Major industries

1.
2.
3.
4.
1.

Manufacturing
Export oriented
import substituting
service sector
Manufacturing industries
I.
In 2006-2007, number of establishment was 3446 and total number of
employment was 177,550.
II.
The growth rate of production of manufacturing sub-sector has been sluggish
since last few year.
III.
The growth rate of industries is very marginal(0.3%)
IV.
In terms of performance of manufacturing sector, the contribution on GDP is less
than 7% in the fiscal year 2010-2011.
V.
Government policies are not satisfactory.
VI.
The problems constraining growth of manufacturing industries are- high cost for
raw material, little access to international market, unfair treaties in the past,
overstaffing, absence of corporate culture, government interference etc.
VII. The capital utilization is very low.
VIII. In case of public manufacturing industries, the constraining factors inhabiting
growth and development of these enterprises are- overstaffing, increasing
government interference, poor operational and financial management, lack of
control mechanism and effort, the overall situation of QWL is not satisfactory.
Major manufacturing industries areSugar producing, Cement producing, Cigarette producing, Soft drink producing,
Biscuits producing, Noodles producing, Matches producing, Pharmaceutical
industries etc.
Some of public sector manufacturing industries are(13 at present)
Birjung sugar factory Ltd.
Diary Development Corporation
Hetauda Textile Industries Ltd.
Janakpur Cigarette factory ltd.
Lumbini Sugar Factory Ltd.
Hetauda Cement inudsries Ltd etc.

2. Export oriented industries

Industries which produce goods to be sold in the international market are known as
export oriented industries. These industries help in maintaining balance of trade. They are
the major source of foreign currencies. The main export oriented industries of Nepal are
I)
Woolen carpet industries
II)
Readymade garment industries
III)
Handicrafts industry
IV)
Agro and forest based industries
I)
Woolen carpet industry
Nepal exports carpet more than 35 countries(Germany, US, France, Netherlands etc)
of the world. During early 1990s, the volume of the carpet export was quite high with
almost 50% of total exports. However in recent years it is reduced drastically. More
then 200000 people are employed in these factories and majority of employees are
female. Now, most of these factories are pursuing a survival strategies. The main
reason behind the fall of carpet market in abroad market are- i) Child labor issue
ii)Competition with cheaper Indian and Bangladeshi carpets iii)Poor reasearch and
development iv)No long term vision v)Industrial and labor unrest
II)
Readymade garment
The industry was started in the country in the late 1970s. In the early 1990s the export
value of readymade garment was about 4 billion rupees. It grew at reasonable rate
until 2001. After then, it witnessed downfall in the foreign market. The market of
garment industries of Nepal are USA, France, UK, Germany, Canada etc. Surya
Garment is the largest garment company in Nepal, shut down in August, 2011 due to
conflict between union and management. The various problems of garment industries
in Nepal are
i)
Quota dependency
ii)
High cost
iii)
Poor government support
iv)
Lack of trained manpower
III)
Handicrafts industry
Handicraft association of Nepal has defined that handicraft industries as "an
industries that uses labor intensive specialized skills, and uses indigenous raw
material and resources. These products are textile and non-textile. The main textile
products are pasmina, wool, dhaka etc. Non textile products are silver jeweler, metal
craft, wood craft etc. The main exporting countries are European counties, UK, US
etc. The overall picture of handicraft industries is quite satisfactory. Roughly 7000
people are employed in handicraft industries and majority of them are female
workers.
IV)
Agro and forest based industries
Agro based products- tea, pulses, ginger, cardamom, coffee, honey etc.
Forest based products-wood, herbs, paper product etc.
Problems: Low productivity, lack of commercialization, weak institutional support,
poor quality control etc

3. Import substituting industries

Import substitution means replacement of foreign products by domestic supply. Nepal
adopted the policy of import substitution in 1961. The main industries established for this
purpose include food, beverage, tobacco, iron, steel, cement, pharmaceutical, sugar
industries etc. The main contribution of these industries include the utilization of ideal
resources in the country, preventing the outflow of foreign currency and providing
employment opportunities to the people. Some of the major problem facing these
industries are low capacity utlization, labor problem, tough competition with foreign
products, government policy uncertainties etc.
4. Service oriented industries
I.
Tourism industries
Largest service industries, largest source of foreign exchange, Hindu Buddhist
heritage of Nepal, rock climbing,
II.
Transport industries
Includes road transport, air transport, water transport. Great majority of business
and people rely on road transport. Road construction is quite slow and number of
vehicle is very high.
III.
Information and communication industries
IV.
Financial service industries
Banking and non banking financial institution. Nepal Bank Ltd was established in
1937.

Management practices in Nepal

Largely traditional
Process rather than objective oriented
Heavily rely on rigid rules and regulations
Things are changing in service sector

1. Planning practices
Top-down planning
Lack of long term strategic planning
Lack of SWOT analysis
Managers believe that once plans are prepared, their job regarding planning is fiished.
2. Decision making practices
Decision making is highly centralized
Managers usually postpone the decision for tomorrow and tomorrow never comes
Reactive decision making style
Employee selection selection is highly influneced by nepotism and favoritism
Lack of the evaluation of decision effectiveness and feedback mechanism
3. Organizing and staffing practices
Small size businesses are using simple line organizational structure

Big organizational are using fuctional structure

Governemnt organizations are adopting line and staff organization structure
Donor assisting projects are using matrixorganizatioal structure
Organization structure are often unnecessary tall
No parity(equality) between authority and responsibility
No proper human resource planning, selection process is haphazard, training and
development is not emphasized and always tension between union and management.
4 Leadership practices
Autocratic leadership style
Political appointment in leadership
Leaders don't consider ethical dimension
Most of the conflicts are ego based rather than issue based
Employee have low morale and motivation
4. Controlling practices
The task of taking correction action is not effective
Post control is common, concurrent control is inadequate and pre-control is often
missing.
Common controlling techniques are budgeting and auditing and they are not effective.
No emphasis on total quality management and continious improvement.
Management problems of major industries
A. External problems
1. Political intervention
2. Infrastructure problems(infrastructure facilities lime road, water supply, electricity is
very poor in Nepal)
3. Security problem(forced donation, strikes, labor unrest, criminality etc)
4. Labor market problem(very difficult to find efficient labor)
B. Internal problems
5. Lack of professional management skills
6. Lack of effective planning and implementation
7. Communication problems(between managers and employees)
8. Lack of adequate financial resources
9. Labor relation problem