Strategy development by Indian SMEs in plastic sector: an empirical study.Abstract This paper examines the issues of pressures and constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. , strategies for investments, competencies development, cost reduction, quality improvement, and relationship of strategies with overall performance for small and medium enterprises in Indian plastic sector under an emerging economy. Using data acquired from an extensive survey of Indian SMEs in the plastic sector, cost, quality, and range of products have emerged as the major pressures. This study has reflected the flexible nature of SMEs in developing competitive strategies. However, it is observed that SMEs are not making clear distinction in developing strategies for reducing cost and improving quality. Key Words: Manufacturing strategy, SMEs, plastic sector, globalisation, performance. Small and medium enterprises (SMEs) represent the largest proportion of the manufacturing sector in many countries. They have always played a key role in the economies of major industrial countries. In India, 95 per cent of industrial units are in small-scale sector with 40 per cent value addition in the manufacturing sector and 6.29 per cent contribution to the Indian Gross Domestic Product (Times of India, 2002). In India, industries having investment in plant and machinery less than Rupees (Rs) 10 million are called small-scale industries (SSI (1) See server-side include and single-system image. (2) (Small-Scale Integration) Less than 100 transistors on a chip. See MSI, LSI, VLSI and ULSI. 1. (electronics) SSI - small scale integration. 2. ). There is no formal definition for medium scale industries but according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. some studies, industries having investment between Rs 10 million and 1,000 million in plant and machinery are termed as medium scale industries, MSI MSI: see integrated circuit. (1) (MicroSoft Installer) See Windows Installer. (2) (Medium Scale Integration) Between 100 and 3,000 transistors on a chip. See SSI, LSI, VLSI and ULSI. (Karandikar, 1999). In the present era of technology, the plastic sector has become an integral part for most of the manufacturing industries manufacturing industries npl → industrias fpl manufactureras manufacturing industries npl → industries fpl de transformation . Asia has been the world's largest plastics consumer for several years, accounting for 30 per cent of the global consumption excluding Japan, which has share of about 6.5 per cent. Next to Asia is North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. with 26 per cent share, then western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). with 23 per cent share in the global market (Verma, 2005). Plastics processing Plastics processing Those methods used to convert plastics materials in the form of pellets, granules, powders, sheets, fluids, or preforms into formed shapes or parts. or product manufacturing industry worldwide is facing increased competition due to globalisation of the plastics trade. The major challenge for SMEs is to continuously provide innovative and customised products using the best available process technologies. Improvements in competitors' capabilities have shortened short·en v. short·ened, short·en·ing, short·ens v.tr. 1. To make short or shorter. 2. product life cycles, elevated product complexity and expanded accessibility to new technical breakthroughs (Gupta and Garret, 1996). According to Ajitabh and Momaya (2004) in such kind of environment, firm's competitiveness will depend on its ability to provide goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. more efficiently than others involved in the market place. In recent years, many large organisations all over the world have been focusing on their core business, downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing , and outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. . This trend has given many opportunities for SMEs to work in partnership with them. As business success depends on the formulation formulation /for·mu·la·tion/ (for?mu-la´shun) the act or product of formulating. American Law Institute Formulation and implementation of viable strategies (Pun et al, 2000), therefore to grab these opportunities SMEs in all sectors need to develop effective strategies for providing higher added values Added value in financial analysis of shares is to be distinguished from value added. Used as a measure of shareholder value, calculated using the formula:
There have been very few studies aimed at strategy development by SMEs for competitiveness. Even in developed countries, most of the studies have been devoted to sectors such as the auto component and electronics sectors. Small firms with limited resources will be expected to perceive its business environment as being different from that of a large firms with perhaps more resources and it is also likely to face different environment pressures with regard to market competitiveness (Gyampah et al, 2001). The approaches that large firms use to benchmark their competitors and negotiate with suppliers are expected to be different from the approaches used by small firms (Vickery et al, 1999). Therefore, this study being an empirical study for SMEs, has its own importance for enhancing the knowledge of strategy development. It will help to understand major pressures and constraints on SMEs, dynamic nature of strategy development as well as relationship of strategies with performance. Research Propositions and Methodology In sustaining their competitiveness, SMEs face many pressures and constraints due to their limited resources like finance, skilled manpower, and advanced technology. Thus, their strategy should match the organisation's resources to the changing environment and in particular its markets and customers in the pursuit of its goals and objectives (Porter, 1998). The new competition is in terms of reduced cost, improved quality, higher performance products, wider range of products, better service, all delivered simultaneously (Dangayach and Deshmukh, 2001). To survive in this new competition, SMEs will have to develop strategies for cost reduction, quality improvement, making new investments, and development of competencies. Williams et al (1995) identified significant relationship between manufacturing strategy and firm performance. It is generally believed that SMEs are reluctant to change due to fear of failure and other constraints but due to the dynamic nature of the market scenario, SMEs will need dynamic strategies. According to Tidd (1997), the main task of corporate strategy is not to describe the current state of art, but to identify and explore core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
2. A positive statute, unrepealed, can never be repealed by non-user alone. 4 Yeates, Rep. 181; Id. 215; 1 Browne's Rep. Appx. 28; 13 Serg. & Rawle, 447. and begin to function as core rigidities. A more natural and fruitful fruit·ful adj. 1. a. Producing fruit. b. Conducive to productivity; causing to bear in abundance: fruitful soil. 2. approach is therefore to think of knowledge and skills required by a company in order to maintain or improve its competitiveness. Chaston et al (2001) have observed that the areas of competence concerned with new product development, human resource management practices, organisational productivity, the management of quality and management of information were extremely crucial in terms of influencing small firm growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. . They observed that firms which have adopted a higher level learning orientation can be expected to exhibit statistically significant higher competencies across the areas of measuring customer expectations, identifying quality variance The discrepancy between what a party to a lawsuit alleges will be proved in pleadings and what the party actually proves at trial. In Zoning law, an official permit to use property in a manner that departs from the way in which other property in the same locality , implementing quality improvements, using information to optimise optimise - To perform optimisation. information, create control systems, identify market changes and use information technology to acquire data with the foregoing discussion as the background, this paper tries to test the following propositions: Proposition 1 Priority and level of investment in different areas change significantly with time. Proposition 2 Priority and level of focus for developing competencies change significantly with time. Proposition 3 Level of various strategies for reducing cost and improving quality differ significantly. Proposition 4 The degree of emphasis that firms place on different areas of strategy development will be positively correlated cor·re·late v. cor·re·lat·ed, cor·re·lat·ing, cor·re·lates v.tr. 1. To put or bring into causal, complementary, parallel, or reciprocal relation. 2. with their overall performance. For data collection from industries, a structured questionnaire was framed. This was also pilot tested and then administered to industry. Extensive visits were made to SMEs in the plastic sector to collect first hand information. The research methodology for this study is shown as a flow chart (Figure 1). Identification of issues and development of preliminary framework for study was done after extensive review of literature and discussions with industry professionals. The framework developed for this study is shown in Figure 2. [FIGURES 1-2 OMITTED] Ward et al (1995) have observed that link between environment and operations strategy determines firm performance. Therefore, based on the market environment, SMEs should decide their strategies for investments, development of competencies, and priorities for reducing cost and improving quality. Formulation of strategies and their effective implementation will influence their performance. In this study, executives were asked to rate the intensity of each factor for their respective organisation on a five-point Likert scale Likert scale A subjective scoring system that allows a person being surveyed to quantify likes and preferences on a 5-point scale, with 1 being the least important, relevant, interesting, most ho-hum, or other, and 5 being most excellent, yeehah important, etc (1 being lowest, 5 highest). About 375 organisations in the plastic sectors in India were contacted for collecting responses. These organisations were selected from various directories available at Confederation of Indian Industries The Confederation of Indian Industry (CII) is a non-government, not-for-profit, industry-led and industry-managed organisation, playing a proactive role in India’s development process. (CII CII Confederation of Indian Industry CII Chartered Insurance Institute (UK) CII Construction Industry Institute (University of Texas) CII Council of Institutional Investors ), Auto Component Manufacturers Association (ACMA ACMA Australian Communications and Media Authority ACMA American Composites Manufacturers Association ACMA Academy of Country Music Awards ACMA American College of Mortgage Attorneys ACMA Associate of the Chartered Institute of Management Accountants ) of India, Federation of Indian Chambers of Commerce and Industries (FICCI FICCI Federation of Indian Chambers of Commerce and Industry ) and Department of Industries, (Government of India The Government of India (Hindi: भारत सरकार [3]Bhārat Sarkār), officially referred to as the Union Government, and commonly as Central Government ). In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite continuous reminders, phone calls, and E-mails only 37 valid responses were obtained for this empirical study. A detailed profile of the responding organisations is given in Table 1. Results and Discussions To measure the scale reliability and internal consistency In statistics and research, internal consistency is a measure based on the correlations between different items on the same test (or the same subscale on a larger test). It measures whether several items that propose to measure the same general construct produce similar scores. of data, Cronbach's coefficient coefficient /co·ef·fi·cient/ (ko?ah-fish´int) 1. an expression of the change or effect produced by variation in certain factors, or of the ratio between two different quantities. 2. alpha was calculated for all items of the questionnaire. A summary of statistics is given in Table 2. The coefficients of Cronbach's alpha Cronbach's  (alpha) has an important use as a measure of the reliability of a psychometric instrument. It was first named as alpha by Cronbach (1951), as he had intended to continue with further instruments. for all constructs range from 0.69
to 0.87. These values exceed the minimum requirements of 0.5 to 0.6 for
an exploratory study such as this (Nunnally, 1978).
Data acquired from the survey of the plastic sector were analysed by statistical tests such as one sample t-test, paired sample t-test (PST PST Paroxysmal supraventricular tachycardia, see there ), and correlation and regression analysis In statistics, a mathematical method of modeling the relationships among three or more variables. It is used to predict the value of one variable given the values of the others. For example, a model might estimate sales based on age and gender. . Although the focus of this study is on strategy development and its impact on performance but to analyse an·a·lyse v. Chiefly British Variant of analyze. analyse or US -lyze Verb [-lysing, -lysed] or -lyzing, the business environment, pressures and constraints on SMEs have been also analysed. Pressures and Constraints In general, smaller firms experience greater market and customer uncertainty. Those who own and manage the smaller businesses exhibit a vastly greater range of aspirations aspirations npl → aspiraciones fpl (= ambition); ambición f aspirations npl (= hopes, ambition) → aspirations fpl than owners/managers of large firms. The smaller firms rationally respond by favouring short over longer term gains, and flexible over specific investments even where there is some cost penalty (Chen and Hambric, 1995). The main barriers to be competitive for SMEs are inadequate technologies as well as inadequate inhouse human expertise and poor financial resources (Armstrong and Coyle, 1999). Resource scarcity Scarcity The basic economic problem which arises from people having unlimited wants while there are and always will be limited resources. Because of scarcity, various economic decisions must be made to allocate resources efficiently. can impact on the ability of smaller firms to enter export markets and can also limit a smaller firm's ability to reach more advanced stages of internationalisation (programming) internationalisation - (i18n, globalisation, enabling, software enabling) The process and philosophy of making software portable to other locales. For successful localisation, products must be technically and culturally neutral. (Moen, 1999). The results of the various pressures being faced by Indian SMEs in the plastic sector on a Likert scale of five are presented in Figure 3. It is observed that the highest pressure is to reduce cost (3.54), which is followed by pressure to improve quality (3.50) and to increase range of products (3.36). Pun et al (2004) have observed that for the electronics industry in Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. , product/service quality and customer services have emerged as the critical success factors. Singh et al (2004) have also observed same findings in their study for Indian auto component sector. [FIGURE 3 OMITTED] Various constraints felt by Indian SMEs in the plastic sectors to become competitive in the market are shown in Figure 4. Most of the constraints are significantly below moderate level. Lack of growth conducive con·du·cive adj. Tending to cause or bring about; contributive: working conditions not conducive to productivity. See Synonyms at favorable. environment (2.42), raising funds from market (2.38), inadequate government support (2.36), are observed as most severe constraints. In creating a growth conducive environment, government policies play important role. Government policies have played a facilitative role in countries like Japan, South Korea, and Taiwan (Wang et al, 1995) but in India, poor infrastructure, red tape, and various government policies are still considered as main barriers for the expansion and growth of the industry. [FIGURE 4 OMITTED] Strategies Adopted by Indian SMEs in Plastic Sector According to Eren (2004), firms have to develop competitive strategies in order to compete. A firm cannot have a strategy for only a month. Factors concerning long-term stability The long-term stability of an oscillator, the degree of uniformity of frequency over time, when the frequency is measured under identical environmental conditions, such as supply voltage, load, and temperature. and short-term need for continual updating in response to evolutionary changes in the environment have to be considered. But the concept of long term can vary from sector to sector depending on its internal dynamics. A long-term strategy for the plastic sector may be two to three years whereas for the chemical sector, it might be eight to 10 years or more. However, to compete in an uncertain environment, strategy development should be flexible according to the needs of the market. Development of competencies, making new investments, reduction of product cost, and improvement of quality have emerged as critical areas for developing effective strategies. Strategies adopted by SMEs in these areas will be discussed. (a) Investment Priorities According to Chanaron and Jolly (1999), global competitive strategies are incrasingly becoming technology driven in the context of extremely dynamic and turbulent environments. Technology operates on competitiveness in two ways. First, by altering the price structure through the development of more efficient and flexible processes, and second by enabling the creation of better products of greater quality, better design, aftersales service, and short delivery periods (Vinas et al, 2001). It is commonly reported that quality and consistency of the manufacturing performance of SMEs can be improved as a consequence of the use of the most appropriate information technology tools without any major changes in business practices, manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. or production facilities (Chan and Tang tang, in zoology tang: see butterfly fish. , 1995). Several studies (Lal, 2004, Hodgkinson and McPhee, 2002) have found that users of advanced E-business technology perform better in the export market than non-users. In this study, research and development, automation of processes, information technology, training of employees, welfare of employees, market research, and advertising were considered as potential areas of investment. Respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. were asked to prioritise Verb 1. prioritise - assign a priority to; "we have too many things to do and must prioritize" prioritize grade, rate, rank, place, range, order - assign a rank or rating to; "how would you rank these students?"; "The restaurant is rated highly in the food these areas. The results of this study regarding investment priorities are shown in Table 3. For Indian SMEs, market research, welfare of employees, research and development had been major areas of priority for investment in the past three years. In the following three years, automation of processes, market research, and training of employees will be top priority for investment. On the basis of paired sample t-test (PST), a significant difference between mean values for level of priority in past and next three years is observed for all areas of investment. This change reflects the dynamic and flexible nature of SMEs and supports the first proposition. The above findings show that the level of investments in all areas is not very high. Specifically in areas of information technology, training of employees, and advertising, the level of investment is significantly less than moderate level. A study made by Oyelaran-Oyeyinka (2004) also observed that internal training opportunities greatly contribute to improving the performance of organisations. (b) Priorities for Developing Competencies Chaston and Mangles Mangles is the name of several people and things: People Mangles is the name of a wealthy English family whose members had amongst other things, interests in the Swan River Colony. Prominent members and interests include:
Development of competencies may vary, depending upon the sector and size. Results of competencies development by Indian SMEs in the plastic sector are given in Table 4. In the past three years, SMEs have given maximum focus for developing competency COMPETENCY, evidence. The legal fitness or ability of a witness to be heard on the trial of a cause. This term is also applied to written or other evidence which may be legally given on such trial, as, depositions, letters, account-books, and the like. 2. in using customers to define quality standards. In addition to this, optimisation Noun 1. optimisation - the act of rendering optimal; "the simultaneous optimization of growth and profitability"; "in an optimization problem we seek values of the variables that lead to an optimal value of the function that is to be optimized"; "to promote the of work environment and use of information to optimise decisions were other major areas of competencies development. In the next three years, identification of market changes and introduction of new technology will become top priority for developing competencies. This change is being observed due to the fast changing market for the plastic sector in India. On the basis of the paired sample t-test, it is observed that level of focus for developing majority of competencies have increased significantly with time as difference between mean values is found significant at 95 per cent confidence level except for optimisation of work environment, use of customer to define quality standards, and information to optimise decisions. Therefore, these observations support the second proposition. (c) Strategies for Cost and Quality Firms in industrialised Adj. 1. industrialised - made industrial; converted to industrialism; "industrialized areas" industrialized industrial - having highly developed industries; "the industrial revolution"; "an industrial nation" countries that have adopted a quality oriented o·ri·ent n. 1. Orient The countries of Asia, especially of eastern Asia. 2. a. The luster characteristic of a pearl of high quality. b. A pearl having exceptional luster. 3. strategy have achieved improved productivity, greater customer satisfaction, increased employee morale, improved management labour relations labour relations (US), labor relations npl → relations fpl dans l'entreprise labour relations labour npl → Beziehungen pl , and higher overall performance (Mersha, 2000). According to Corbett et al (2002), SMEs can gain competitive advantage through the quality of their products because they can implement a just-in-time system with low defect defect - bug rates or higher quality of products. It will also help in reducing product cost. Lau (2002) has also found higher quality and lower cost as top ranking competitive factors among United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. electronics and computer industries. The results of strategies adopted by Indian SMEs for reducing cost and improving quality are given in Table 5. It is observed that for reducing cost, SMEs in plastic sector are giving maximum focus on improvement of maintenance followed by improvement of process capability and product design. For improving product quality, improvement of maintenance continues to be top priority. In addition to this improvement of process capability and automation of operations, there are other major priorities for improving product quality. On the basis of paired sample t-test, it is observed that most of the strategies for cost and quality except improvements in product design does not differ significantly at 90 per cent confidence level. It means Indian SMEs do not make a clear distinction in terms of strategies adopted for cost and quality thereby not supporting the third proposition. Performance For measuring performance both subjective and objective measures are considered. Although according to Vickery et al (1994), use of only subjective measures is also a reliable alternative to actual performance because managerial assessments are consistent with objective internal and external performance. Subjective performance of Indian SMEs in the plastic sector in comparison to national standards is given in Table 6. Respondents were asked to mark their performance in comparison to national standards on a five-point Likert scale (1 for very inferior INFERIOR. One who in relation to another has less power and is below him; one who is bound to obey another. He who makes the law is the superior; he who is bound to obey it, the inferior. 1 Bouv. Inst. n. 8. , 2 for inferior, 3 for equal, 4 for high, 5 for very high) for various measures. Performance of Indian SMEs in the plastic sector in comparison to national standards is significantly higher than moderate level for measures such as manufacturing cost, level of inventory, delivery speed, percentage rejection, employee turnover rate, and customer satisfaction. Objective performance is measured in terms of average percentage change in the past three years on certain financial parameters such as market share, return on investment, profit after tax, and sales turnover. The objective performance of SMEs is given in Table 7. For most of the financial performance measures except return on investment, change is significantly higher than moderate level. Relationship between Adopted Strategies and Overall Performance Based on discussions with professionals from industries, for measuring overall performance equal weightage is given to subjective and objective performance. Correlation and regression analysis was done between various strategies adopted and overall performance. Results are shown in Table 8. Correlation between all strategies and performance is found significant thereby supporting the fourth proposition. On the basis of regression analysis ([R.sup.2] = 0.67), these strategies explain 67 per cent of the variability of performance. In addition to this, other factors related with industry and country competitiveness will also play an effective role in performance of organisation. Conclusion The objective of this study was to analyse different strategies adopted by Indian SMEs for being competitive against a backdrop Backdrop may refer to:
[FIGURE 5 OMITTED] Some of the concluding observations are: * Cost, quality, and increasing the range of products are the main pressures on SMEs. * SMEs consider lack of growth conducive environment, raising funds from market, and inadequate government support/incentives as major constraints. * Market research, welfare of employees, and research and development are top ranking areas for making investments. * Improvements of maintenance, process capability, and product design are the main strategies adopted for cost and quality. * Use of customers to define quality standards and optimisation of working environment and decisions are the main areas of competency development. * All areas of strategy development considered in this study are significantly correlated with performance. * SMEs are not making a clear distinction in terms of strategies adopted for cost and quality. * This study has demonstrated the flexible nature of SME (1) (Small and Medium-sized Enterprise) See SMB. 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"A Conceptual Model for the Development of Technological Management Processes in Manufacturing Companies in Developing Countries". Technovation, Vol 21, pp 345-352. Wang JC and KH Tsai, 1995. "Strategies to Lift R&D Expenditure in Taiwan". Journal of Industry Studies, Vol 2 No 1. Ward PT, R Duray, GK Leong, and CC Sum, 1995. "Business Environment, Operations Strategy and Performance: An Empirical Study of Singapore Manufacturers". Journal of Operations Management, Vol 13, pp 99-115. Williams FPD (1) (Flat Panel Display) See LCD, plasma display, EL display, FED and flat panel display. (2) (Field Programmable Device) An umbrella term for all chips that can be programmed by the customer including SPLDs, CPLDs and FPGAs. See PLD. , DE Souza De Souza or D'Souza is a common Portuguese family name. Although it is still quite common outside Portugal -- especially in Brazil and India --, Souza is the old spelling of present-day Sousa. , ME Rosenfeldt and M Kassaee, 1995. "Manufacturing Strategy, Business Strategy and Firm Performance in a Mature Industry". Journal of Operations Management, Vol 13 No 1, pp 19-33. Rajesh K Singh Suresh K Garg Mechanical Engineering Department Delhi College of Engineering Delhi College of Engineering (DCE) is an engineering college in India. SG Deshmukh Mechanical Engineering Department Indian Institute The Indian Institute in central Oxford, England is located at the north end of Catte Street on the corner with Holywell Street and faching down Broad Street from the east.[1] of Technology
Table 1: Profile of Responding Plastic Organisations (N=37)
Turnover Respondents Investment Respondents
(Rs million) (per cent) (Rs million) (per cent)
Up to 100 22 (59.46) Up to 10 17 (45.95)
100-1000 11 (29.73) 10-250 16 (43.24)
1000-5000 3 (8.11) 250-500 3 (8.11)
More than 5000 0 500-1000 0
Did not specify 1 (2.70) More than 1000 1 (2.70)
Product nature Location
Product for the
end user 13 (35.13) Rural 0
Product for the
other manufacturer 19 (51.35) Semi Urban 18 (48.64)
For end user and
other manufacturer 3 (8.10) Urban 12 (32.43)
Did not specify 2 (5.41) Did not specify 7 (18.92)
Total employees No of professionals
Up to 100 22 (59.45) Up to 10 17 (45.95)
101-500 13 (35.13) 11-50 12 (32.43)
More than 500 1 (2.70) 51-100 1 (2.70)
Did not specify 1 (2.70) More than 100 1 (2.70)
Did not specify 6 (16.22)
One US Dollar is about 44 Rs; one Singapore Dollar is about 27 Rs.
Table 2: Summary Statistics and Reliability of Constructs
Variable Mean SD No of Cronbach
(Scale 1-5) items alpha
i. Constraints 2.19 0.62 11 0.87
ii. Pressures 3.23 0.79 6 0.69
iii. Investment 2.68 0.68 7 0.80
priorities
iv. Strategies for 3.25 0.56 9 0.75
cost
v. Strategies for 3.31 0.58 9 0.79
quality
vi. Competencies 3.20 0.66 7 0.80
development
vii. Subjective 3.24 0.53 12 0.85
Performance
viii. Objective 3.56 0.53 5 0.82
Performance
Table 3: Investment Priorities
Nature During past three years
of Investment Mean SD t-value
i. Research and
development 2.92 1.11 -0.45
ii. Automation of
processes 2.89 1.12 -0.60
iii. Information
technology 2.06 1.15 -4.76#
iv. Training of
employees 2.51 0.89 -3.24#
v. Welfare of
employees 2.97 0.92 -0.18
vi. Market research 3.03 1.06 0.16
vii. Advertisement 2.39 1.06 -3.29#
Nature In next three years Sig
of Investment Mean SD t-value (Two-tailed)
i. Research and
development 3.47 1.13 2.42 * 0.002
ii. Automation of
processes 3.71 1.06 3.89 * 0.000
iii. Information
technology 3.16 1.17 0.76 0.000
iv. Training of
employees 3.48 0.91 3.08 * 0.000
v. Welfare of
employees 3.34 1.07 1.82 0.026
vi. Market research 3.59 1.19 2.83 * 0.002
vii. Advertisement 3.12 1.29 0.55 0.000
* Significantly above moderate level at 0.05 level
#Significantly below moderate level at 0.05 level (Based on single
sample t-test), Significance (two-tailed) values are based on paired
sample t-test for difference of mean values.
Table 4: Areas of Competency Development
Competencies During past three years
Mean SD t-value
i. To identify niches 2.71 1.00 -1.71
ii. To develop new
products 3.14 0.94 0.89
iii. To optimise work
environment 3.37 0.77 2.85 *
iv. To use customer
to define quality
standards 3.46 0.85 3.17 *
v. To introduce new
technology 3.29 1.05 1.62
vi. To use information
to optimise
decisions 3.36 0.93 2.33 *
vii. To identify market
changes 3.31 0.95 1.93
Competencies In next three years Sig
(Two-tailed)
Mean SD t-value
i. To identify niches 3.26 0.90 -1.71 0.000
ii. To develop new
products 3.49 0.89 0.89 0.032
iii. To optimise work
environment 3.54 0.74 2.85 * 0.110
iv. To use customer
to define quality
standards 3.66 1.03 3.17 * 0.182
v. To introduce new
technology 3.68 0.88 1.62 0.046
vi. To use information
to optimise
decisions 3.63 0.94 2.33 * 0.124
vii. To identify market
changes 3.91 1.03 1.93 0.004
* Significantly above moderate level at 0.05 level (Based on single
sample t-test), Significance (two-tailed) values are
based on paired sample t-test for difference of mean values.
Table 5: Strategies for Cost and Quality
Strategies To reduce cost
Mean SD t-value
i. Reduction of
inventory 3.03 1.07 0.15
ii. Reduction of
rejection/rework 3.25 1.16 1.30
iii. Automation of
operations 3.31 0.98 1.87
iv. Vendor
development 3.11 0.95 0.70
v. Improvement of
process capability 3.36 1.05 2.07 *
vi. Improvement of
maintenance 3.39 0.84 2.78 *
vii. Improvements
in product design 3.35 0.98 2.10 *
viii. Research and
development 3.22 1.02 1.31
ix. Training of
employees 3.22 1.00 1.31
Strategies To improve quality Sig
(Two-tailed)
Mean SD t-value
i. Reduction of
inventory 2.88 0.88 0.154 0.598
ii. Reduction of
rejection/rework 3.29 1.22 1.30 0.556
iii. Automation of
operations 3.46 1.01 1.87 0.586
iv. Vendor
development 3.17 0.89 0.70 0.865
v. Improvement of
process capability 3.49 1.01 2.07 0.661
vi. Improvement of
maintenance 3.53 0.86 2.79 * 0.343
vii. Improvements
in product design 3.12 0.95 2.10 * 0.088
viii. Research and
development 3.43 0.98 1.31 0.118
ix. Training of
employees 3.42 0.91 1.31 0.147
* Significantly above moderate level at 0.05 level (Based on single
sample t-test), Significance (two-tailed) values are based on paired
sample t-test for difference of mean values.
Table 6: Subjective Performance in Comparison
to National Standards
Measures In comparison to the
national standards
Mean SD t-value
i. Manufacturing cost 3.42 0.73 3.42 *
ii. Level of inventory 3.39 0.69 3.39 *
iii. Delivery speed 3.31 0.71 2.58 *
iv. Flexibility in production 3.14 0.99 0.84
v. Percentage rejection 3.78 0.83 5.61
vi. Labour productivity 2.86 0.90 -0.93
vii. Capacity utilisation 3.06 1.04 0.32
viii. Employee turnover rate 3.40 0.91 2.59 *
ix. Throughput (Rs/hr) 2.78 1.16 -1.07
x. Employee satisfaction 3.08 0.94 0.53
xi. Customer satisfaction 3.37 0.94 2.33 *
xii. Supplier satisfaction 3.18 0.88 1.18
* Significantly above moderate level at 0.05 level
(Based on single sample t-test).
Table 7: Objective Performance
Objective performance Mean SD t-value
measures
i. Market share 3.53 0.62 3.75 *
ii. Sales turnover 3.80 0.69 5.14 *
iii. Profit after tax 3.50 0.62 3.43 *
iv. Return on investment 3.29 0.59 2.06
v. Export 3.37 0.59 2.69
** Significantly above moderate level at 0.05 level (Based on
single sample t-test).
Table 8: Relationship between Adopted Strategies
and Overall Performance
Strategies Correlation with Regression analysis
Performance
1. Investment priorities 0.51 * R 0.81
2. Cost reduction 0.78 ** R-square 0.67
3. Quality improvement 0.55 * F 7.94
4. Competencies
development 0.53 * Significance 0.001
* Correlation is significant at 0.05 level of significance,
** Correlation is significant at 0.01 level of significance.
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