This article uses analytical hierarchy process (AHP) to find prioritization of functional strategies (manufacturing, marketing, human resource, and financial management) by small and medium enterprises (SMEs) operating in auto parts manufacturing sector of Pakistan. SMEs are major part of the industrial structure and have significant contribution toward generating jobs in Pakistan. These enterprises are generally family-owned businesses, and this study provides concrete insights into the mind-set of owners toward different functional strategies. The AHP implementation steps are performed using commercially available software "Expert Choice®." Marketing strategy is considered to be the most important strategy, while manufacturing management strategy is the second most important strategy. There is little emphasis on the financial and human resource management which is a serious cause of concern. The study would help policy makers to understand the business behaviors of this sector and consequently formulate policies to enhance their performance.

PurposeThe purpose of this research is to identify the prevalent condition of productivity in the automotive manufacturing industry of Pakistan and to indicate the possible areas for enhancing productivity.Design/methodology/approachSecondary data for the last ten years were gathered. Total productivity and all partial productivities were computed using methodology proposed by Sumanth, and total factor productivity (TFP) was computed using Cobb‐Douglas production function. Regression analysis and Pearson correlations were run to determine labor elasticity and capital elasticity.FindingsResults indicated very low levels of labor productivity and capital productivity, resulting in huge losses and stagnant growth of these firms. Increasing returns to scales (IRTS) with high values of labor elasticity and low and even negative value of capital elasticity were computed. Low values of TFP showed minimal utilization of technology in these firms.Research limitations/implicationsOne of the limitations of this research is that only two automotive manufacturing companies of Pakistan i.e. Honda Atlas and Indus Motors were targeted, which limits the generalizability of findings.Practical implicationsFindings of this research revealed that effective utilization of technology can enhance the productivity of Pakistani manufacturing firms significantly. IRTS with high values of labor elasticity and low value of capital elasticity depict the areas of productivity enhancement.Originality/valueIn Pakistan not enough effort has been put into measuring the productivity of manufacturing industry. The contribution of this paper is that it indicates the productivity blemishes in this industry and also the areas of focus for productivity enhancement.

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