The term “critical mass” is borrowed from nuclear physics, where it refers to the smallest mass that can sustain a nuclear reaction at a constant level. In both physics and finance, it refers to a point at which a self-sustaining state is reached and in business especially, it is linked to “economies of scale” whereby below the “minimum critical mass” there are unlikely to be sufficient economies of scale to sustain the financial viability of the business.
In other words “critical mass refers to the size a business activity needs to reach in order to efficiently and competitively participate in the market. This is also the size a business must attain in order to sustain growth and efficiency.
A business’s critical mass is determined by the size of its staff, resources, revenues, and market share. Once these elements reach the size that enables a company to operate efficiently, it is said that a company has reached its critical mass. This is important because it can mean the difference between thriving and surviving in a market environment. A company that sustains profitability is safely above its critical mass.
Supply and demand in Barbados is determined by our small population and market. Many business activities which readily achieve critical mass in larger countries cannot do so in Barbados. Entrepreneurs in Barbados make a mistake when they fail to recognize the local market limits. Bearing in mind that an external market can only be developed when there is a solid local market on which a business can build the external market.
Businesses in Barbados need to focus on activities where we can achieve that critical mass and do them as well as possible and not be distracted by “wishful dreams’ that cannot be achieved in Barbados because of the market limitations.
The minimum critical mass for a sugar industry is about 30,000 acres (12,000 ha). Barbados sugar industry thrived when there was an export market that permitted our sugar industry to operate above that critical mass. Now that our sugar industry is well below that the industry is floundering.
Ross University after 40 years in Dominica failed to achieve that critical mass with 1,500 students. At the same time St. George’s medical school in Grenada had grown to well over 5,000 students over the same period. The number of medical off shore students in Barbados is growing and several of the off shore schools located here could achieve critical mass in the near future. However Barbados is a relatively expensive domicile and the Barbados public sector needs to be more facilitating and cooperative than they have been in the past.
All of the current off shore schools in Barbados need accreditation both locally and internationally to source adequate financing and the critical mass of students who in turn need student loans. These schools have the potential to contribute significantly to Barbados economy and we should not leave it to the whims and fancies of our unproductive civil servants. I recommend the creation of a small commission empowered to work with the off shore schools promoting and facilitating their activities.
Peter Webster is a retired Portfolio Manager of the Caribbean Development Bank and a former Senior Agricultural Officer in the Ministry of Agriculture, Barbados.