Answer to Question #266115 in Marketing for Saif

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 appealing. Monthly payments are often lower because the factory will not be paying back any principal. With leasing, 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 appropriate for Pharma Company to lease a factory in this perspective.

Reference

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