Transactional 'spares and repairs' contracts run the risk of incentivizing what behavior from Industry?
Understand the Problem
The question is asking what negative behavior might result from 'spares and repairs' contracts in an industry context. It provides three options regarding the potential impact on profits.
Answer
The sale of more spares and repairs to maximize profits.
The sale of more spares and repairs in order to maximize profits
Answer for screen readers
The sale of more spares and repairs in order to maximize profits
More Information
Transactional contracts focus on specific transactions rather than outcomes like performance improvement, leading companies to maximize revenue by increasing the quantity of spare parts sold.
Tips
A common mistake is to assume transactional contracts focus on improving performance when they are generally oriented towards maximizing transactions.
Sources
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