An entrepreneur is regarded as a person who buys factor services at certain price with a view to sell its products at certain prices in future.
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People are poor because they prefer in that way but an entrepreneur accepts various challenges and won hard to achieve success. The large scale enterprises are the most important and popular types of industrial units in India. These units occupy an important position because they contribute substantially for economic development of a country.
The entrepreneurs engaged in large scale enterprises. Large scale entrepreneurs play a pivotal role because they contribute for availing a number of economies on production, management, finance and marketing. The followings are some of important reasons for growth of large entrepreneurs.
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i. Economies in production
ii. Economies in management
iii. Economies in finance
iv. Economies in marketing
(i) Economies in Production:
(a) Bulk purchase of raw materials:
Large scale units require large quantity of raw materials which enable the entrepreneur to earn trade discount in the bulk purchase of raw materials at wholesale price.
(b) Saving in freights:
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The large scale enterprise can make saving of freights by purchasing and carrying large quantity of raw materials at same or less rate of freight.
(c) Improved technology:
The large scale industrial units, because of huge asset base can use the advanced and latest technology in the production activities which helps to reduce the wastages of raw materials, time, labor and efforts.
(d) Division of labor:
The large scale industry can apply the principle of division of labor by distributing the work to specialized persons according to their qualification or experience, so as to achieve efficiency and effectiveness in operations.
(e) Research & development activities:
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The large scale industrial unit can afford to spend money on research and development work to increase the output and productivity.
(f) Use of by–products:
A large scale concern can also earn profit by selling the scrap of wastage material or by-products.
(ii) Economies in Management:
(a) Employment of experts:
Large scale business unit can appoint experts for handling the complicated and difficult managerial problems relating to labor, finance, marketing and administration.
(b) Use of mechanical techniques:
The large scale concern can introduce labor saving devices / techniques which will increase the productivity and reduce the cost of production.
(c) Economical organization:
A large scale concern can find suitable experienced candidates from inside the organization for the vacant posts and there will also be fewer chances of industrial disputes.
(iii) Economies in Finance:
(a) Mobilization of finance of low rate:
A large scale enterprise can raise large funds at very nominal rate by issuing equity shares.
(b) Reinvestment of profit:
A large scale enterprise can reinvest its profit for financing its expansion problems. Different types of reserves are created for meeting the future demand of finance.
(c) Spreading of risks:
A large scale enterprise can bear the loss in one product by setting it off against profits from other products.
(d) Reduction in bad debts:
The large scale enterprise sells their products on cash basis. There is very less chances of bad debts.
(iv) Economies in Marketing:
(a) Economies in selling expenses:
A large enterprise sells goods in large quantity, which results in saving in freight, packing, and transportation. All these factors will be helpful in reducing the selling cost.
(b) Effective advertising:
Advertising is considered the booster of sale. A large scale concern can do better advertisement for its products because it has the capacity to spend more money on advertisement.
(c) Quick services:
The orders from customers can be attended without any delay because the large scale concerns have sufficient resources to fulfill the customers’ orders.
Disadvantages:
(i) The owner of large scale concern cannot exercise control, over all the affairs of the concern.
(ii) Lack of co-ordination between different departments.
(iii) Increase in working cost.