Efficient use of capital equipment: There is large scope for use of machinery, which results in lower costs. A Large producer can install an up-to- date and expensive machinery. He can also have own repairing unit. Specialized in machinery can be employed for each job. The result is that production is very economical. Small producer with a small markets cant keep the machinery continuous working. Keeping it idle is uneconomical.. A large Producer can work it continuously and reap resulting economies.
Using of specialized labour: Specialized labour produce a large output and of better quality. It is only in a large business organization that every person can be put on the job that he can best perform.
Better utilization of special in management: The use of capable manager’s time in an enlarged scale production. His assistance and specialized may be used in a large-scale production where his ability is more fruitful.
Economies of buying and selling: While purchasing raw material and other accessories , a big business can secure specially favorable term an account of its large custom. He can attract customer by offering a greater variety and by ensuring prompt execution of the orders, placed with it when he selling a product.
Economy in rent: A large-scale producer makes a saving in rent too. If the same factory made to produce a large Quantity of goods, the same amount of rent is divided over a large output. This means a smaller addition to the cost per unit in the form of rent.
Experiment and research: A large concern can afford to spend liberally on research and experiments. Successfully research may lead to the discovery of cheaper process.
Advertisement and salesman ship: A big concern can afford to spent large amount of money on advertisement and salesmanship. Amount of money spent on advertisement per unit comes to a low figure when production is on large scale. Salesman can make a careful study of individual markets and thus acquire a hold on new market or strengthen it on old ones.
Utilization of by-products: A big producer will not have to throw away any of its by products or waste products. It will be able to make an economical use of them.
Meeting adversity: A big business can show better resistance in times of adversity.
It has much better recourses. Losses can easily bear.
Cheap credit: A large business can secure credit facilities at cheap rate. Its credit in the money market is high and banks are only two willing to give advance. Low cost of credit reduces cost of production.