Survival of Small Scale
Firms:
Small scale production firms
has the actual survival value side by side with large scale
production. The facts are that small scale firms have a firm
footing along with the large scale firms. The reasons are that
small
scale firms concerns enjoy certain advantages which are
peculiar to their own. They are following:
Reasons for Survival of Small Scale
Firms:
(i) Close
supervision.
When production is being carried on a small scale, the producer
can easily supervise each part of the work. The raw material is
fully utilized
by avoiding the waste. As the workers are closely
supervised they work
efficiently. The machines are carefully handled. All this
results in lowering of cost production.
(ii) Economic independence.
In a small firm, the producer is generally the sole proprietor
himself. When he clearly knows that the whole profit will go to
him and not to anybody else, he works untiringly.
(iii) Economy in management.
A large firm has to spend a sizeable portion of the income on
maintaining administrative machinery but that is not the case
with the small firm. In a small firm, the proprietor himself is
the manager. He does not need superfluous account keeping. He
just writes the income and expenditure of his business on a
small notebook and keeps that with himself.
(iv) Close contact with
customers. As the, workers employed in a small firm are few in number, the employer can
have a close contact with them. He can listen to their
grievances personally and can redress them if he thinks them
justified. Due to better understanding between the and the
employees, the chances of industrial disputes are reduced.
(v) Greater adaptability to
Changes. Another advantage claimed by a small firm is that
it can easily adjust its supply to the changed conditions in
demand. As the small firm has not to consult the various
share-holders of the business, so it can easily arrive at quick
decisions and these decisions can be promptly executed.
Small Scale
Firms VS Large Scale Firms:
In addition to the advantages
discussed above, there are some special circumstances where
small scale production is most suitable and economical than
large scale production:
Advantages of Small Scale Production
Firms:
(i) When the demand for a
commodity is small and is expected to remain as such for many
years to come, then the production will not be carried out on a
large scale. Similarly, if the demand is of a fluctuating
nature, the goods are produced on small scale and not on large
scale.
(ii) Production is also carried on small scale where the
scope of division of labor is limited. For example, in
tailoring, repairing agricultural concerns, the division of
labor cannot be introduced on a large scale. In tailoring, the
clothes are prepared according to the individual tastes of the
customers. So, is also the case in repairing. In agricultural
work cannot be divided into processes and sub-processes. So, it
is generally organized on a small scale.
(iii) Small scale
production is also able to hold its own in that field where
production is carried on according to the individual tastes. For
instance, in jewellery, embroidery works and in other autistics
wares, the demand is met locally and the work is done strictly
according to the wishes of the customers customers.
(iv) The goods are also produced on
small scale where it is not possible to standardize them.
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