Large scale of production means level and degree of production. It is very useful for the development and prosperity of the nation. Where they have merits as well as they have some demerits which are as under.
Over worked Management
The large scale producer mostly involved with import and export problems, Concession from the Govt. and attainment of cheap credit. Supervision becomes tax and there is a waste of raw material, leakage of finished goods, mishandling of machinery, inefficiency of labor, dishonesty etc. and this appears when concern grows.
No Personal Element
As the concern grows personal contact between the employer and employees disappear. The owner is usually absent. Paid employees managed the business generally. Personal contact and sympathy between the owner and the employees are missing and this sometime lead to misunderstanding strikes and look up of the factory, which is harmful for the business.
Individual Tests Ignored
Large concerns are run by huge and most modern machinery which only turn out standardized good and control the quality. Large quantities are produced hence individual tests, traditions and customs are ignored.
Danger of Depression
If at any time in large scale production supply greater than. The demand prices go down, profit rate goes down and if production stopped. There is a danger of depression because of unemployment.
Dependence on Foreign Market
Large scale producer imports raw material and machinery. If the supply of raw material cut off by war or political unrest in the exporting countries production process is disturbed. This makes the business risky.
Over Production/Cut Throat Competition
Larger scale producer have the desire to increase output to earn more profits. They fight for the markets and there is wasteful completion and as a result there.
Lack of Adaptability
Large scale producer in adversity or in depression find it very difficult to witch over from one business to another.
Danger of Monopolies
Large scale producer do not allow the small scale producers to enter into the business and if enters, large scales producers lowers down price per unit of output than the cost per units of small scale producer and hence become monopolists and earn super normal profits.