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 at different periods of time, as well as in various industries.
Concentration of production is a process in which it focuses on the largest enterprises. Its very name implies the economic essence of this process, which is bilateral:
1. The steady increase in the share of large enterprises in the total production of a particular industry.
2. The constant growth of the size of these large organizations.
The concept of a large (large) enterprise is dynamic. So, in almost all sectors of social production, their average size grew by 4-5 times. The concentration of production takes its own certain level, which has a whole system of indicators. The main thing is the share of the largest industrial organizations in the total production of the industry:
UVK = Occ / Oop x 100%,
where UVK is the concentration level in%,
OCC - production volumes of the largest enterprises,
Oop - total output.
Volumes are calculated in monetary, in- kind, conditionally-natural terms. Complementary is the indicator of the share of the largest industrial organizations in different elements of production (fixed assets, revolving funds, total capacity, headcount).
Concentration of production occurs in 2 forms: interbranch and industry. Intersectoral means the concentration of production at ever larger enterprises that produce various products. Their size in this case is increasing due to the output of products from various industries. This process is a diversification option. With industry concentration, the growth of the size of the enterprise and its specific share in total production volumes occurs 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 change in space, time and from one industry to another.
Concentration on enterprises is developing on the basis of:
- the creation of specialized industries with an increase in the production of homogeneous products;
- launch of universal plants with an increase in the production of various products;
- Creation of large factories based on combined production;
- diversification of production.
It is reached in the following ways:
- the use of equipment and machines with greater power;
- an increase in the number of equipment, machines, production lines;
- a simultaneous increase in the number of devices, machines, the existing technical level and the use of more modern equipment;
- a combination of several interconnected industries.
From the point of view of the economy, the most intensive way of development is considered , in which modern technologies are introduced, the latest equipment is used. When analyzing the degree of concentration, relative and absolute indicators are used. Relative concentration is characterized by the distribution of the total volume of production in a given industry between all enterprises of different sizes. This indicator to some extent characterizes the level of monopolization of enterprises. Absolute is characterized by the size of production of various enterprises. Its level is determined by the following indicators: the volume of output, the average annual value of production fixed assets, the average number of employees.