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Ways to Maintain Business Status Quo

Sometimes the business status quo must be maintained.  There are different reasons for wanting to maintain the present situation.

One is that you are waiting for information to arrive that will allow for a decision to be made.  In this case the status quo needs to be maintained for a short period of time.

Another situation is when you want to lock in a cost structure in a rapidly increasing price market.

Long term sales contracts are another way to maintain status quo in an uncertain market when it comes to selling your product.

The following are techniques to maintain status quo.

Lease terms

In some situations short term leases are desirable.  In other situations, long term lease terms are desirable.  If the goal is to avoid long term commitment, a short term lease (usually at a higher cost) is preferable.

For most situations, maintaining a stable cost structure is the goal.  In these situations, a longer term lease is preferable assuming the lease payments are flat for the life of the lease, or are relatively stable.

Contract terms

Supply and sales contracts are similar to the lease terms described above.  If the goal is to avoid a large, long-term commitment to purchasing materials, then a shorter, lower quantity supply contract is preferable.

If long term cost stability is the goal, then a longer term supply contract is preferable.

Likewise, in an uncertain market, locking a customer into a long term contract to maintain the status quo may be desirable.  Of course if your costs are increasing, or the market price of your products is rising then a long term sales contract works against you.

Lifetime buys

A lifetime buy is where a component is purchased in a sufficient quantity to meet the supply needs over the entire life cycle of the product that uses the component.

Example: Electronics frequently become obsolete and no longer available.  For long life products and tools this can be a headache to build new product and maintain existing products already in use.  Doing a lifetime buy where a purchase quantity large enough to meet the needs of the product life cycle can solve this problem.

A lifetime buy avoids the problem of redesigning new components to work with future production as well as being backward compatible with existing units in use.