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The total cost of ownership - Coursework Example

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This research is being carried out to provide an example of higher total cost of ownership based on international trade, global supply chain. Total cost of ownership as a fundamental factor that influences the cost of doing business in a country…
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The total cost of ownership
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Total cost of ownership Introduction Total cost of ownership is a fundamental factor that influences the cost of doing business in a country. This refers to the cost of purchasing a product and transporting it into a country. In the United States, the cost of ownership varies based on the features and usability of the product. Several indirect costs often raise the value of the cost. The cost of ownership is often high in imported products since the government investigates the nature of the products thus charging various costs and duties based on the quality and features of the products. Importing electronics into the United States is a hectic process since the government investigates the usability and suitability of using the products in the country (Feinschreiber, McNeill & Kent, 2012).
Insourcing and outsourcing are types of purchases that an individual can use in purchasing a product. Just as the names suggest insourcing refers to the purchasing of products within a country while outsourcing refers to purchasing a product out of the country thus importing it. In the two cases, insourcing remains cheaper than outsourcing. However, a consumer must always investigate all the hidden costs since either group can conceal numerous costs in the transaction. The government has stringent policies and laws on dumping, a concept in commerce that refers to the use of electronic products in the country. Goods manufactured in the country undergo minimal tax regimes. Global supply chains that import goods from overseas on the other hand incur numerous costs owing to the complex nature of the US custom laws. The laws contribute to the hidden costs thus increasing the total cost of ownership. A consumer must therefore investigate the nature of a company thus compare the cost of the products before making purchase.
Antidumping costs for example are associated costs that the government wants the consumer to meet based on the suitability and the usability of a product. The government argues that importing an electronic into the country increases the cost of cleaning up the environment since after using the product a consumer is likely to dump the same in the country. Coupled with the countervailing duties, the cost of importing a product into the country thus increases significantly.
The total cost of ownership depends on various factors and includes numerous elements of a transaction. These include the cost associated with the pre transaction the transaction and post transaction. The three are vital and have numerous undertakings all of which have financial implications thus contributing to the total cost of ownership. Such costs as the cost of qualifying sources, the price of the product, transportation costs and follow up and correction costs are some of the basic costs whose values contribute to the cost of ownership. Additional factors that increase the total cost of ownership especially for global supply chains are duties levied by the government. Import duties are levies that a government attaches to every product that enters the country. Such are important taxes that coincidentally increase the cost of doing business thus raising the total cost of ownership.
Reference
Feinschreiber, R., McNeill, F. & Kent, M. (2012). Wiley Corporate F and A: Transfer Pricing Handbook : Guidance for the OECD Regulations. Somerset: Wiley. Read More
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