Advantages and Disadvantages of Large Scale Industries:
Advantages of of Large Scale Production:
Large scale production is responsible for producing goods in very large quantities. It supplies consumer goods of superior quality at a reasonable price. It has also got external and internal economies. Its advantages are summarized as under-
- External Economies- The development of large scale industries at a particular place is itself responsible for the development of the area. Other facilities tend to develop at these places, such as raw material, labour supply, machines, tools, equipment, transportation, communication, banking and marketing facilities. In this way, large scale industries have not to worry and spend a large sum on these services, because these requirements are locally and economically met.
- Internal Economies- These are the advantages available to a particular firm for its own expansion. The firm expands its size and becomes a large scale industry. The bigger size of the firm results in the following advantages:
Advantages of Large Scale Industries:
- Advantages of a division of labour- In the case of large scale industries, the work is divided and sub-divided into parts. Every piece of work is performed by specialists. It simplifies the work and improves the quality of goods.
- Use of latest machines, tools and equipment- In order to produce goods in larger quantity at the minimum cost, the industry uses modern machines and equipment. It produces goods with speed, precision and certainty. In this way, the superior quality of goods is available at reasonable prices.
- Appropriate use of scraps- A large number of scraps and wastes of the industry is effectively used. Proper utilization of resources reduces waste.
- Economies in purchases and expenses- Goods are purchased in large quantities, so trade discounts at higher rates are available. The services of technician, supervisors, managers and employees can be fully availed of. It also results in the economy of expenses.
- Less effect of fluctuation- Large scale industry is big enough to remain less affected by the fluctuation in demand and supply and availability of land, labour and capital.
Disadvantages of Small Scale Industries:
- Unemployment- The greatest disadvantage of large scale industry is unemployment, which causes many social and economic tensions. These are capital intensive industries, requiring more capital and a lesser number of workers.
- Danger of monopoly- Large scale industries, if grow too much in size, become a monopoly and exploit consumers.
- Inelastic structure- Large scale industry is too big to reduce its structure. It is also very difficult for it to expand itself continuously. Its size cannot be increased or decreased easily according to the requirements.
- Inequality of income- Large scale production makes the classes or rich and poor persons. Rich grow richer and the poor become poorer.
- Class struggle- There is generally a clash between the workers and management. Workers adopt the methods of strikes, Dharna and Gherao etc. and the management adopts the policy of lockouts. In this way, class struggle continues.