Advantage and Disadvantages of Large-Scale Industries | Management

 

Advantages of large Scale Industries

The following are the merits of large-scale production:

1. Internal Economies:

Internal economies arise within the firm due to the expansion of the dimensions of a specific firm.

2. External Economies:

External economies arise with the expansion of the industry. These are generally the results of large-scale production and are related to the benefits of localization.

 3. Use of machines:

Large-scale production always makes use of machines. So, all the benefits of the utilization of machinery are available.

 4. More Production:

The large scale industries can produce more goods. as an example, an enormous sugar factory can use molasses to form spirits and thus can reduce the value of the production of sugar.

5. Economies of Organization:

With a rise within the size of the firm, the value of management is reduced.

 6. Cheap and straightforward Loans:

A large business can secure credit facilities at cheaper rates because these firms enjoy credit and reputation within the market thanks to their fixed assets. Banks and other financial institutions willingly advance loans to those enterprises at a really low rate of interest.

Disadvantages of Large-Scale Productio

1. Evils of Factory System:

The large-scale production is amid all the evils of the factory system like over-crowding, density, pollution, bad morals, etc. Dirty habits of drinking and gambling spread very easily.

2. Danger of Over-Production:

The large-scale organization leads to over-production sometimes, so demand can't be properly estimated. At last, prices fall, and depression sets in.

3. Less Supervision:

A large-scale producer cannot pay full attention to each detail in various departments. Costs often rise on account of the dishonesty of workers. Thus, thanks to inefficient and inadequate supervision, the value of production goes up.

4. Monopoly:

Large-scale production leads to the localization of industries. As a result, the larger fish swallows the smaller ones, and cut-throat competition and monopolies result.

5. Class Struggle:

The large-scale production gives rise to class war, the struggle between the laborers and therefore the capitalists. Their interests cannot go together, as they're very different from one another. As a result, there's a struggle between the 2 groups.

6. Dependence on Foreign Markets:

A large producer has generally to depend upon foreign markets. The foreign markets could also be stopping by wars, etc. This makes the business risky.

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