The Manufacturing Strategies and Firm’s Performance in the Auto Part Industry

Abstract

The purpose of this research is to find the proper manufacturing strategies affecting return on equity for auto parts manufacturing. Data were collected from 109 companies through conducting a survey. The respondents were asked to evaluate their judgments on the 25 manufacturing strategies in 3 areas namely: 1) Competitive priority on quality issues; 2) Improvement Activities to achieve firms’ goals and objectives; and 3) Order-winning for its product to be preferred as compared with a competitor. A Factor Analysis Technique was applied to search for jointvariations and to lower the number of variables by 11 out of 25. Then the Principal Component Analysis was used to extract 14 factors classified into 6 areas. The results from Multiple Regression Analysis show that Return on Equity could be explained by the 4 out of 6 important factors of manufacturing strategies. First, the competitive priorities in delivering merchandise, and criteria of order winning in quality competition and product variety and versatility, have an inverse relationship with return on equity. But the competitive priority in cost and quality conformance has a direct relationship with return on equity.