP 1000
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
0
2000
4000
6000
8000
10000
12000
Jun-17 Jun-16 YOY Growth
DGHE Sub-StrategyBIDDING/PROPOSAL ENGINEERING
MANUFACTURING
 Bidding of more and more projects which are
crucial to the economy like Metros, Nuclear, Hydel,
Ports, Special Bridges and Defence
 Enhance the bidding process to upgrade project
execution on an EPC basis for export gas
compression facilities
 Strategic tie up with nuclear business
Future of Nuclear Energy (Capacity Projects in GW)
 Gross revenue from engineering has reduced
from 3.8% to 3.1% in current year, DGHE should
focus on innovation & technology
 Company has excellent track records at places
like Oman, so joint ventures in that region will
increase the number of projects
 Infrastructure (especially transport
infrastructure) vertical can offer EPC services for
off-shore projects
D&G Segment Annual Growth
 Making more and more
manufacturing plants capable of in-
house facilities to design,
manufacture and supply a wide
range of products related to specific
industries around the area, For
example – Kancheepuram,
Tamilnadu
 Middle-east is a prospective region
to explore & set-up processing units
0
1000
2000
3000
4000
5000
ShipBuilding Industrial
Machinery
Realty MMH
2016-17 2015-16
Gross Revenues in crores
Source: Team Analysis; L&T annual report; orfoline.org; Economic times report on L&T and its businesses
Considering the future industry growth and turns, DGHE should focus on strategic tie-ups,
joint ventures & providing in-house facilities to manufacturing plants

5. 4
DGHE Sub-StrategySUPPLY CHAIN CONSTRUCTION
PROCUREMENT
 Business tie-ups with local and international
consortium partners for pre-qualification for
mega projects in the GCC countries (Mostly in
East Africa and Kuwait, as they are new
markets). Doing this will ease-up as well as
speed-up the procurement process
 Considering the world class fabrication facilities
present in India’s east and west coast (in Hazira
and Kattupalli), the procurement facilities can
be improved by implementing load-out jetties
to facilitate delivery of large and heavy modules
vie ocean-going vessels and barges
 Development of commercial buildings is
increasing on exponential rate, thus strategy of
procurement centres at places where
construction of malls, offices are taking place
will help save lots of time with least cost
involved
 With respect to the transport
infrastructure, construction of more
engineering design centres to cater to
international projects
 Installation of improved engineering
models like Inclinometers, GPS system
and LIDAR surveys for quality
improvement, timely completion, cost
optimization and efficient resource
utilization
 Backward Integration into Engineering
and Procurement
0
500
1000
1500
2000
2500
3000
3500
0
10000
20000
30000
40000
50000
Revenue Order Inflows PAT
Source: Team Analysis; L&T annual report; orfoline.org; Economic times report on L&T and its businesses
 Process standardization which will
automate manual or mundane work
processes therefore, making it easier to
streamline supply chain management
practices
 Since the supply chain highly depends on
outstanding vendor performance, it needs
to be monitored and rated through robust
metrics available through ERP systems.
 Long term agreements for India’s emerging
deep water market and to execute Saudi
Aramco’s offshore facilities on EPCI basis
0
5
10
15
20
25
2015 2016 2017 2018 2019 2020
Estimated Spending on Logistics and Supply
Chain (Global) in B$
Further analysis shows that DGHE should strategies in process standardization, installation
of improved engineering models & business tie-ups with international partners

6. 5
3. Gaps in DGHE Competency
Premier EPC
Contractors
HSE Management
Systems
Business lines
Solution
Commissioning
Business
EPCI Projects
3D model based
engineering solutions
Internationally
Certified
Engineering Design
Centers
Collaborations Engineering Services
In this era of evolving technology,
DGHE is not equipped with the
current technologies and thus there
is a huge gap in its competencies
Evolving information
technology
Collective learning in
the organization
Major Orders
Perspective of the
Company Leaders
The co-ordination between diverse
production skills and integrate
multiple streams of technologies
There are very less major orders and that
too, confined to a certain region, which
restricts the global development
Top management was unable to conceive
of the company as anything other than a
collection of discrete businesses.
GapsinDGHECompetency
DGHE’s Core Competency
Source: Team Analysis; L&T annual report; orfoline.org; Economic times report on L&T and its businesses
Offers ‘total
engineering
solutions’ right
from ‘concept to
commissioning’
across all its
business lines
Long term agreements
with McDermott
International for India’s
emerging deep water
market and Saudi
ARAMCO to execute
Saudi Aramco’s
offshore facilities on
EPCI basis
The Company’s
HSE
Management
System is
OHSAS 18001
and ISO
Concept Studies,
3-D model based
engineering and
special studies to
commissioning
CoreProduct
Competencies
An extensive set of suppliers from
around the globe, networked
through an online procurement and
an e-business platform
Procurement
Fully integrated
capability chain
Division of businesses
into value chains
Digitized project
control
In-house engineering and R&D centres,
world-class modular fabrication facilities
as well as onshore construction and
offshore installation capabilities
Offshore, Onshore, Construction Services,
Modular Fabrication Services and
Engineering Services
Enable the business to establish itself as
one of the premier EPC contractors, both
in the Indian industry and in targeted
overseas markets.
AccumulateCoreCompetency
Evolving technology & in-house engineering are major gaps in DGHE’s competencies; its
core competency consists of collaboration, management system & type of contractors

7. 6
4. Organizational issue in 20th Century Organizations
Self-esteem
Relationship
Survival
Transformation
7 levels of organizational consciousness
Key issue was to consider
reconstructing plausible histories
Synchronization of culture,
politics, knowledge management
and team management
Organizational politics
representing attempts at control
and resistance
Key Issues
Source: Team Analysis; narratives by Monika Kostera, and guidelines as per Mackay/Sisodia’s Conscious Organization model
Key issues consist of Reconstruction of Histories and synchronization of different phases
of an Organization like Culture, Knowledge Management and Leadership

8. 7
5. Sub-strategies for efficient workflow
The core competencies should be used to
modify short-term competitive positions that
can be used to build longer-term competitive
advantage
Source: Team Analysis; Ghemawat, David Teece, Gary Pisano, and Amy Shuen
Tangible
• DGHE’s physical Resources like
Land, Buildings, and Machinery.
They confer little advantage to
the company in the long run
Intangible
• DGHE’s brand reputation,
trademarks, intellectual
property are all intangible
assets. They are built over a long
time and is something that
other companies cannot buy
from the market. They are the
main source of sustainable
competitive advantage
Assumptions
Heterogeneous
Immobile
DGHE Sub Strategy
Valuable?
Rare?
Costly to imitate?
Is the Firm organized
to capture value?
Sustained Competitive
Advantage?
• Companies achieve CA1 by using
different bundle of resources
• Company can’t replicate immobile
resources giving them CA
YES
NO
NO
NO
NO
IN DGHE EVERY WORK-FLOW
SHOULD BE BASED ON THE
RESOURCE-BASED VIEW
MODEL. COMPANY SHOULD
ALLIGN ITS STRATEGY TO
GAIN CA
BY FOCUSING ON
ORGANIZATIONAL
CAPABILITIES DGHE CAN GAIN
COMPETITIVE ADVANTAGE
1 CA = COMPETITIVE ADVANTAGE
YES
YES
YES
For efficient workflows short term positions, DGHE should be modified to build long term
competitive advantage

9. 8
6. DGHE’s top 5 risks for project execution
Risks Coding
Demand Risks
Increasing penetration of electric cars and
the broader mobility revolution D1
Gas Demand D2
This rising prosperity drives an increase in
global energy: energy demand increases by
only around 30% D3
Environmental
Increasing Emission of Carbon affecting
environment P1
Renewables are the fastest growing fuel
source,quadrupling over the next 20 years P2
Supply Chain
second wave of LNG supply growth is slow
to materialise causing a temporary period
of tightness within LNG supplies S1
Financial
Focusing on short term cost reduction
rather than long term development F1
Legal
Onerous contract terms by client and
counter-party risk L1
Other Risks
localization requirements O1
tight schedule O2
forex exposure O3
High
Med
Low
Low Med High
D1
D2
D3
P1
P2
S1
F1
L1
O1
O2
O3
RISKPROBABILITY
RISK IMPACT
 Periodic review to ensure that the executive management follows a properly
defined framework
 Investment made in the Middle East for training of workmen.
 Showing a long term commitment to consolidating presence in select
geographies through setting up of offices, entering into alliance with
collaborators and developing marketing networks.
 operational excellence initiatives, alliances, cost optimization and improved
customer intimacy
 compliance with stringent HSE standards, strong contract & claims
management and identification of key personnel and talent at the pre-bid
stage
 detailed assessment of deliberation on mitigation measures by the ARMC
RISKMITIGATION
RISK MANAGEMENT FRAMEWORK
Identify
Analyze
Plan & Action
Control & Mitigate
• Pre-Bid Review of All Processes at business
and at the corporate level
• Executive management assesses its strategic,
financial, operational and accident risk factors.
• Periodic review to ensure that the executive
management follows a properly defined framework
• evaluation of risks using a risk matrix, thereby also
assigning monetary values to risks
• Project managers/selected project team members
undergo a certified Risk Induction Program
conducted by ECRI. Collaboration with Engineering
and Construction Risk Institute (ECRI), USA
• Investment made in the Middle East for training of
workmen. Contingency plans are prepared for
significant risks.
• Following well documented Standard Operating
Procedures(SOPs) detailed assessment of deliberation
on mitigation measures by the ARMC
• Structured risk management framework
Source: Team Analysis; Case Study
DGHE’s risks are high short-term cost & fast growth of renewable source. For performance,
periodic review, detailed assessment & compliance with standards should be followed

10. 9
Environment
Goals & Strategy
Culture
Technology
Size
Site Level Organization Level
• For Customers, Suppliers and Sub-Contractors, the
execution managers have to co-ordinate with safety and
quality functions at every point of time, leading it to a
decentralized decision making.
• At the same time for projects, the decision depends on the
size of the project.
• CEO along with corporate managers, have to deal with the
general environment like economic, political, technological,
environmental and international forces.
• There is high level of interaction with the customer and
the focus of the employees is customer satisfaction and
faster execution. so there is high level of decentralization.
• The goal is to get more projects and devising ways to
improve the efficiency of execution. Since Top
management are not involved in day to day execution of
projects, the process remains decentralized
• Mostly culture remains same, so high level of
decentralization .
• Change in CEO may affect the culture of whole company
including the facilities available for site based employees,
shows a bit of centralization
• The process is mostly continuous and less human
intervention is involved. All the departments performing
the activities follow decentralized structure
• Each site has an average strength of 50; employees. ideal
for organic structure. integration is possible and increases
efficiency of employees. So, decentralized process
• the work done at corporate level cannot be automated,
knowledge and skills are the most desired qualities and
work depends a lot on them; thus a bit of centralized
process if followed
• Corporate office houses more than 2000 employees. Best
suited structure is mechanistic structure where
integration is low and centralized decision making
increases efficiency. So, centralized process
7. Centralized & De-
Centralized Controls
Source: Team Analysis; Case Study; Management Control Systems – R.N. Anthony, V. Govindarajan
Studies reveal that site level control is dominated by decentralized decision making,
whereas in organizational level, centralized control is followed to improve the quality

11. 10
1 On 76% of the great days, respondents mentioned progress as the real reason (HBR – Breakthrough ideas for 2010 article)
2 Growth mindset employees reach higher level of productivity. Managers should promote growth mindset among the employees
Source: Team Analysis; Stress experienced by active members of trade unions, Nandram & Klandermans; The progress Principle, Teresa Amabile; HBR – Break through ideas -
2010; Growth & Fixed Mindsets, Dweck Carol;
8. Ideal Individual Competencies/Skills/Mindsets of DGHE’s Employees
Challenges
Obstacles
Effort
Criticism
Success of Others
…Embrace
Challenges
…Persist in
the face of
setbacks
…See effort
as a path
to mastery
…Learn from
criticism
…Find inspiration
in the success of
others
Growth Mindset
leads desire to
learn & therefore a
tendency to
G
R
O
W
T
H
M
I
N
D
S
E
T
76%
43%
25%
53%
19%
25%
12%
4%
43%
15%
Progress Instrumental
Support
Interpersonal
Support
Collabration Important Work
What happens on a great day? 1
Best Day Worst Day
Competencies & Skills Individual Productivity
 DGHE’s managers should create both the perception & the
reality of the progress
 Cultivate a culture of helpfulness, properly support
employee’s effort
 Managers should celebrate progress, even the incremental
sort
 When workers sense they’re making headway, their drive to
succeed is at its peak
Core Competencies
Behavioral Competencies
Technical Competencies
Functional Competencies
• DGHE’s huge experience in setting processes,
methodologies, technologies can be used for
competitive advantage
• Apply knowledge to identify issues and
internal problems; work to develop additional
technical knowledge and skills
• Work harmoniously with others to get a job
done; respond positively to instructions and
procedures; work well with staff & co-workers
• Challenge conventional practices; adapt
established methods for new uses; pursue
ongoing system improvement; create novel
solutions to problems
DGHEshouldinculcateidealcompetencies
initsemployeesanddevelopthegrowth
mindsettoboostproductivity2
Mindset
DGHE’s manager should focus on inculcating the ideal competencies in the organization by
creating a growth mindset, perception & reality of the progress

12. 11
9. Ideal competencies/skills/mindset for DGHE project teams
Project teams have some characteristics of
start-up companies like…
Source: Team Analysis, Strategic thinking: can it be taught?, J M Liedtka; Causation and Effectuation, S D Sarasvathy; Effectual versus predictive logic in entrepreneurial decision
making, S D Sarasvathy
DGHE project teams should
embark Strategic Thinking as a
skill to take project decisions
DGHE project teams should see
vertical & horizontal linkages
within the system from multiple
perspective
DGHE project teams should
marshal and leverage their
energy, to focus attention, to
resist distraction, and to
concentrate for as long as it takes
to achieve a goal.
DGHE project teams
should think on what
to keep from past,
what to lose from
past & what to create
in present to reach
the desired goal
DGHE project teams
should accommodate
both creative
and analytical thinking
sequentially in its use of
iterative cycles of
hypothesis testing.
DGHE project
teams should
encourage lower
levels to practice
intelligent
opportunism in
order to avoid
strategic
dissonance
Increases
Project
Productivity
Are DGHE project teams like startups?
Effectual Reasoning in Decision Making
• For project teams, goals emerge by imagining courses of action
based on given means. Similarly, who comes on board
determines what can be and needs to be done
• Project team frames the problem as one of pursuing adequately
satisfactory opportunities without investing more resources than
stakeholders can afford to lose. The focus here is on limiting
downside potential.
Causal Reasoning in Decision Making
But at the same time some characteristics of
project teams are not that entrepreneurial…
• Teams frame the future as a continuation of the past. Hence
accurate prediction is both necessary and useful.
• Teams frame promulgate a competitive attitude toward
outsiders. Relationships are driven by competitive analyses and
the desire to limit dilution of ownership as far as possible.
• Accurate predictions, careful planning and unwavering focus on
targets form hallmarks of project teams. Contingencies,
therefore, are seen as obstacles to be avoided.
DGHE’s project teams should think strategically while making decisions. Project teams are
similar to startups when they are managing project tasks with minimum resources

13. 12
10. Skill/Mindset challenges for construction industry
PO PM PM C
Hires
Performs
Monitors
Informs
Hires
Performs
Hires
Performs
Self
Interest
Self
Interest
Self
Interest
Self
Interest
po c
GlobalEconomy
GlobalConstruction
Sector
$ 37/hour
$ 25/hour
$(1.63)
$(0.03)
$(0.05)
$(0.07)
$(0.44)
$(0.46) $(0.58)
Africa
South America
Middle East
Asia Pacific
Europe
North America
Average value added by
employees per hour worked
1 Assumes total productivity catches up with total economy productivity and current employees are reemployed at the total economy productivity rate
2 PO = Project Owner, PM(po) = Project Owner’s Project Manager, PM(c) = Contractor’s Project Manager, C = Contractor. Relationship between PM(po) & PM(c) is the key to success
3 1 = Bureaucratic control, 2 = Information system, 3 – incentives, 4 = corporate culture, 5 = reputation, 6 = Trust (most important strategy to minimize information asymmetry)
Loss in economic value due to the skills gap by
region1, Productivity Gap = 1.63 $ trillion
Source: Team analysis; Reinventing Construction through a productivity revolution, McKinsey Global Institute; Strategies for minimizing information asymmetries in construction
projects, Anita Ceric; Minimizing communication risk, Anita Ceric; Construction market labor skill crisis, Andrew R J
0.176 0.17 0.135 0.154 0.164 0.2
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
0.18
0.2
1 2 3 4 5 6
 rethinking design and engineering
processes
 improving procurement and supply-chain
management
 improving onsite execution
 infusing digital technology, new materials,
and advanced automation
 reskilling the workforce.
 Skill Shortage Risk: due to lack of productivity, there’s an
economic loss of $1.6T. Middle east – most productive
 Information Asymmetry: Principal-agent theory
 Labor Productivity: over the past decades growing at a
glacial pace – 1%
 Technology and Digitization: Less use of technology, no
automation
Risks & Challenges
DGHE should convert these challenges into opportunities by …
1. Understanding relationships and passing on the Information2
2. Acting in these 5 areas simultaneously
to boost productivity by 50-60%
3. Minimizing the information asymmetries by
following these 6 strategies3
UtilityImportance
Skill shortage & low labor productivity are the main challenges in the construction
industry. DGHE can minimize information asymmetry by focusing more on creating trust

14. 13
1 DGHE should use project manager model to built trust in the organization & making it project friendly
2 Project performance model should be used for efficient & successful execution
11. Making DGHE a project friendly organization
Source: Team Analysis; Characteristics of a project friendly enterprise, Vittal Anantatmula; Project leadership role in improving project performance, Vittal Anantatmula
Competent Practices &
Professionals
Productive Teams
Project Friendly
Organization
 Rank value of proposal & project
 Rank desirability of Contractor
 Manage project facets like cost,
duration, risk using planning,
fine tuning, Change
management& tradeoff analysis
 Measure the attributes
 Divide into teams – proposal
team, proposal portfolio team,
project team, project portfolio
team
 Make a team charter – specify
personal behavior &
professional performance
Guidelines
Procedure & Models for
 Managing attributes
 Project
 Proposals
 Portfolios
 Consistency in
 Performance
 Success
Team Norms for
 Performance
 Deliverables
 Reporting
 Punctuality
 Behavior & Attitude
 Trust
 Conflict
management
 Harmony
How DGHE can
leverage over it?
 Senior
Management must
facilitate
formalization of
prioritization of
projects
 DGHE should
support a
comprehensive
project
management office
infrastructure to
support projects,
proposals, and
portfolios
 DGHE should
formalize the
process, and
should articulate
DGHE’s strategic
objectives and
financial resources
 Frequent
monitoring of the
effectiveness of
DGHE’s initiatives
FRAMEWORK FOR MAKING DGHE A PROJECT FRIENDLY ORGANIZATION
Incremental efforts by
setting up an enterprise
project management office
Prioritize projects based on
financial, strategic and
funding category constraints
Create Clarity in
Communication
Define roles &
responsibilities
Communicate
Expectations
Employee
Consistent
Processes
Facilitate
Support
Establish Trust
Manage
Outcomes
Given Means Ends
Project
Manager
Model1
ProjectPerformance
Model2
DGHE can become a project friendly organization by focusing on Competent Practices and
Productive Teams. DGHE should use project performance model for increasing productivity

15. 14
12. Co-Creation Strategy for DGHE
Stakeholder co-creation
completes the interaction
between multiple stakeholders.
Applying this in a project:
• Increases the likelihood of more
engaged and satisfied
stakeholders
• Increases the danger of losing
focus on those stakeholders who
possess the most critical
resources for the project's
survival and progress
• Increases the danger of inducing
stakeholder disappointment due
to expectation escalation and
impossibility of embracing
conflicting requirements and
wishes.
Framework for co-creation at DGHE
Source: Team Analysis; Case study; Martina Heumann, Co-creation strategy
Capabilities before & during stakeholder’s co-creation project helps in exploitative and
explorative knowledge. It also increases likelihood of satisfied stakeholders

16. 15
13. Strategic Decision Making Model for DGHE project teams
Multi-Attribute Utility
Model1
ranking the preferences of an agent over
bundles of goods under uncertainty.
Using MAUDM model team mangers can
assess the utility of different options
having different attributes and an
uncertainty attached to them.
Since, it’s an ordinal utility model the
scope of including qualitative attributes
(variables) in the model is also there.
Process
Assess different attributes
Calculate utility function
using Von Neumann–
Morgenstern utility theorem
Take decision if expected
utility of one option is more
than other
Pros
Accounts for uncertainty in
decision making
Based on the utility of the
decision
Constraints are inherent
Attributes are used as
criteria
Qualitative factors can be
factored in
Cons
Attributes are explicit in
nature
Utility function is difficult
to calculate
Can be used only for finite
number of decision
Model becomes complex
for more attributes
1 Tool used to take decision based on certain attributes. Criteria is based on attributes and not the objectives
Source: Team Analysis; Decision Making Theory; Multi Criteria Models for Strategic Decision making
DGHE’s project teams should take decisions based on Multi – Attribute utility model. It’s a
multi criteria based attribute decision making model

17. 161 Content based on telephonic interview; Source: Team Analysis; google scholar
14. Insight on strategic element in Indian Context
Project Taken - Derivatives and its various
strategies.
Situation Analysis – A full service brokerage firm
providing advisory services to all its clients under
one roof, enabling to manage all financial needs.
Clients is a mix of institutional, high net worth,
and retail investors.
Solution – Meeting the support needs of the
investors through execution skills driven by
experienced sales team and researched backed
advice generated by team of experienced
analysts.
Strategy –
1. Proper Training to the respective teams
2. Both Pull and Push mechanism
3. Emphasis on R&D
AJAY PANDEY RAGHU ANANTANARAYANAN1 KANIKA BHAL
Project Taken – Organizational Development and
Alignment
Strategy – Most of the systems follows closed
model, but rather it should follow network model
where they can enhance supplier-customer
relationship. With respect to same, 4 voices needs
to be connected and to be worked on :
Voice of Customer – What customer wants
Voice of Employee – How should we achieve it
Voice of Wealth – How much money is involved
Voice of Technology – What technologies should
be involved so that adjustment is easy
All are equally important and equally prior.
Informal Comments – Try to show it as, all the 4
things are equally important and the act of joining
of all 4 will lead to the successful organization
KIRANKUMAR MOMAYA
Project Taken – Foundation of Core
Ideologies and Vision in Strategy
Strategy - Leadership was identified
to be the most important factor,
particularly in context of core
ideologies.
Accelerated Growth through
internationalization, value capture in
global markets and late stage of
ascent on the value curve
Organizational values should be
articulated as part of strategic intent
(e.g. Mission, Vision, Values). These
are often a sub-set of values the
leadership of an organization
evolves over time
Project Taken – Accessing the
nature of decision making in
public and private sector
organizations
Strategy - New and Improved
Marketing Strategy Push
Strategies at most of the
times, but at times pull
strategy
Areas – Ethics and Leadership
Work – Measuring the quality
of interaction between leader
manager and members
The basic insights emphasizes on R&D, combination of all 4 voices and accelerated growth
through internationalization and value capture in global markets

18. APPENDIX

19. Team: ShootingStars
L&T OutThink 2017
Juggling Hypercubes: long-term EPC
Business Strategy for Hydrocarbon
Sector
September 30th, 2017
This case is developed by L&T Institute of Project Management, Vadodara.
All the recommendations related to the business problems, as mentioned in the case, has been given by team Shooting Stars from IIM Rohtak
Image: Pexels

20. Executive Summary & the Approach
1
Existing Business Model
Value & Goals
External Analysis Internal AnalysisSWOT
Business Level Strategy
Global Strategy
Arena Selection Model
Corporate level Strategy
Portfolio
Contribution
Impact on
Competitive
Advantage
Human Leverage
Strategy
Formulation
Strategy
Implementation
1
2
3 4
5
6
7
8
9
10
Approach Flow Chart
1
2
3
Source: Case study, Team analysis. In our analysis we have assumed that DGHE business is very much similar to LTHE business of L&T Group
BCG, SWOT and Porter’s Five Forces
analysis suggests DGHE has a strong
competitive positioning
Arena Selection Model suggests
Middle East & North Africa as a first
choice followed by South East Asia.
PESTLE analysis suggest South East
Asian countries as 1st Preference
DGHE’s contribution to DGHE has
significantly increased. Its EBITDA
margin is 6.8%

21. 21
Outlining DGHE’s Strategy (2-6)
Arena Selection Model (7-9)
DGHE’s Contribution (10-13)
Source: L&T annual report

22. DGHE executes capital projects through EPC contracts. DGHE can leverage on its value
proposition to gain a competitive advantage in a maturing industry…
2
*We have assumed that the growth in orders of DGHE is similar to LTHE unit of L&T. SOURCE: L&T Annual report , Case study & Team analysis
1 Existing Business Model
EPC Contracts
offshore onshore
• Well-head
platforms
• Process
Platforms
• Modular
Structures
like living
quarters,
heavy
jackets
• Subsea
pipelines,
brownfield
• Floating
system &
offshore
drilling rigs
• Refinery
expansion
and
revamping
projects
• Gas
treatment
facilities
• Fertilizer
projects
• Petrochemi
cals
• Cryogenic
storage
tanks and
terminals
• Pipelines
76%
25%
43%
12%
0%
20%
40%
60%
80%
100%
120%
140%
Best Day Worst Day
Growth in Orders of DGHE Subsidiary*
Progress
Source: Annual Report and Appendix 1
Pros:
 “Single Point Responsibility” ensures completion of
projects in schedule and budget
 Guarantees Competitive advantage to clients
Cons:
 Over-aggressiveness w.r.t schedule leads to unfavorable
delays, and decline in quality
 No periodic assessment of costs and risk of not having
the skilled labor force to complete the project
2 Value Proposition and Goals
Can DGHE meet its goal and continue
offering the customer value?
The recent increase in the orders is favorable, but we should also
look into the cons of the business model to address the demand
DGHE
Suppliers
Competitors Complementors
Customers
PLAYERS: DGHE, DGHE’s existing client base, new clients, other
competitors, Co-opetitors (Potential Partners)
ADDED VALUE: Flawless project deliveries, state of the art
execution, top class safety, sharp focus on quality, huge experience
RULES: Usually projects are EPC contract based, risk is high
TACTICS: Excellent PTR, high available capacity, integration
SCOPE: Huge scope in emerging economies
Currently, DGHE is more focused on Indian subcontinent
and nearby regions. Existing business model offers an
excellent leverage to venture into other economies

23. 0
2
4
6
8
10
12
14
16
18
1965 1975 1985 1995 2005 2015 2025 2035
OECD China India Other non-OECD Asia Africa Other
Following the prolonged downturn, the oil & gas industry is showing some signs of revival, oil
prices are expected to rise and emerging economies will be the largest energy market …
3
Source: Team analysis, BP global outlook 2017 . *scores based on team analysis
3 External Analysis
Five Forces Analysis*
A region - based perspective
-2.5
-1.5
-0.5
0.5
1.5
2.5
3.5
4.5
5.5
1965-75 1975-85 1985-95 1995-05 2005-15 2015-25 2025-35
GDP(%) Primary energy(%) Energy Intensity(%)
Growth in GDP is expected to become stable, but
growth in primary energy is expected to decline
Due to increase in energy efficiency, there’s a
slowdown in primary energy requirements.
The pace at which global energy intensity
declines is projected to increase as China’s
economy rebalances and India leverage its
growth on favorable macro conditions
• China is expected to be the largest
energy market, but India will overtake it
by the end of 2035. Africa, also will be a
growth market in a long term.
• DGHE should consider it expansion in
these countries to gain as an early
mover by leveraging its value
proposition
Energy Consumption by region
0
200
400
600
800
1000
10.9031735
416.4 4.5
• Industry attractiveness is more in middle
Eastern Countries
• South Asian countries are center of
attraction for DGHE

24. Advancement in technology has led to slow down in oil demand from industry and transport
sector. DGHE should focus on diversification of its services…
4
0
1
2
3
4
5
6
7
1965 1975 1985 1995 2005 2015 2025 2035
Industry Buildings Transport Non-Combusted
Production by region Consumption by region
0%
20%
40%
60%
80%
100%
120%
1975 1985 1995 2005 2015 2025 2035
Gas Non-Fossils Oil Coal
There’s a supply -
demand gap of
around 4-5 million
barrels per day.
Majority of the
consumption is
from Asia Pacific
Region, America
& Europe
Due to recent advancement in
technology, the share of primary
energy has shifted from coal to non-
fossils sources of energy. It’s a risk
for Hydrocarbon Engineering EPC
firms
Shares of Primary Energy Increase in energy efficiency has led to the
slow demand in industry and transport
sector
Total energy consumption by sector
Macro factors are not that
favorable, because it’s
maturing industry. Business
diversification is required
Source: Team analysis, BP global outlook 2017

25. Immense amount of experience has led DGHE to gain a competitive advantage. BCG analysis
suggests that pipelines and head platforms are most profitable project types for DGHE…
5
4 Internal Analysis: Building Blocks of Competitive
Advantage
Competitive Advantage:
• Differentiation
• Cost effective
Superior Quality
Superior
Efficiency
Superior Innovation
Superior
Customer
Responsiveness
• In-house capabilities helps to deliver complete from design to build turnkey
solutions
• The business has repeatedly delivered, large, critical and complex projects,
globally, by virtue of its customer focus & responsiveness, experienced &
highly skilled human resources, world-class Quality & HSE practices and
culture of excellence
BCG Matrix analysis for project types (Revenue Streams)*
Relative Position (Market Share)
GrowthRate
High Low
High
Low
Invest ?
Cash Cow Dog
• BCG analysis shows that businesses like well head platforms, subsea
pipelines, cryogenic storage tanks, pipelines are in “investment zone”
• DGHE should use its resource to leverage on these kind of projects
Source: Team analysis, Annual Report, EY business outlook

26. SWOT analysis, with a score more than 2.5, suggests that DGHE has a huge competitive
advantage over its competitors…
6
5 SWOT Analysis: Strategic Factor Evaluation Matrix
External Factors Weight Rating Weighted Score
Threats
High growth rate of renewable sources 0.15 4.8 0.72
Sharp decrease in demand of coal 0.15 4.2 0.63
Projected closure of global refineries in Europe, OECD Asia,
North America
0.10 3.5 0.35
Decrease in demand of oil due to use of non-combustibles 0.05 1.6 0.08
Increasing energy efficiency 0.05 1.2 0.06
Total Scores 1.00 3.79
Internal Factor Evaluation Matrix
External Factor Evaluation Matrix
Internal Factors Weight Rating Weighted Score
Weaknesses
Little presence in markets other than India, Middle East 0.20 4 0.8
Project assessment not as good as European
companies
0.10 2.5 0.25
ROE is less according to Indian standards 0.10 2.0 0.2
Total Scores 1.00 4.03
Internal Factors Weight Rating Weighted Score
Strengths
Robust track record on project deliveries 0.15 5 0.75
Vast client base, covers almost all major players 0.15 4.8 0.72
Market leaders in capital intensive projects 0.15 4.8 0.72
Major Focus on Operational Excellence 0.10 4 0.4
Umbrella for huge range of services 0.05 3.8 0.19
External Factors Weight Rating Weighted Score
Opportunities
Projected substantial increase in import of LNG in China and
Europe
0.15 4.8 0.96
large scale and low cost resources in Middle East, US,
Russia
0.10 3.0 0.3
Projected decline in liquids supply, while demand increases
for China, Asia, Europe
0.15 3.4 0.51
Slow increase in oil producing market in Brazil 0.05 1.6 0.08
Increase in energy consumption to generate power 0.05 2 0.1
SWOT Analysis suggests that odds are in favor of DGHE
Source: Team analysis, case study, annual report

27. Hydrocarbon industry is in mature stage. The business level strategy for DGHE should be more
focused on deterring rivals and diversifying across economies…
7
6 Business level Strategy: for Maturing Industry
Strategy for
Deterring
Entry of Rivals
Product
proliferation
Price Cutting
Maintaining
Excess
Capacity
Strategy to
manage
Rivalry
Price Signaling
Price
Leadership
Nonprice
Competition
Capacity
Control
Market
Penetration
Product
Development
Market
Development
Product
Proliferation
Products
Existing
MarketingSegments
New
NewExisting
• By focusing on diversified range of products,
DGHE can improve its competitive positioning
and deter competitors from entering
• Dynamic price cutting for high margin products
and efficient cost structure will give a
competitive edge
• DGHE can maintain excess capacity by
developing well tested processes
• DGHE can go for a tit-for-tat price signaling
competitive strategy
• DGHE can leverage over its experience, resources
and capabilities to gain price leadership
• Right forecast of capacity will help DGHE in
efficient budgeting
• Hydrocarbon segment has high EBITDA
margin – hence penetration should be
done
• Electrical & Automation in Hydrocarbon
segment – penetration may lead to
competitive advantage
• Innovation can lead to new product
development in EPC life cycle
Four Nonprice Competitive Strategies
Source: Team analysis, case study, annual report

28. South East Asian & North African Countries seem very attractive after Middle East Countries.
DGHE should look for divestment in these countries…
8
Source: Team analysis, case study, annual report BP energy outlook
6 Arena Selection Model
Oil consumption per capita (in tonnes)Trade flows worldwide (in million tonnes)
Most trade flows in
this region
Huge consumption in
Middle East, America
and South East Asia

29. Arena selection model suggests, after taking 7 important parameters, Middle Eastern and North
African countries for penetration, followed by South East Asian countries. Qualitatively, south
Asian countries are preferred..
9
Source: Team analysis, case study, annual report
0
1
2
3
4
5
6
Track record Repeatable
Availability of
Projects
Customer Base PEST Analysis Risk Metrics Accessibility (CAGE) Availability of
Resources
Middle East and North Africa Russian Common Wealth South East Asia North America Average Socre
Arena Selection Model – Analyze on different parameters and compare
with the average
We can clearly see from the above model suggests Middle East, North Africa and
South Asian Countries
0
0.5
1
1.5
2
2.5
3
3.5
4
Political
Economical
Social
Technological
Legal
Environmental
Middle East and North Africa Russian Common Wealth
South East Asia North America
Average
PESTLE ANALYSIS
After qualitative analysis, preference order of
region where DGHE should penetrate: South
Asian Countries > Middle East & Africa > North
America

30. After selection of the market, DGHE should align its global strategy with its business
strategy and core competency…
10
8 Global Strategy: How to concur the world?
GlobalStrategyforSupplyChainofOilandGas
Cost cutting: A diet for the overweight
Vertical Integration: One-Stop shop
New Revenue models: for future rewards
Consolidation: Increasing Concentration
New Service models: Design to value
• Cost cutting by making well tested process
• Use improved tech and BIM to reduce leaks
• Collaboration to simplify contractor management
• In-house equipment purchase – 30% cost reduction
• High leveraged capital structure
• Focus more on OPEX and capitalize by parts
• Joint ventures to gain the competitive adv.
• Merger and Acquisition to gain mkt. share
• Collaboration with other co-opetitors
• Leverage on technology
Company Response Strategy
Diversification of Revenue Streams
Effective cost controls & Customer Service
Safety and Human Capital Investment
• Offer broad service range
• Consolidate & Leverage existing business in UKCS
• Emerging market opportunities such as Africa
and Asia
• Continuous Capital Expenditure & Technology
investments to improve economies of scale and
efficiency
• Reduce operational cost base utilizing innovative
approaches (e.g. cut down wastage)
• Ensure project deadlines & service delivery timely
• Investment in Employee Health & Safety
• Initiatives to ensure continuous supply of talent
pool
• Adequate succession planning for senior
management
Overcoming the Barriers to Change
• Utilize integrated logistics
policies to cut down project
timelines
• Bespoke risk & asset
management strategies to
address capital allocation
decisions.
• Effective communication
strategies to understand
employee & customer needs
• Training and human capital
development
Source: Team analysis, case study, annual report

31. D&G corporate strategy has four key areas. D&G group subsidiaries should contribute to
D&G’s portfolio by focusing on these 4 areas…
11
9 Corporate level Strategy: Four Key Areas
Strengthening execution
and operational
efficiency
Business value unlocking Digitalization
Emphasis on improving
Working capital
level
D&G Group
DGHE
Source: Team analysis, case study, annual report

32. DGHE’s contribution to D&G’s portfolio is very significant. There’s a substantial increase in
orders & EBITDA margin but asset size has remained low…
12
10 Portfolio Contribution of DGHE to D&G
6%
10%
0%
2%
4%
6%
8%
10%
12%
0
5000
10000
15000
20000
25000
30000
2016 2017
Number of Orders % Contribution
• There’s a significant increase in the number of
orders from around 15000 to 25000
• The percentage contribution to total portfolio
has also increased significantly from 6% in
2016 to 10% in 2017
• Hydrocarbon segment’s EBITDA margin has
increase significantly frim 0.5% to 6.8% in a
matter of one year
• Such increase indicates that the portfolio
contribution of DGHE to the parent company
has become significant
• Despite being a significant increase in EBITDA
margin, there’s no significant increase in
Assets as such
• DGHE has achieved such a high EBITDA
margin by having a light asset base
D&G consolidated – Hydrocarbon order book
D&G consolidated – EBITDA Margin D&G consolidated – Assets
Source: Team analysis, case study, annual report

33. The Impact web shows that the there’s a huge impact of corporate level strategy on DGHE’s
business. DGHE’s should effectively use human capital to gain competitive advantage …
13
The Impact Web
• High EBITDA margin from DGHE business is inline with the corporate strategy of
strengthening operational efficiency and execution
• D&G is planning to divest some of its business to diversify. DGHE being a high
EBITDA and low asset business, it’s highly unlikely of such case to occur
Leveraging Human Capital
Organizations deliver superior and sustainable value
when they have:
Evolutionary Purpose
Spiritual Intelligence
Entrepreneurial Ability
Shared Tacit Knowledge
Trust Communication
DGHE should leverage on it’s strong human
capital by creating a trust among the employees
Source: Team analysis, case study, annual report