Question

What advantages are there for companies to seek long-term logistics agreements with other organizations that may also be assist their competitors? In other words, it what advantages are there and having established agreements when it comes to distribution of product or service? What are the disadvantages? What does everyone think?

Answer 1

Answer
The advantages which are there for companies to seek long term logistic agreements with other organizations that may assist their competitors are as follows-
1. Long term agreement have the benefit of being more cost effective as compared to short term agreements which are expensive.
2. Long term agreement benefit of increased security for the organization.
3. Long term agreement helps the companies understand the needs and benefits of each other in a better way.
The disadvantages are-
1. The same company is working with the competitor which has the risk of leaking important information to the competitor and loss of business can take place.
2. The disadvantage of having long term logistic agreement is the cost is fixed initially and cannot be negotiated at a later stage, this prevents the benefit which the company can get by getting into agreement with the new company which initially charges less price.

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