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Survival of small firms

Since there are many disadvantages and weaknesses of large scale firms which have already been discussed above, many businessmen prefer to operate on the small scale. Small scale firms also enjoy certain economies as compared to the large scale firms. In addition, there are a number of sectors which make the individuals to operate on a small scale.

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Evils of large firms

The expansion of big firms may lead to the following evils

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Disadvantages of large firms

Large firms are not always in a position to reap all the economies of large scale production. They suffer from the following weaknesses

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Economies in marketing of growth of firms

The economies associated with distribution of products o a large scale are discussed below

Click to read - Economies in marketing of growth of firms

Economies in finance of growth of firms

A large scale firm obtains the following economies in financing

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Economies in management of growth of firms

Following are the managerial economies available to a large scale business unit

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Economies in production of growth of firms

The effect of the economies in production or technical economies arising out of large operations is the reduction in the cost of goods produced as compared to the cost of production of small firms.

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Reasons for the growth of firms

There is generally a tendency for the business firms to expand the scale of their operations. This tendency is the result of a large number of economies of large size.

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Factors affecting size

There are many factors which operate to expend or restrict the size of a firm. These factors are discussed below

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Measurement of size of Business

The measures commonly used to determine the size of business firms are discussed below

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Size of Business

The term `size' may be defined as scale-it may be scale of production, output or operation. While talking of size, it is essential to be clear as to whether we mean plant, a group of plants or any manufacturing group under one management, ownership or control.

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Non-legislative measures

The Monopolies Enquiry commission also made certain other recommendations to regulate concentration of economic power and monopolies.

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MRTP Commission

The Monopolies Equiry Commission provided for the establishment of a permanent statutory Commission known as the Monopolies and Restrictive Trade Practices Commission.

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The MRTP ACT, 1969 of Causes of concentration

The Monopolies and Restrictive Trade Practices Act was enacted by the Parliament on 27th December, 1969 and it was brought into force form 1st June, 1970.

Click to read - The MRTP ACT, 1969 of Causes of concentration

Restrictive Practices of Causes of concentration

The important objectionable restrictive practices found by the Commission are listed below

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Causes of concentration or monopoly

The Commission was also authorized to report on matters bearing on any aspect of national economy in addition to the aforesaid two terms of reference.

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The monopolies inquiry commission

The Central Government appointed a five member Commission under the Chairmanship of Mr. K.C. Dasgupta in April, 1964 to enquirer into the concentration of economic power and suggest measures to regulate and control monopolistic and restrictive trade practices in the country.

Click to read - The monopolies inquiry commission

Control of monopoly

It is the responsibility of the Government to regulate and control the industrial monopolies in the country to safeguard the interests of consumers, small entrepreneurs, suppliers, workers and society in general. The Government of India has assumed wide powers under various Acts like companies Act, industries (Development and Regulation) Act, Monopolies and Restrictive Trade Practices Act, etc. to keep under control the functioning and growth of industrial giants.

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Limitations of Complete consolidation

Complete consolidation suffers from the following limitations

Click to read - Limitations of Complete consolidation

Advantages of complete consolidation

The main advantages of complete consolidation are as follows

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