Organization Theory - ORGANIZINGIN A CHANGING GLOBAL ENVIRONMENT
3 important questions on Organization Theory - ORGANIZINGIN A CHANGING GLOBAL ENVIRONMENT
Transaction costs are low when these conditions exist:
- Organizations are exchanging nonspecific goods and services.
- Uncertainty is low.
- There are many possible exchange partners.
Transaction costs increase when these conditions exist:
- Organizations begin to exchange more specific goods and services.
- Uncertainty increases
- The number of possible exchange partners falls.
Three linkage mechanisms that help organizations to avoid bureaucratic costs while still minimizing transactions costs are:
- Keiretsu Is a mechanism for achieving the benefits of a formal linkage mechanism without incurring its costs.
- Franchising A franchise is a business authorized to sell a company’s products in a certain area.
- Outsourcing Is the process of moving a value creation activity that was performed inside an organization to outside where it is done by another company.
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