20-India's Manufacturing Strategy - Global Perspective.pdf - Mimts.org

More documents

Recommendations

Info

56 LBS Journal of Management & Research www.IndianJournals.com Members Copy, Not for Commercial Sale Downloaded From IP - 115.248.73.67 on dated 30-Nov-2010 need for over $269 billion in funds in the next five years. So far, the manufacturing sector has attracted $2 billion as FDI in 2005-2006, a 75 percent rise over $671 million in 2003-2004. As announced by the industry minister recently, manufacturing investment regions will be set up for automotive components, leather, footwear, telecom and hardware. LITERATURE REVIEW Manufacturing strategy process, content and implementation determine how manufacturing resources and capabilities are deployed (Hayes and Wheelwright, 1984) to complement the business strategy (Swamidass and Newell, 1987) and if properly utilized provide a 'competitive weapon' in the firm's strategic planning (Skinner, 1969). Manufacturing strategy hence influences the success of strategic initiatives including new process technologies (Beach et al., 2000; Gagnon, 1999; Honeycutt et al., 1993; Schroeder et al., 1995;Wathen, 1995), new products (Spring and Dalrymple, 2000; Voss et al., 1996), and humanresources (Bates et al., 1995; Youndt et al., 1996). Manufacturing strategy contributes substantially not only to manufacturing performance (Anderson et al., 1991; Meredith and Vineyard, 1993) but also to business strategy, as measured by business unit performance on market share, growth, and profits (Ramanujam and Venkatraman, 1987). Manufacturing strategy frameworks have identified key manufacturing decisions and highlighted the need for consistency among decisions that affect business-level strategy, competitive priorities and manufacturing strategy and infrastructure (Fine and Hax, 1985; Hayes and Wheelwright, 1984; Hill, 1985,1995; Schroeder etal., 1986; Skinner, 1969), as well as manufacturing strategy, manufacturing capabilities, marketing-manufacturing congruence, and their effects on manufacturing performance (Bozarth and Edwards, 1997). Recently, however, concerns have been raised about the current manufacturing strategy paradigm. Inevitably, core manufacturing strategy concepts such as manufacturing capabilities, market requirements, and tradeoffs between competitive priorities have been criticized. For example, Spring and Boaden (1997) have argued that the firm wins orders in the marketplace as a result of a number of factors, and not just via the firm's products per se, as had been indicated in some of the manufacturing literature (e.g. Hill, 1985). Similarly, the tradeoff view has been challenged by Japanese approaches to manufacturing, world-class manufacturing (Schonberger, 1990), and empirical findings (e.g. Meredith et al., 1994). More fundamentally, however, whether the existing manufacturing strategy paradigm is still useful has been questioned (e.g. Drucker, 1990). Leongetal. (1990) suggest that the current manufacturing strategy paradigm lacks: (1) a cohesive theory-based effort by manufacturing strategy researchers; (2) sufficient survey based empirical work; and (3) proper integration with concepts and theories developed in other disciplines. The lack of consensus about manufacturing strategy's content has been especially identified as a barrier to advancement (e.g. Hayes and Pisano, 1994; Kim and Arnold, 1996; Mills et al., 1995) as it creates "Competition between alternate manufacturing strategy paradigms (Voss, 1995). Thus, manufacturing strategy still needs a coherent theory (SwinkandWay, 1995). Is manufacturing strategy passe (Clark, 1996) or does its importance need to be regained (Pilkington, 1998)? Despite providing Skinner's (1969) missing link between business-level strategy and manufacturing, manufacturing has increasingly lost touch with the mainstream corporate and business strategy literature (Ward et al., 1996). Environmental and other changes have caused manufacturing strategy to drift away from the strategy mainstream, particularly the market-led and resource-driven approaches to strategy. However, manufacturing must be aligned with corporate strategy in order to contribute to performance (Skinner, 1969). As can be seen from Table-1, the route of manufacturing has tracked a unique path starting with mass production; product oriented philosophy during 1980s to mass customization and value proposition in the present day situation.
India's Manufacturing Strategy: Global Perspective 57 www.IndianJournals.com Members Copy, Not for Commercial Sale Downloaded From IP - 115.248.73.67 on dated 30-Nov-2010 Philosophy Table-1. CHANGING FACE OF MANUFACTURING 1980s 1990s 2000+ Mass production; Product oriented People Individuals; Self - Just-in-Time; Customer Service Teams; Company Mass customization; Customer Value Strategic leadership; oriented oriented process oriented Finance Labor allocation Activity based Integrated Performance mm Materials Adversarial suppliers Supply Chain Value Chain Overall Posture Just-in-Case Lean Strategic Manufacturing Initiative To be successful in today's increasingly timesensitive and competitive markets, businesses need manufacturing processes that are fast, flexible, and adapt quickly to change. Achieving this objective requires integrated solutions that connect supply chains to factory processes, production equipment, and factory systems in a seamless, customer-centric network. THE EMERGING SCENARIO Just as Japan appears to be emerging from more than a decade of economic difficulty, the emergence of China and India is rapidly undermining Tokyo's longterm game plan for staying competitive. The Chinese challenge has, of course, been recognized for some time and Japanese companies have responded by redoubling efforts to penetrate Chinese markets while at the same time keeping proprietary, high tech production at home. But just as it seemed like these efforts might be paying off, India has entered the picture with a high tech strategy of its own that, when paired with China's manufacturing thrust, makes the entire Japanese economy more vulnerable than ever. Ironically, this is, at least in part, the result of the success of Japan's original export led growth policy. It worked so well that it was studied and widely imitated by other Asian countries seeking "miracles" of their own. First Korea, then Taiwan, Hong Kong, Singapore, Malaysia, and Thailand adopted their own versions of the Japanese game plan. It worked for them too and turned them from scrawny alley cats into Tigers. Of course, there was another important factor that contributed powerfully to the success. The United States adopted a complementary domestic consumption led growth plan. This created the demand necessary to absorb the exports of the export led growth countries by making America into the greatest consuming country the world had ever seen. Over the past thirty years, the convergence of these two strategies has led to creation of a global economic structure that is highly complementary and unbalanced. The strong dollar, while good for American consumers, has tended to move manufacturing out of the United States to offshore locations in Asia. The result is a large and rapidly growing U.S. trade deficit that acts as the primary engine of growth of the global economy. However, this deficit has to be financed, and is currently funded primarily by lending from Japan and China. They provide a kind of vendor financing that keeps their exports and those of most of the rest of the world growing while enabling Americans to enjoy living beyond their means by consuming more than they produce. For a long time, it has been argued that this situation is nothing to worry about because the United States will move to higher ground by creating primarily services and a high tech based economy that will eventually replace manufactured exports with exports of high value added services and technology. As it has become a high cost country in recent years, Japan has also begun to move manufacturing offshore while focusing more attention on services and high technology as the keys to future growth and competitiveness. Perhaps even more significant, however, is the impact of India on the global economy. Like China, its large population is mostly poor and unskilled, but ten percent is over 100 million people who are highly skilled and fluent in English with many educated in elite U.S. and U.K. universities with extensive experience in Silicon Valley, the U.S. Center for
Page 1: India's Manufacturing Strategy: Glo
Page 5 and 6: India's Manufacturing Strategy: Glo

20-India's Manufacturing Strategy - Global Perspective.pdf - Mimts.org

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?