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The advantages/disadvantages of the total cost of ownership.

Title: The advantages/disadvantages of the total cost of ownership.
Category: /Business & Economy/Accounting
Details: Words: 548 | Pages: 2 (approximately 235 words/page)
The advantages/disadvantages of the total cost of ownership.
Advantages: 1)Take all cost elements into consideration, because it extends the procurement to the whole life cycle of product within a firm. 2)Reflects the real cost of the purchasing rather than the pure acquisition. 3)It helps to define a rational purchasing policy for the buyer, for instance, how to allocate the purchasing volume, and to whom, and etc. 4)It can be a tool to evaluate outsourcing deals. 5)Can be used in negotiations with suppliers, by …showed first 75 words of 548 total…
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…showed last 75 words of 548 total…Use TCO for products with long life cycle within the organization e.g. PC's, machines. Cannot be applied to: 6)Lack of negotiation power, fro instance, with monopoly supplier; if supply is behind demanding, and etc. 7)Buy service from banking, insurance, and consulting. 8)Company with very simple process, e.g. pure re-selling and wholesale. 9)Companies spend a small proportion of total spending on purchasing. 10)Too competitive internal environment, for instance, each department has an individual budget.

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