Modernisation


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Modernisation

A firm may use the strategy of modernization to achieve growth. Modernization basically involves upgradation of technology to increase production, to improve quality and to reduce wastages and cost of production. The worn-out and obsolete machines and equipment are replaced by the modern machines and equipment.

 

Consider these examples:

  • National Organic Chemicals Industries Ltd (NOCIL), a major manufacturer of petrochemicals in the private sector, undertook a Rs 100 crore modernization plan in order to complete effectively.
  • Modi Industries Ltd planned to invest Rs 30 crore for technological upgradation of its steel unit, primarily for widening its product range.
  • The corporate planning team at Steel Authority of India Let (SAIL) envisages a Rs 15,000 crore capital spending programme spread over seven years to modernize its steel plants with a variety of objectives such as lower costs, energy saving, higher capacity utilization, closing down unprofitable units, etc.

Modernization could be used for different purposes as can be seen from the above examples. Some of these could be operational but most modernization programmes involve a huge amount of resources and, are aimed at gaining competitive and strategic strengths. Some organizations, in fact built their strategies around technology.


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