Component-based development (CBD), Agile and Extreme Programming (XP) are such names, with which software professionals are quite familiar. CBD facilitates reuse of the existing components with the new ones, while agile models promote fast development. XP process model is one of the most widely used agile models. XP model has certain drawbacks, such as weak documentation and poor performance for medium and large development projects. Although these models contain good features and strengths but still there are un-answered questions and improvement possibilities in these models. Therefore majority of the software development companies face problem to select and implement an appropriate process model for development of medium and large-scale projects. The objective of this research is to address the above-mentioned problem. There are two domains namely CBD and agile XP development that can provide partial solution to the problem in hand. Keeping in view the demand of two different domains to tackle the software industry problem, simultaneous research is taken up in this thesis to handle the software industrial issues for medium and large-scale projects.