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