Analysis of manufacturing strategy in developing countries

Abstract

Purpose – The purpose of this paper is to formulate the manufacturing strategy in a developing country with particular reference to Nigeria in sub-Saharan African country. Design/methodology/approach – Using survey methodology and the partial least squares – structural equation modeling technique, The authors find that in addition to the four basic environmental factors – business cost, labor availability, competitive hostility and environmental dynamism, both government policies and the adopted manufacturing practices have significant effects on the manufacturing strategic priorities. Findings – Among other findings, the environmental factors of government policies and the type of manufacturing practices adopted have significant effects on manufacturing strategy. Research limitations/implications – Further studies should explicitly look into the effect of the adopted manufacturing strategy on company performance. Possibly, a case study research might be considered to establish this relationship. Practical implications – As manufacturing firms continue to experience greater competition, especially from China, and given the technological advancement in manufacturing, the business environment facing Nigerian manufacturing companies is likely to become more dynamic, complex, diverse and even hostile. Under such a turbulent climate, the configuration and effective deployment of manufacturing strategies is imperative to achieving superior business performance. Social implications – A more effective strategy will make companies more competitive in the market place, thus creating employment in a sector that has witnessed declining growth in employment. Originality/value – The linkage between environmental factors and manufacturing strategy has been studied widely. However, this study reveals the role of government policies and manufacturing practices in formulating manufacturing strategy in a developing country context.