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Efficiency Analysis and Flexibility: A Case Study of Cement Firms in India

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Abstract

The present paper aims to study the efficiency and flexibility of cement firms in India. Different data envelopment analysis (DEA) models have been employed to assess the efficiency of cement industry in India. Major findings of the DEA analysis suggest that 43 % firms are found to be technically efficient. Overall, the industry shows good performance with a mean technical efficiency level of 0.885 (variable returns to scale model) and 0.859 (constant returns to scale model). The results relating to returns to scale indicate that 14 firms are experiencing increasing returns to scale, 12 firms are operating at decreasing returns to scale, and the remaining 21 firms are exhibiting constant returns to scale. Results show that foreign firms are technically more efficient than the domestic firms, and owing to the benefits of economies of scale, large-scale firms are more scale efficient than the small- and medium scale firms. The study highlights the importance of flexibility in the production processes of inefficient firms in order to bring their efficiency at par with efficient firms.

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Authors and Affiliations

  1. Department of Management Studies, Indian Institute of Technology, Delhi, India

    Mini Kundi & Seema Sharma

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  1. Mini Kundi
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  2. Seema Sharma
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Correspondence to Mini Kundi.

Appendix

Appendix

See Tables 8, 9, 10, 11, 12.

Table 8 Production of cement in India
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Table 9 Market share of leading cement firms in India (in percent)
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Table 10 Observed values of inputs and output (in Rs. million)
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Table 11 Efficiency scores for cement firms in India: 2012–13
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Table 12 Target values of inputs for inefficient firms (in Rs. million)
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Kundi, M., Sharma, S. Efficiency Analysis and Flexibility: A Case Study of Cement Firms in India. Glob J Flex Syst Manag 16, 221–234 (2015). https://doi.org/10.1007/s40171-015-0094-0

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