Strategy development by small scale industries in India
| Date | 24 August 2010 |
| Published date | 24 August 2010 |
| Pages | 1073-1093 |
| DOI | https://doi.org/10.1108/02635571011069112 |
| Author | Rajesh K. Singh,Suresh K. Garg,S.G. Deshmukh |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Strategy development by small
scale industries in India
Rajesh K. Singh
Indian Institute of Foreign Trade, Delhi, India
Suresh K. Garg
Mechanical Engineering Department, Delhi Technological University,
Delhi, India, and
S.G. Deshmukh
Mechanical Engineering Department, Indian Institute of Technology,
Delhi, India
Abstract
Purpose – In the present scenario of e-globalization, small scale industries (SSIs) are considered
engine for economic growth all over the world. After markets globalization, SSIs are facing many
pressures and constraints to sustain their competitiveness. The purpose of this paper is to examine
various issues in context of Indian SSIs such as nature of pressures and constraints, competitive
priorities, competencies development, areas of investment, and their relationship with performance.
Design/methodology/approach – For collecting data, a questionnaire-based survey was
conducted. In total, 75 valid responses were received. Statistical analysis of data acquired from
survey is done by reliability test, t-test, and correlation analysis.
Findings – Cost reduction, quality improvement, and delivery in time have emerged as major
challenges for SSIs. Market research, welfare of employees, and research and development are found
as major areas for investment. Use of information technology, training of employees, and research and
development has significant relationship with performance.
Research limitations/implications – Organizations should develop their strategies after
analysing business environment and SSIs should utilize their resources judiciously. However, it is
felt that this study can be further explored by considering other aspects of strategy development such
as human resource, vendor development, organization culture, etc.
Originality/value – Findings and issues of the paper will be highly useful for SSIs in framing their
strategies, and academia for further research in the context of changing market scenario.
Keywords India, Smallenterprises, Competitivestrategy, Business development,Product management
Paper type Research paper
1. Introduction
In India, 95 percent of industrial units are in small-scale sector with 40 percent value
addition in the manufacturing sector and 6.29 percent contribution to the Indian gross
domestic product (Singh et al., 2008b). In most of the countries, small scale industries
(SSIs) are defined in terms of number of employees whereas in India, investment in plant
and machinery is the criteria for defining SSIs. In India, the size of SSIs is defined
The current issue and full text archive of this journal is available at
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The authors are extremely grateful to Reviewers and Chief Editor of the journal for their valuable
suggestions and constructive comments to improve the quality and content of the paper.
They are also grateful for industry professionals and respondents for participating in the study.
Strategy
development by
SSIs in India
1073
Received 16 October 2009
Revised 13 December 2009,
3 February 2010,
3 April 2010
Accepted 19 April 2010
Industrial Management & Data
Systems
Vol. 110 No. 7, 2010
pp. 1073-1093
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635571011069112
as industries having investment in plant and machinery less than Rs 50 million
(US$ ¼Rs 50) and for medium-scale enterprises this limit is Rs 100 million (SIDO,
2005). In India, organizations having investment up to 100 million rupees are also
commonly referred as small and medium enterprises (SMEs). As investment limit does
not differ significantly therefore they have quite similar characteristics. The major
challenge for SSIs is to continuously provide innovative and customized products using
the best available process technologies. Improvements in competitors’ capabilities have
shortened product life cycles, elevated product complexity, and expanded accessibility
to new technical breakthroughs. Therefore, firm’s competitiveness will depend on
its ability to provide goods and services more efficiently than others involved in the
market place.
Ngai and Wat (2002) argue that globalization and information technology (IT) are
radically changing the face of business and organization. IT has become the major
facilitator of business activities today. Management activities, which were time
consuming earlier, are taking far less time and effort in IT-enabled globalization.
The presence of IT tools deemed the geography and physical distance of no importance.
This IT-enabled globalization is called as e-globalization. Abouzeedan (2005) defines it
as the phenomenon related to the establishment of commercial and cultural contact
between people, firms and nations using, extensively, methods of modern IT tools. Now,
IT is being used in all aspects of business activities including sales and marketing,
purchasing, financial transaction, accounting, production, and planning and control.
It has also become essential tool for managing the supply chains. Information is
improving the speed and reliability with which information is passed not only within the
individual organization but also around the globe. E-globalization is creating new brand
experiences for customers, suppliers and business partners. Now markets have become
more transparent.
In the present era of e-globalization (Abouzeedan, 2005), many large organizations all
over the world have been focusing on their core business, down sizing and outsourcing.
This trend has given many opportunities for SSIs to work in partnership with them and
expand their market. Business success depends on the formulation and implementation
of viable strategies (Pun et al., 2004). By improving product quality, organizations can
accumulate multi faceted competiti ve advantage in terms of cost and service
(Prajogo, 2007). Small firms with limited resources, perceive its business environment
differently from that of large firms (Gyampah and Boye, 2001). Owing to limited
resources small firms are not able to devote sufficient resources and time for developing
strategies to sustainable growths. There are very few studies aimed at strategy
development by SSIs for competitiveness specifically in developing countries including
India.
The initiation of economic reforms through industrial and trade liberalization in
1991-1992 marked the beginning of a new era for Indian industry. The measures
included: industrial delicensing, the removal of threshold limits on the assets of larg e
enterprises, liberal foreign investment policy, the expansion of the open general license
list, reductions in customs duties and so on. This implied easier entry and more
operational freedom, as well as cheaper and easier access to imported inputs and capital
goods for large enterprises. After the opening of Indian economy, scenario for Indian
SSIs has changed from protective to competitive environment (Singh et al., 2008a ).
Sustainable growth in globalized market has become a big challenge for SSIs.
IMDS
110,7
1074
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