Describe four types of transaction cost, Business Management

Assignment Help:

Many organisations are making decisions to outsource some of their activities. Though, when considering the option to outsource, organisations have to consider the transaction costs which might be incurred. These will be influenced to some extent by the specificity of the assets needed for the contract.

Explain FOUR types of transaction cost which organisations could incur if they use an outside supplier for an input or service.

When an organisation relies on an outside supplier for an input or service, this is called as a market solution. In addition to the price for the bought in input/service it may also contain the following transaction costs:

  • Negotiating and drafting the legal contract with the supplier.
  • Monitoring the supplier's compliance with the contract on issues like as quality, reliability, invoicing etc.
  • Pursuing legal action for redress because of non-performance by the supplier.
  • Penalty payments and cancellation payments if the organisation finds it requirements to change its side of the bargain and draft a new contract with the supplier.

 

 


Related Discussions:- Describe four types of transaction cost

Discuss how the masculine and feminine language use differ, QUESTION 1 ...

QUESTION 1 a) Discuss how do stereotypes act as barriers to communication across cultures? Support your answer with examples. b) Explain and discuss on the sources of commun

Recent macro developments, In 2006, European economy performed well with an...

In 2006, European economy performed well with an economic growth of 3%, which was the highest since 2000. This is a sign that the economy is on the road to recovery and in fact mos

Sales communication techniques, Sales communication techniques: Sales ...

Sales communication techniques: Sales communication techniques will provide some helpful techniques to use while communicating with customers. We will look at the dos and d

Legal system, . identify and give out the explanation of different categori...

. identify and give out the explanation of different categories of legal system

Define right wing totalitarianism with relevant examples, QUESTION 1 (a...

QUESTION 1 (a)Explain the following terms; Multi Domestic Strategy, international Strategy and Transnational Strategy. (b) Define right wing totalitarianism with relevant exam

Define the term marketing concept in briefly, Define the term marketing con...

Define the term marketing concept in briefly. The marketing concept is a management orientation which holds that the key task of the organisation is to find out the needs, want

Organisation, enumerate on the princeples of organisation

enumerate on the princeples of organisation

Describe the methods of measuring reliability, Question 1: Quality Func...

Question 1: Quality Function Deployment has been widely regarded as a breakthrough in the quality function. Discuss. What are the different phases of Quality Function Deployme

CASELET, Do you agree with the view such abusive happenings on the telephon...

Do you agree with the view such abusive happenings on the telephone do not have any impact on business?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd