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

Explain diffusion of innovation theory, A) "Diffusion of innovation theory ...

A) "Diffusion of innovation theory is relevant to software, where software is considered as an innovation. In particular, the elements of diffusion, the innovation decision process

Dimensions of workforce diversity, The term 'workforce diversity' in its br...

The term 'workforce diversity' in its broadest sense encompasses many dimensions. The researchers have classified such dimensions into many categories. According to the study ( Spo

Describe briefly the five stages of group development, QUESTION 1 a) Ho...

QUESTION 1 a) How can an understanding of the team roles as developed by Meredith Belbin help a manager in communicating effectively with his/her team? b) Discuss the major

Portfolio analysis, explain portfolio analysis in marketing with practical ...

explain portfolio analysis in marketing with practical life examples

How will an investor earn risk less arbitrage, Question: 1. What factor...

Question: 1. What factors might an individual investor take into account in determining her or his investment policy? 2. Distinguish between fundamental and technical securi

Mensa INC, 1. Describe the situation facing Mensa at the time of the case. ...

1. Describe the situation facing Mensa at the time of the case. This should include the major issues facing the company and the decisions that need to be made. You are to spend no

Different types of communication, Explain the different types of communicat...

Explain the different types of communication with relevant examples.

Australian Consumers, Are Australian consumers better off as a result of ec...

Are Australian consumers better off as a result of economic rationalism? Discuss, drawing upon the concepts taught in this unit.

Steeple, How can steeple affect usa gas fracking business

How can steeple affect usa gas fracking business

Case study, List some scientific decision aids that you may prescribe to im...

List some scientific decision aids that you may prescribe to improve the situation.ion

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