Concentration of production

Concentration of production is the most important form of social organization of any enterprise. It reflects the laws of economic development, despite the fact that its manifestation is not straightforward in different periods of time, as well as in various industries.

Concentration of production is the process by which it focuses on the largest enterprises. From its very name follows the economic essence of this process, which is two-sided:

1. The steady growth of the share of large enterprises in the total output of a particular industry.

2. Constant growth of the very sizes of these large organizations.

The concept of a large (large) enterprise is dynamic. Thus, in practically all branches of social production, their average size has grown 4-5 times. Concentration of production takes its own level, which has a whole system of indicators. The main is the share of the largest industrial organizations in the total output of the industry:

Uvk = Okk / Oop x 100%,

Where Увк - concentration level in%,
Okk - the volume of production of the largest enterprises,
Oop - total output.

Volumes are calculated in money, in kind, in conditionally-natural expression. The index of the share of the largest industrial organizations in different elements of production (basic, circulating assets, total capacity, number of personnel) is complementary.

Concentration of production occurs in 2 forms: interbranch and branch. Interindustry means the concentration of output at all large enterprises that produce different products. Their size in this case is increased due to the output of products from different industries. This process is a variant of diversification. With industry concentration, the growth in the size of an enterprise and its share in total production volumes is due to an increase in the output of a particular industry. Large-scale production significantly reduces the cost of the product, so a large enterprise becomes more competitive.

Concentration and centralization of production is the law of economic development. They are carried out under certain conditions, different for each industry. These processes vary in space, time, and from one industry to another.

Concentration in enterprises develops on the basis of:

- creation of specialized productions with increasing output of homogeneous products;
- launch of universal plants with increasing output of different products;
- Creation of large plants on the basis of combined production;
- Diversification of production.

It is achieved in the following ways:

- use of equipment and machines with more power;
- increase in the number of equipment, machines, technological lines;
- simultaneous increase in the number of devices, machines, available technical level and use of more modern equipment;
- the combination of several interrelated productions.

From the point of view of the economy, the most optimal way is considered to be the intensive development path, in which modern technologies are introduced, the newest equipment is used. When analyzing the degree of concentration, relative and absolute values are used. The relative concentration characterizes the distribution of the total volume of output in the industry between all enterprises of different sizes. This indicator to some extent characterizes the level of monopolization of enterprises. Absolute characterizes the size of production of various enterprises. Its level is determined by the following indicators: the volume of output, the average annual cost of production fixed assets, the average number of employees.