Advantages and disadvantages of B-2-B leasing

 

1. What are the key advantages and disadvantages of B-2-B leasing? Can you provide an example?
2. Why are derivatives considered riskier than other financial instruments?

 

Sample Solution

Advantages and disadvantages of B-2-B leasing

Business-to-business (B2B) is a form of transaction between businesses, such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer. Leasing is proving a new model for B-2-B and consumer products. For example, instead of utilizing multiple third parties in vehicle ownership, fleet management leasing options provide the company with a multidimensional business that can assist all of their needs. The most important advantage of B-2-B is to have JIT just in time delivery, the company can have the track of goods as to which place it has reached with the help of electronic commerce. B-2-B practices diverge in several and significant ways from standard business-to-consumer practices. Although some differences entail simple changes in perspective, others create disadvantages for companies seeking to sell to other business. The disadvantages include: limited market, long purchase decision time, inverted power structure, and sales process.

This could be explained as he was writing in 1990, when primary sources became widely available for use, especially some from the soviet archives which were released after USSR began to collapse in 1990. Also his jobs provide an insight to why he holds the views he does. He is a director of the Council on Foreign Relations and also teaches in the program on National and international Affairs. This provides evidence towards his international views.
Evaluation

The Kolko’s argument is more narrow than others as he claims that the motives behind the Marshall plan were purely of economic self-interest as the US wanted to “secure their own immediate gains”. This already strays Kolko’s argument away from those of Rees and Yergin who have more diverse views on the motives such as humanitarian and political. Kolko’s particular focus economically for the basis of his argument is on the self-interests of the American government and particularly the dollar crisis which at the time was viewed as critical for the condition of the world economy. Similarly, to add support to Kolko’s specific argument McCormick too comments on the importance of it, that “the dollar gap situation provoked” the plan. Therefore, Kolko’s argument does highlight the important motive that economic factors, such as the dollar crisis, had on the introduction of the Marshall plan. This argument is further developed as Europe was undoubtedly in a financial crisis with money being the short term requirement by many European countries. This is seen as Britain was already using up the $3.75bn Anglo-American loan given in 1945 which was meant to last till 1951 and “designed to get England back on its feet”, which it didn’t. Emphasizing the need for the Marshall plan. Overall, the Kolko’s were right to say that Europe was desperate and that the Americans exploited this for their own selfish reasons.

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