Contract Hire Model for Fire Extinguishers- myassignmenthelp

Question: Discuss about theContract Hire Model for Fire Extinguishers. Answer: Introduction An operating lease is a long-term agreement between the owner of a property and a person in need of the property for a specified period, (Cotei Farhat, 2016, p. 175). The contract may last for one to five years depending on the business requirements. At the end of the lease period, the property is always returned to the lessor. Changes in control of the fleet. Reduction in responsibility for ensuring the security of the fleet There would be less control security on the vehicles. The renting firm will only be responsible for the security of the car on its premises. However, if the lease terms allow the firm to return the vehicle to the lessor's premises at the end of each day, then the lessor will be responsible for maintaining security, (Giner Pardo, 2017, p. 1887). The lessor is also liable for installing security apparatus such as fire alarms, GPS Identification equipment, and fire extinguishers. Maintenance and servicing of the fleet. There would be a reduction in the regular maintenance of the fleet. Temporary ownership of the vehicle by the customers makes them responsible for the servicing such as tire rotation, (Morais, 2013, p. 438). However, in some lease agreements, the lessor may be responsible for regular servicing of the vehicle and ensuring that the car is in a proper working condition. Restriction on the car mileage limit There is a limit on the vehicles miles coverage. Usually, terms and conditions for vehicle leasing include limitations on the vehicles mileage. If the customer has to cover more distance then they have to pay more for the addition, (Contract Hire and Leasing, 2017). This is advantageous as compared to owning and using the vehicle since the owner may not consider the specified mile coverage. Initial cost payment When the firm purchases a car on loan, it will be forced to pay the whole amount of the loan including the interest. However, in an operating lease, the firm only pays monthly rentals, (Contract Hire and Leasing, 2017). How the model would satisfy sudden changes in demand Change in concentration of the management In a car lease agreement, the renting firm may not be responsible for maintaining and servicing the leased car. This enables the management to have more time to concentrate on other areas of administration, (Morais, 2013, p. 440). The management will, therefore, spend more time and resources on other management areas. Response to changes in prevailing economic conditions in the market. With the adoption of leasing, the company will be more flexible to satisfy economic variations in the market such as a change in prices, staff salaries, and inflation. This is because the enterprise may shift to any dealer after the lapse of an existing lease agreement, (Contract Hire and Leasing, 2017). This would enable the firm to adopt contracts with fair prices. Addressing the variations in staff requirements Whenever a contract lapses, a firm may not be in a position to renew it, but instead form a new contract with a different company. The company may also change the composition of its staff by employing new drivers and car operators who are more qualified, (Cotei Farhat, 2016, p. 175). References Contract Hire and Leasing, 2017. Buy Versus Lease The Benefits of Car Leasing. [Online] Available at: https://www.contracthireandleasing.com/guides/buy-versus-lease-the-benefits-of-car-leasing [Accessed 31 October 2017]. Cotei, C. Farhat, J., 2016. The Leasing Decisions of Startup Firms. Review of Pacific Basin Financial Markets and Policies, p.175. Giner, B. Pardo, F., 2017. Operating Lease Decision and the Impact of Capitalization in a Bank-oriented Country. Applied Economics, 49(19), pp.1886-1900. Morais, A.I., 2013. Why do Companies choose to Lease Instead of Buy? Insights from Academic Literature. Academia Revista Latinoamericana De Administracin,26(3), Pp.432-446.