15 © 2005, Global Institute of Flexible Systems Management Development of Flexible Strategies by Indian SM Es in Electronics Sector in Emerging Economy Rajesh K Singh Lecturer Mechanical Engineering Department Delhi College of Engineering, Delhi-110042, India rksdce@yahoo.com Suresh K Garg Professor Mechanical Engineering Department Delhi College of Engineering, Delhi-110042, India skgarg63@yahoo.co.in S G Deshmukh Professor Mechanical Engineering Department Indian Institute of Technology, Delhi-110016, India sgdeshmukh2003@ yahoo.co.in Abstract In this paper, an attempt is made to study nature of pressures and constraints under emerging dynamic market condition and need for flexibility in developing strategies by Indian small and medium enterprise (SMEs) in the electronics sector for improving their performance at the national and international level. Such strategies may be needed for making new investments, development of competencies, reduction of product cost and improvement of quality. For the collection of data, a questionnaire-based survey was conducted. About 44 valid responses were received. Statistical analysis of data acquired from survey is done by reliability test, t test and correlation analysis. It is observed that government support, customer support and poor financial condition are the major constraints whereas quality, cost and delivery time are main pressures for SMEs in the electronics sector. Although SMEs are flexible in developing their strategies but in view of the pressure and constraint findings, it is felt that they should develop their strategies carefully for utilizing their limited resources and improving flexibility in value chain to get supports from customers and suppliers. Keywords : flexibility, globalization, performance, SMEs, strategy development Introduction Recent developments of the World Trade Organization and other mutual trade agreements among different countries have created a highly complex, turbulent and uncertain market environment. To survive in such a hyper competitive market, all organizations need to develop flexibility in their organization structure, operations and strategy development. Flexibility is defined as ability of organization to meet an increasing variety of customer expectations while keeping costs, delays, organizations disruptions and performance losses at or near zero (Zhang et al., 2002). Although small and medium enterprises (SMEs) are supposed to have flat, flexible structure, innovative potential, informal and dynamic strategies even then SMEs are facing more impact of this changing scenario for their survival and growth. SMEs represent the largest proportion of the manufacturing sector in every country. In India, 95 per cent of the industrial units are in small-scale sector with 40 per cent value addition in the manufacturing sector and 6.29 per cent contribution to giftjourn@l Global Journal of Flexible Systems Management 2005, Vol. 6, No. 2, pp 15 - 26 the Indian Gross Domestic Product (Times of India, 2002). In India, industries having investment in plant and machinery less than rupees ten million are called small-scale industries (SSI). There is no formal definition for medium scale industries but according to some studies, industries having investment between rupees (Rs) ten million and one thousand million in plant and machinery are termed as medium scale industries (MSI) (Karandikar, 1999). In the present era of automation, electronics has become integral part of all manufacturing industries. SMEs in the electronics sector are mainly the component manufacturers for various industries such as automobile, machinery, electronics and telecommunication. Components are the building blocks to the electronics industry. For a viable electronics hardware manufacturing activity, the availability of components is a basic requirement. Production of components itself involves two stages - first the design and development and the second the specialized machinery or production equipment. Unfortunately, the production base Empirical Study