2. Management service
contracts are
agreements used
between investors or
owners of a project or
business and a
management
company.

3. Business owners who do
not want to run their
business themselves often
turn to hiring a
management company to
run the business. When
this occurs, a
management service
contract is created to state
all of the details of the
arrangement.

4. A management service contract states many
details of the agreement:
 the names of both parties
 the duration of the contract
 the payment amount, method and due date

5. Technical
operation
of a
productio
n facility
Managem
Training ent of
personnel
What are
their
functions?
Marketing Accountin
services g

6. *The owner hands over most of the
responsibilities of the organization to the
company, allowing the owner to be
considered a silent partner.
*The management company handles all
day-to-day tasks of operating the
business.

7. *Many management companies are paid a flat
fee plus bonuses based on performance. These
bonuses paid can be an advantage for the
business owner.
*Management companies may strive hard to
increase performance to earn the bonuses, thus
benefiting the business owner.

8. *A management company typically cannot
handle all aspects of running the business and
making business decisions.
*The decisions the management company
makes may not always be the decisions the
owner feels are the best.
*Hiring a management company also increases
the operating expenses of a business.

9. • 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 contracts have been
used to a wide extent in the airline
industry, and when foreign
government action restricts other
entry methods.