Large-scale industries are businesses that operate on a massive scale, producing and distributing goods and services to a large market. They play a significant role in the growth of an economy and contribute significantly to the employment and revenue generation of a country. However, like everything, they also have their own advantages and disadvantages.
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 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 in 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.
7. Ancillary Industries:
With the event of large-scale production, there arise many small industries which use their by-products or supply inputs thereto. Suppose, when the assembly of steel is increased, many other auxiliary industries develop. the event of auxiliary industries contributes to the industrialization of the world and therefore the industry itself.
8. Standard Goods:
The production of standardized goods is feasible on account of large-scale production. Only an enormous motor company can produce standardized motor parts. Besides, it’s possible to sell and transport these goods to foreign places only by business houses.
9. Research:
Large-scale production is conducive to the event of technology also. With a bigger amount of capital and financial resources, large-scale firms can afford to spend more on research and experiments which ultimately cause the invention of the latest machines and cheaper techniques of production.
10. Economy of shopping for and Selling:
A large concern usually buys things in large quantities and thus, at low rates. It also sells things in large quantities and may secure better terms.
11. Economies of Indivisibility:
Many factors of production aren’t perfectly divisible. as an example, assume that one machine can produce 100 units of a commodity, but we are producing only 50 units by that machine. The machine is indivisible. If the size of production is increased and that we start producing 100 units, the cost is going to be reduced. this is often the economy of the indivisible machines.
12. Economies of Scale:
One of the major advantages of large-scale industries is that they can take advantage of economies of scale. They can produce goods and services at a much lower cost than smaller firms, as they can benefit from reduced unit costs due to their large production volume.
13. Employment Quo:
Large-scale industries often have a dominant position in their respective markets, which gives them significant bargaining power. They can control prices, set standards, and influence consumer preferences.
14. Job Creation:
Large-scale industries provide employment to a large number of people, which contributes to the overall growth and development of a country. They also provide job opportunities in various fields such as production, management, marketing, and more.
15. Innovation:
Large-scale industries often have the resources and expertise to invest in research and development, which leads to new products, processes, and technologies. They also help to drive technological advancements and play a crucial role in technological progress.
Disadvantages of Large-Scale Production
1. Evils of Factory System:
The large-scale production is amid all the evils of the factory system like overcrowding, 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 stopped by wars, etc. This makes the business risky.
7. Possibility of War:
Large-scale production increases the chances of wars. Big producers make attempts to sell their goods within the foreign markets and check out to capture them by fair and foul means, thereby exposing the planet to wars and struggles.
8. Lack of Adaptability:
As huge capital is invested in large-scale production, it’s very difficult to cause a change within the scale of production consistent with the circumstances.
9. Individual Tastes Ignored:
Individual tastes and interests stand completely ignored in large-scale production. Goods of uniform quality are clothed regardless of the wants of the individual customers. Individual tastes aren’t, therefore, satisfied. This leads to the loss of consumers to other competitors.
10. Unequal Distribution of Wealth:
All wealth and incomes of the country get concentrated within the pockets of massive producers thanks to large-scale production. there’s the unequal distribution of wealth and resources on account of large-scale production. The rich become richer and therefore the poor become poorer.
11. Monopolistic Tendencies:
Large-scale industries often have a dominant market position, which can lead to monopolistic practices. This can result in higher prices, reduced competition, and lower-quality products.
12. Environmental Impacts:
Large-scale industries often have negative impacts on the environment, such as air and water pollution, deforestation, and soil degradation. They also contribute to climate change through their carbon emissions.
13. Income Inequality:
Large-scale industries often result in income inequality, as the benefits of their growth are often concentrated among a small group of people. This can lead to a widening income gap and social tension.
14. Dependence on Foreign Markets:
Large-scale industries are often heavily dependent on foreign markets for their raw materials, which makes them vulnerable to fluctuations in the global economy. This can result in job losses and economic instability.
In conclusion, large-scale industries have both advantages and disadvantages. While they play a significant role in the growth and development of an economy, it is important for governments to implement policies that mitigate their negative impacts and ensure that the benefits of growth are distributed more equitably.
