PUBLIC WAREHOUSE V/S PRIVATE WAREHOUSE

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Course Code: IBO – 05
Course Title: International Marketing Logistics
Assignment Code: IBO-05/TMA/2019-20
Coverage: All Blocks

IBO – 05 International Marketing Logistics Solved Assignment for 2019-20

Q5.) Distinguish between the following :

(d.) Private Warehouse and Public Warehouse

Ans: The difference between Private Warehouse and Public Warehouse are:

Definition: Private Warehouses are owned and operated by big manufacturers and merchants to fulfill their own storage needs. The goods manufactured or purchased by the owner of the warehouses have limited value or utility as businessmen, in general, cannot make use of them because of the heavy investment required in the construction of the warehouse, some big business firms which need large storage capacity on a regular basis. Whereas, Public Warehouse is a specialized business established that provides storage facilities to the general public for a certain charge. It may be owned and operated by an individual or a cooperative society. It has to work under a license from the government in accordance with the prescribed rules and regulations.

Zero Investment: When a firm or company wants to run a private warehouse, the outlay of capital is required to purchase, repair, and retain the inventory. Moreover, to run efficiently, safety equipment, storage cabinets, as well as a host of other items have to be bought. Contrary to that, a public warehouse has most of the facilities, equipment, and staff in operation. So there is no capital investment needed, which ensures the money won't get directed away from other essential business aspects.

No property tax: Real estate tax is a massive cost on companies that own massive warehouses. Falling to pay prompt taxes contributes to penalties and fines, increasing prices more. This kind of exposure can cause significant problems in severe financial conditions that can be complicated, or unlikely, to rebound from. On the other side, public storage space for customers, there are no taxation obligations. The primary responsibility rests with these expenses.

Greater flexibility: Owing to the private warehouse limits the ability of your company to move if the need occurs. Selling a privately-held retail plant will take a lot of time and energy, finding a new site, and designing to meet your desires. Public warehousing, though, offers a lot of versatility as traditional lease agreements allow either a 30 or 60 day warning before transferring. Furthermore, by using other shared storage facilities, extension into new territory and geographical location could be encouraged with ease.