Large scale of production means level and degree of production. It is very useful for the development and prosperity of the nation. Following are advantages of large Scale Production:
Economics of Buying and Selling
The large scale producer purchases raw material in larger quantities and from the areas where its supply is greater and price is low and hence secure favorable terms on account of its large customer. He sells its product in the markets where its demand is greater and price is high.
Optimum use of Machinery
Most of the goods of daily use now a day are produced with the help of modern machinery which produces larger quantities, of superior quality with lowering cost. But modern machinery can be used only by large scale producer.
Division of Labour
Division of labour helps in increase in deficiency of the labour. Efficient labour can produce larger output and of better quality. But division of labour is only possible at large scale.
In large scale production waste is not thrown away but it is utilized for production of by- products which lower the cost of production e.g. a big sugar mill does not throw away the wastes, but turn it into hard board.
Economics of Overhead Charges
Overhead charges do not change with the output. Overhead charges per unit of output decreases with an increase in output so the expenses of administration and distribution are much less in large scale production that results in lower per unit cost.
Economies of Repair or Establishment of Workshops
Large scale producer being financially strong establishes workshops within the factory hence, production process continues without any break and expenses of repair are much less.
Analysis of market fluctuations
Market fluctuation means changes in the price level. Those organizers who forces these fluctuations benefits and for this large scale producer employees able minded and experienced marketing managers who survey the demand and supply positions in the different markets and help the major producer in earning maximum profits.
Facing the Adversity
A larger concern can face the adversity and depression in a better way on account of his vast resources. He can bear losses even for a longer period in a hope to earn profits in full.
Advertisement and Salesmanship
In the present times none of the firm can introduce its products without the advertisement and salesmanship. Only a large scale producer can spend heavy amounts on advertisement and salesmanship. Thus, he captures the market and increases its revenue.
Cheap Credit Facility
Govt. provides more concessions e.g. tax holiday and import of machinery to a major producers, he also secures credit facilities at a cheaper rate. Low costs of credit reduce the cost of production.
Research and Experiment
It an admitted fact that expanses of experiment and research repay more. Successful research and experiment may lead to a cheap method or technique of production which in the long run reduce cost of production. But only large scale production can afford the expenses of experiments and research.