What Are The Merits And Demerits Of Small Scale Industries?


1 Answers

Andrew Mole Profile
Andrew Mole answered
As with any aspect of business or commerce, there is the universal question: Is it better to be a huge behemoth of a corporation, or one that is much smaller scale? The reason that this question endures is that there are advantages to both options, which naturally means that there are both advantages, and disadvantages, to being a small-scale industry.

It is important, however, to not confuse a small scale industry with a singular corporation. Whilst an industry (particularly a burgeoning one) may be occupied by only one corporation this position is definitely not the norm, and usually an industry will take in many different companies.

One of the most obvious merits of a smaller scale industry is a lack of competition: Fewer companies operating in the same space means that any company in a small industry has more opportunity to sell their products to their consumers. Conversely, a demerit is that there may be few companies in this industry because they customer-base for the good/ service offered is limited, for example, a product that lasts a long time, and is only required once.

Another disadvantage of a small scale industry is the inability to partner with other companies in the industry and benefit from mass-buying power (economies of scale) - this means that the companies in the industry will probably end up paying more for the raw materials required to produce their product or service.

The advantage that counters this, however, is flexibility: Industries that are smaller tend to be more flexible and responsive to change, e.g. The Social Media industry in the UK is operated mostly from a small area of London by a few small agencies. These agencies are not lumbering giants, so are able to respond more quickly to the changing needs of the consumer, unlike their counterparts in traditional media.

Answer Question