Matrix Technologies is considering upgrading its computer equipment. The company is growing, with increasing requirements in terms of laptops, desktops and printers. The company has limited IT support staff. There is a need to decide whether to opt for leasing of computer equipment or to buy it. This report seeks to present the differences between the two approaches and recommends that we lease computer equipment.
A lease is a long-term agreement to rent equipment. The lessee needs to make periodic payments to the owner of the equipment. The lease payment covers the original cost of the equipment and provides a profit to the lessor (Bizmove, n.d.). The usual lease runs for about two to three years, which is the average period for the technology to get upgraded. Factoring in depreciation, leasing becomes an attractive option for firms such as ours, which are on a budget. Leasing avoids large cash outlays that would be required if the equipment had to be bought outright. Leasing would provide onsite support from the equipment provider, obviating our firm’s constraint of limited IT support staff (Powersolutions. n.d.).
Buying computer equipment would provide the firm ownership rights. This aspect is useful if we do not expect the technology to become obsolete in two to three years. With 30% of the employees requiring laptops, this is unlikely to be the case. There are tax incentives that could boost the firm’s bottom line if we buy computer equipment. However, this advantage needs to be weighed against the other obvious disadvantages for the firm. The high cost of initial investment, the problems of disposal of computer equipment at the end of the life cycle are added disadvantages of buying computer equipment (Powersolutions. n.d.).
Therefore, it is recommended that the firm opt for leasing computer equipment to retain current technology, minimize cash outflow in a single tranche, and avoid problems of recycling and disposal of obsolete equipment.
Legolas is a leading sports footwear and apparel maker. It competes with the top three sportswear brands globally- Adidas, Reebok and Puma. In a bid to cash in on the growing drive towards fitness and health worldwide, Legolas is planning to launch the Sprint line of footwear. This communiqué is to orient all employees about the planned launch that is to occur on April 05, 2016.
The Sprint sportswear line will be replacing the existing Groove sportswear line. It is important for customer support, sales and marketing staff to be aware of the characteristics of the Sprint Line of footwear, and its advantages over similar brands of the competition. Relevant details are uploaded in the online Knowledge Base, so that Customer Support and sales staffs are conversant with them. Legolas plans to conduct a series of promotional events in the lead up to the planned launch. Information about these events would be disseminated to all employees through the company intranet. In the meantime, it is imperative for finance and accounting staff to factor in the depreciation value of unsold stock of Groove sportswear line and provide financial figures, so that Legolas can go in for a massive sale of unsold Groove sportswear in March 2016 before the Sprint line hits the stores.
Legolas expects to become the number one seller of branded sportswear by the end of 2016. To that end, it is important that all stakeholders work in tandem to ensure that the launch of the Sprint line is a success. Actions by the Customer Support and marketing staff in disseminating information about the new launch, and of the finance staff in correctly assessing the sale price of the Groove line, would go a long way towards ensuring continued profitability and success of Legolas in its new venture.
Bizmove. (n.d.). Lease versus buy equipment decision. Retrieved February 4, 2016, from http://www.bizmove.com/general/m6l.htm
Powersolutions. (n.d.). Who can benefit from leasing computer and network hardware equipment. Retrieved February 4, 2016, from https://www.powersolution.com/what-is-better-to-lease-or-to-buy-computer-hardware-equipment/