Disadvantages of Large Scale Productions

Large scale of production means level and degree of production. Large scale of production 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 is 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. The business is generally managed by the paid employees. 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 are 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 is greater than the demand prices go down, profit rate goes down and if production is 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 is 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.