Answer to Question #268387 in Management for agast

Question

You are part of Pharma Company who has grown immensely during Covid times. Your company is planning to set up two more plants for manufacturing of vaccinations. As Procurement Manager help them to evaluate between leasing or buying two factory premises. Please support your answer with reasoning & mention advantages of selected option.

Answer 1

As a procurement Manager, leasing two factory premises is better than buying because it is more attractive. Monthly payments are frequently lower because the factory will not be paying back any principal. With renting, the firm will be borrowing and repaying the difference between the factory’s value when new and the factory’s residual (Hodges, 2012). Therefore it is suitable for Pharma Company to lease a factory in this perception.

Reference

Hodges, J. (2012). Rent vs. Own: A Real Estate Reality Check for Navigating Booms, Busts, and Bad Advice, Chronicle Books.