MANAGEMENT SERVICE CONTRACTS
JUAN FELIPE MORA BONILLA1520101018
¿ What is MSC ?
A management service contract is used to hire a company to run a business.
MSC are agreements used between investors or owners of a project or business and a management company.
Technical Operation of a
Production
Management of personel
Accounting Marketing Services
Training
• Can be found in industries like hotel, hospital, and infrastructure entities like airports, seaports, and public utilities.
• Management contracts are often formed where there is a lack of local skills to run a project.
• The first recorded management contract was initiated by Qantas and Mr. Duncan Upton in 1978 to create an airline in Sidney.
PURPOSE
This agreement is designed to protect both
parties and to allow them to understand
their obligations.
DETAILS
It explains the payment amount, method and due date and any other important terms of the agreement.
ADVANTAGES
The owner → Silent partner.
Management Company → Day-to-day
tasks.
More performance = More bonuses
DISADVANTAGES
What the management
company cannot handle, the owner
have to do it.
What decision have to make?
More expenses
• DBS Asia (Thailand) agreed a management contract to set up and run a company of digital television programming in Taiwan.
• In Asia, many hotels operate under management contract arrangements, as they can more easily obtain economies of scale, a global reservation systems, brand recognition etc.
MANAGEMENT SERVICE CONTRACTS
Home Country Host Country
Wholly-Owned Subsidiary
Multinational Firm
Local Firm
Management Fees
Managerial Service
Profit
Inputs
Thanks a lot!
SOURCES
• http://www.ehow.com/info_8067580_management-service-contracts.html#ixzz26fgNkmaV
• http://entrymodes2.wikispaces.com/Management+Service+Contracts
• http://en.wikipedia.org/wiki/Management_contract