Scale of Production
The term, “Scale of production” refers to the size of the production unit of a firm or business. Depending on the size of production, it can be classified into large scale and small scale production.
What is Large Scale Production?
The term, “Large scale production” refers to the production of a commodity on a large scale with a large sized firm. It requires huge investments in plant and machinery. Large scale production can be carried out if the market size is large and expanding.
Large scale firms are characterized by mechanization, division of labor and production and sale of goods in large quantities. They cater to a large market. The industrial revolution laid the foundation of the factory system. The factory system which extensively used machinery and adopted division of labor made large scale production possible.
China is today considered to be the factory of the world because of its focus on large scale production. It today accounts for 50% of the world’s production of cameras, 30% of air-conditioners, 25% of washing machines and 20% of
refrigerators. It has become the world’s largest producer of toys, mobile phones, DVD players, laptop computers and colour TV sets.
What are the Motives for large scale production?
The following are some of the motives of large scale production.
- Desire for economy.
- Desire for increase in sales.
- Desire for a large customer base.
- Desire for large profits.
- Desire to become a global company.
- Desire for economic power.
- Desire for continuous growth and expansion.
- Desire to increase demand.
- Desire to overcome competition.
- Desire to achieve monopoly status.
- Desire for achieving long term profitability.