Factor Analysis In Economics

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not the same across the types of units. The P value is less than the table value. Hence the null hypothesis is rejected. 6.24 FACTOR ANALYSIS: To test the various problems faced by MSMEs both in Hyderabad and Visakhapatnam district, factor analysis was used. This analysis is applied as a data reduction. In order to test the validity of the data for factor analysis KMO (Kaiser Meyer Olkin ) and Bartlett’s test of Sphericity was conducted. This test is an indicator to know how well the sample data is suited for factor analysis. The factor analysis test for Visakhapatnam district extract 33 variables and the results were grouped into 9 factors. The main findings of the study have generated some important factors relating to problems faced by…show more content…
The variables derived in this factor are shortage of Raw Material, Increase in ordering cost, problem in storage of Raw Material and High cost of Raw Material. This shows that the fifth problems faced by these enterprises are relating to Raw Material, which in turn affects the production along with power problems and labour problems. This proves that one of the major problems faced by these sectors is production. The sixth problems faced by these sectors is relating to debtors. It is derived in factor 6. There is only one variable derived in this factor which is problems relating to allowing credit to customers. This shows that by allowing credit to customers MSMEs are facing problem. This problem is also part of Finance Problem. The Seventh problem faced by MSMEs is relating to Technology. This is derived in Factor 7. There is only one variable derived in factor 7 relating to technology which is Non availability of Machinery. This variable is representing the problem relating to technology. The technology problem also affects the…show more content…
Factor analysis has derived 13 factors as shown in table 5.16. The major problem faced by these MSMEs sector in Hyderabad District is finance problem which is disclosed factor 1, and factor 4. Factor 1 problems are purely related to tax and factor 4 variables are related to fiancé. The variables of finance extracted in these factors are payment of CST, payment of excise duty, payment of custom duty, problem for claiming Input Tax Credit, factoring problem, documentation problem, allowing credit to customers, slow collection of debts, grant of loan, maintenance of books of accounts and also budgeting problems. Out of 15 variables studied in finance problem the respondent have responded that they were facing problems in 11 variables. Due to lack of funds they are unable to meet their required budget, unable to pay various taxes. Hence the study revealed that Finance is the major problem which these sectors are facing

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