Size of the unit

Determination of size of the firm or scale of operations is an important decision in the establishment of a new enterprises. An attempt should be made to achieve the size at which the average cost per unit is minimum. In other words, the entrepreneur should aim at the optimum size keeping in view the extent of market, technique of production, nature of the product, availability of finance, competence of management, etc. Large scale operation offer several economies of scale but require huge capital investment and expert managerial skills. Where the risks involved are high or a new idea is to be tried, it is often preferable to start with a small size and to expend the firm gradually. According to shubin, "The initial size of the establishment must be based on judicious sales estimate. With accurate sales estimates the firm can avoid investing in an establishment that is too large and expensive to be profitable at the outset but can select a size sufficiently large to take care of the initial sales and their expected increase during the years immediately ahead. " However, the initial size of the enterprise can be large provided the entrepreneur is able and willing to afford the capital required and the risks involved.http://cainpatna.com/ A careful analysis and reconciliation of technical, managerial, financial, market and such other factor should be made to determine the size of the firm.    




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