The Impact of Technology on Entrepreneurs in the Auto Components Sector

The latest abstract to be accepted for publication in my forthcoming collection on technological change and organizational development is:

The Impact of Technology on Entrepreneurs in the Auto Components Sector

Mukund Deshpande, Professor & Research Scholar at HNIMRW, Pune- India and Dr. Neeta Baporikar, Doctoral Guide, University of Pune, India

Abstract

Organizational excellence has at all times aroused curiosity and been a favourite area of dialogue for entrepreneurs. Small and medium-sized enterprises (SMEs) have been recognized world over as important drivers of the national economy. Nevertheless, running such an enterprise amidst global challenges can require extraordinary skills at both managerial and entrepreneurial levels, if the enterprise is to survive and grow. Whilst technology endeavours to introduce useful techniques based on functional logic for proactively conducting business, excellence is only attainable in the course of innovative practices. Good business policy-making requires effective entrepreneurship and proper engagement with all key stakeholders throughout the process. Enterprise leaders believe that the ability to innovate and change is crucial to the success of business. Given this situation, a built-in innovative mechanism has become a critical ingredient of the current business model.

The business approach of SMEs in particular has been a key area of research as these firms, generally lacking human, financial and other tangible and scarce resources, need to be configured accurately to match the new business surroundings. Consequently, a major challenge has been the articulation of resources so as to enable them to achieve success for the enterprise overall. The globe itself seems to be shrinking as a result of information exchange through the internet. For that reason, organization of resources has regularly posed a challenge for SMEs to manufacture products with competitive prices, timely delivery and appropriate quality. The traditional business approaches fail to gratify the general needs of business, owing to the complex environment and, as a result, businesspeople are always alert for approaches. The overall objective of good business strategy is to ensure that it is fit for the purpose, resource efficient, sustainable, resilient, adaptable and attractive.

This case study explores and elaborates such approaches in the Pune Auto-Component industry in India as an illustration of excellence that is setting new trends in modernizing the industry. The auto components industry is a major sub-sector of the automobile manufacturing sector. In effect, it is a large feeder industry that has put India on the global map for excellence and innovation and it has been categorized in the SME class by the Indian Government. Whilst the auto-component industry has been exponentially growing in India at three different locations, the Pune region has been particularly vibrant due to the support from the Automotive Research Institute and the IT industry, coupled with the availability of technological talent. To take advantage of this market opportunity, prospective entrepreneurs must remain inquisitive about new initiatives in this area.

The mainstream auto-component industries are mostly run by family-owned enterprises at Pune, with interest in diverse product ranges that operate around the world. Industry specific challenges ensue due to global competition and continually changing customer demands. They pose further challenges concerning the dearth of in-house resources, as well as the recurrent fresh demands posed by intensification of information exchanges. The case focuses on implementing the “Strategy for the SME” approach that is, in effect, accountable and well judged for the start up, survival and growth of such enterprises. The research methodology designed for the study consists of in-depth study of diverse sources describing the success of the business. A diverse range of entrepreneurs was approached for interviewing and a questionnaire utilising five-point Likert scale questions used to collect data. Emphasis was placed on issues of Face, Construct and Criteria validity. Data collected, based on personal interviews with owners, managers and supervisors of SMEs, were collated into a database. Seven such SMEs agreed to share confidential information and they represent the primary sources of data. In-depth analysis of the data, employing a deductive approach, was undertaken to identify and understand the effective instruments used by SMEs in their businesses. The statistical analysis, in terms of consistency of the approaches, has uncovered very constructive, reliable and sustainable approaches and techniques employed in these industries. The purpose of this research study was to reveal the tools, techniques and behaviour of the Pune businesspeople, at their workplaces, as they addressed the multiplicity of challenges they faced.

The study has revealed that Pune entrepreneurs require an analytical mind and belief to enter the business successfully, which should be undertaken after thorough investigation of facts and figures as well as government policies, while also taking account of the need for information technology back-up for continuity of market knowledge, information on innovation in technology and to link with prospective collaborators. Placing emphasis on customers’ requirements is considered an important policy in manufacturing. A strong belief in the importance of technology is evident, as well as the need for world class amenities that facilitate auto-components manufacture with diverse designs resulting in sustainable policy options. This policy effectively leverages manufacturing competence into access into multiple markets.

Their survival strategy has also been determined and it is to to obtain repeat business from existing customers by providing good quality products, with timely delivery and competitive prices. They are also cautious in maintaining a sound cash flow that is coupled with restricnig the number of debtors and creditors to a minimum and ensuring the prompt recovery of receivables. Keeping borrowings to the minimum and making financial collaborations has also been used to gain access to low or zero interest funds for the business. Survival is also accomplished through supply chain management by way of cooperating with partners. Strengthening survival likelihood is achieved through low rejection of products and eliminating waste materials through effective means that are also consistent with government.

The growth policy of firms involves making smart investments in projects through innovation, adding multiple sources of income and controlling spending to generate surpluses for reinvestment to promote enterprise growth and, where appropriate, collaborating with prospective partners. The Pune auto-component industry has been utilizing a trilateral instrument for designing policies for business that includes the phases of conceptualization, formulation and analytical. They further believe that this approach to business is formulated on its utility, flexibility, viability and competitiveness to match the type, size and value of resources of the enterprise for its prolonged subsistence. These firms prepare business plans and intentionally sketch out process flow charts to generate operational Key Performance Indicators (KPIs). Sector specific indicators allow an entrepreneur to quickly ascertain whether assumptions are out of line with industry benchmarks.

A further finding of the study is that Pune industries use a bilateral approach to link up the internal and external environments through what are termed ‘core’ and ‘complementary’ approaches. The core approach has emerged to relate the external environment to the internal, whilst the complementary approach represents support for the core approach to the business. Findings further indicate that these are practical instruments and reliably improve operating economics, maintain environmental equilibrium and intensify harmonious social dealings. The modus operandi of growth is to have an innovative model with repeated iteration which has the ability to surmount sometimes dreadful challenges.

Key words: Auto Components, Entrepreneurs, India, Technology