0203

Problem

Describe the total-cost-of-ownership orientation that purchasing managers use and illustrate how you could apply it to your next automobile purchase decision.

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Step 1/2

When purchasing a product or service, purchasing manager is bound to consider and analyze carefully the invisible and additional costs of the actual purchase price. This possessing of products and services with their complete overall costs by an organization is termed as “Total Cost of Ownership” (TCO).

The procurement managers analyze and use total-cost-of-ownership orientation towards the ultimate benefits of the organization. It is explained below in brief:

Total-cost-of-ownership orientation and its usage by procurement managers:

• Procurement managers look for ways to eliminate transportation and delivery charges.

• Proceeds to minimize internal charges.

• Negotiates for free installation works and formal charges.

• Make arrangements to import experts for educating employees.

Step 2/2

One could apply total cost of orientation to my next automobile purchase decision in the following ways:

• Bargain for the reduction or discount on the product

• To receive guarantee for a certain period

• Free repair and handling charges for basic works

• Better rate for exchange policy.