What are the advantages and disadvantages of large scale production?
Currently, many businesses, instead of choosing small factory designs, have chosen a larger size factory model to produce on a large scale. This form has certain advantages, but any production model is limited and so is the large scale production model. Let's find out what the pros and cons are through this article!
Advantages of large-scale production
1. Using modern and specialized machines to increase productivity
In contrast to the small workshop design model, the large scale production model requires a large size factory area to allow sufficient space for the use of machinery. Each manufacturing industry needs different types of specialized and modern machines for each stage, so the allocation of production areas is essential. However, depending on the industry and the cost of each enterprise, the large-scale production model will work.
2. There is a division of labor, increasing work efficiency
In large enterprises, the working model will be divided according to specialization, each individual will be in a fixed and intensive position. Therefore, large-scale production is essential to making the best use of workers' work capacity. For SMEs, it is necessary to optimize manpower and production space to meet the actual conditions of the company.
3. Saving production costs
The management and distribution costs per unit of production in a large enterprise will be much less. Interest rates, bills and other expenses are the same, big or small. Therefore, the same amount of spending is distributed on a larger volume resulting in lower cost per unit.
4. Easy to get loans
A large-scale production model can take advantage of the financial economy. With strong economic potential, a large business model can ensure credit facilities at low prices. Low credit costs reduce production costs. These are some of the advantages that a large scale enterprise has over a small scale enterprise. It can produce better goods at lower costs
Disadvantages of large-scale production
1. Lack of supervision
A large scale manufacturer cannot pay enough attention to detail. Costs often increase due to employee dishonesty or waste of their materials. This is due to the lack of supervision. Due to the laxity of control, production costs will increase.
2. Dependence on foreign markets
A large manufacturer often depends on foreign markets. Overseas markets may be affected by the war or some other upheaval. This makes the business very easy to face risks.
3. Need large capital
Unlike small production models with small factory designs, large quantities are required to have strong capital resources. In the absence of capital, large-scale industries face many difficulties and are under pressure.
4. Difficult management
Managing large businesses is very complex and costly. In order for businesses to operate smoothly, it is necessary to have a professional management system. Otherwise the business will suffer many fluctuations, causing economic losses.
Thus, each production model has its advantages and disadvantages for businesses. However, no matter which type you choose, small or large design workshops is an important profit for your business. Hopefully the article above provides useful information for businesses.