The paper "Prospects for an Australian Manufacturing Company of Investing in Advanced Manufacturing Technology" is a good example of a business assignment. The basic purpose of this report is to evaluate the prospects for an Australian manufacturing company of investing in advanced manufacturing technology. For this purpose, the researcher will apply the transaction cost theory to determine whether any such investment is optimally feasible or not. Before any empirical studies are conducted, it is best that the researcher first try and understand the system the basis of transaction cost theory. Now, in any organization, it takes a large pool of individuals and workgroups who have to work together as well as take initiative on their own decree in order to ascertain the fulfillment of all the goals of a company.
Therefore, transaction cost economics implies that managerial control structures can be viewed for better understanding as to the answer to the many problems firms face with regards to controlling, adaptability, incentives management and enforcement which crop up due to the contraction and management of these offerings. There are two major instigators of these problems: Behavioural traits of the people who are attached to the project The type of activities that the organization wishes to undertake, and the requirements from the members of the organization by the organization with regards to these said activities. First, the researcher will look at the behavioral aspects of this issue.
Now, with regards to the behavioral characteristics of human being, transaction cost economics allows the presence and controlling interest of factors of bounded rationality and opportunism. The basic interpretation of the term Bounded rationality is in reference to the bordered cerebral and computational ability of the human beings in general.
(Hodgson, 1998) On the other hand, the concept of opportunism is defined quite acutely as the self-interest seeking and maximization directives of every person but done with a lot of craft and astuteness. (Maki, 2000) Due to the negative connotation that is attached to opportunism, most of these self-interest maximization activities are well thought out actions prepared in a bid to misinform and hoodwink all the other participants of this action. The type of activities that take place and the requirements of these activities on the part of the participants of these activities are demarcated separately based on their respective grades in three separate areas of judgment: Ambiguity; or what can also be identified as the level of risk and uncertainty that any firm has to face with regards to a decision based on random variables in the present date. The level of investment specificity; the level of use of alternative investment opportunities that can be entertained as an assistance mechanism to the main investment that is being made which would lead to a large amount of opportunity cost losses. The level and subsequent strength of asymmetric information a priori to the actual unfolding of the event that is going to take place or the capability of the evaluation mechanism that has been put in place to demarcate the real level of quality of the real delivered appointment.
(Marginson, 1999) Now, these factors, in the presence of human behavioural concepts that have already been described above i. e. bounded rationality and opportunism, these features are considered to be most probably correlated to the easily differentiable problems of organizational control that must be brought to the attention of the scholars and general masses alike.
Now managerial control structures are the basic mechanism that has been the major choice of problem-solving mechanism for most type of organizations around the world. These prescriptions are available in a completely overpowering range of alternatives. However, inside this overpowering range, only a certain type of standard methods of control can be identified and easily distinguished:
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