Transactions Costs (Devolpments & Definitions) Opportunity Costs Essay

Transactions Costs (Devolpments & Definitions) Opportunity Costs (Devolpments & Definitions) finally link both ie Opportunity Costs should be considered as a T - Essay Example theoretical area there are plenty of models and empirical evidence that can help the management team to formulate a well grounded plan, in real terms the changes and the turbulences that tend to characterize the commercial markets create significant obstacles towards the establishment of an appropriate and effective business strategy. This paper examines particularly the influence of two economic variables, the transaction costs and the opportunity cost on the planning of the corporate strategy to the level that the above two elements can often interact and have therefore a more decisive role in the relevant process. The definitions and the particular characteristics of the above two criteria of ‘financial measurement’ are presented using a series of examples from their applications in practice. The findings of the literature are also been considered as crucial to the validity of the assumptions made. On the other hand, the reference to the work of Coese and Williamson h as been proved valuable to the explanation of these elements’ existence and role in the business environment. In economics and related disciplines, a transaction cost is ‘a cost incurred in making an economic exchange; a number of kinds of transaction cost have come to be known by particular names, like a) Search and information costs are costs such as those incurred in determining that the required good is available on the market, who has the lowest price, etc., b) Bargaining costs are the costs required to come to an acceptable agreement with the other party to the transaction, drawing up an appropriate contract and so on, and c) Policing and enforcement costs are the costs of making sure the other party sticks to the terms of the contract, and taking appropriate action (often through the legal system) if this turns out not to be the case’. Today, transaction cost economics is used ‘to explain a number of different behaviors. Often this involves considering as "transactions" not only