An
enterprise is defined as the
unit of ownership and control. (People use the word firm to mean an
enterprise). [When a large company has several subsidiary firms, the whole
group is classified as an enterprise].
An
enterprise or a firm owns several plants. A plant is a work place such as a factory, farm or a
shop.
An Industry may be defined as a group of
firms making the same or very similar products (that is, according to the
market they serve).
Industry
is also grouped in a variety of ways,
1)
According to the process carried out,
2)
On the basis of the kinds of factors of
production they use, or
3)
The kind of technology they use.
Size of a factory, a firm, or an industry may be assessed on the basis of the
capital employed, the value of output or number of employees. The use of
different methods to study the size of the firm will often give different
results. (Highly mechanized firms employ less labour, force to produce
large output). Studies show that the Minimum Efficient Plant Size (MEPS) is different for
industries. MEPS may be
defined as the point on the long run cost curve at which average costs cease to
fall. However, large firms account for not only a high proportion
of total employment but also high proportion of total output.
The
recent trends towards increase
in industrial concentration is due to the increase in the size of plant, which
enable them to get the benefits of economies of scale, improve
efficiency and faster rate of technical progress. The most
important disadvantage of industrial concentration is e the reduction of
competition (moving towards monopoly).
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