Transactional Cost on Mid-Size Firms

In: Business and Management

Submitted By Daeij
Words 890
Pages 4
This paper will discuss the effect of the transactional cost on mid-size firms and the effect of the Vertical integration in regards to the reduction of transactional cost and the issue of dissimilarity of transactions.
Merriam-Webster defined the organization as a company, business, club, etc., that is formed for a particular purpose, The act or process of putting the different parts of something in a certain order so that they can be found or used easily, the act or process of planning and arranging the different parts of an event or activity. (
The business dictionary defined the organization objective as The overall goals, purpose and mission of a business that have been established by its management and communicated to its employees. The organizational objectives of a company typically focus on its long-range intentions for operating and its overall business philosophy that can provide useful guidance for employees seeking to please their managers.( 2015)
To address the topic we need to start by defining the main two business terms and their interrelation, which play a major role in understanding the theoretical part of the case. The firm, can simply define as it, is the set of transactions that is organized by supervisory authority instead of the market. In which the aim is to provide the set of services in one place in order to reduce the transactional cost, which by itself can be simply defined as the cost incurred in making commercial exchange, or according to Williamson “Transaction costs refer to the costs involved in market exchange. These include the costs of discovering market prices and the costs of writing and enforcing contracts.”

The Case
In this case, we will address a “Firm” which is a Market leader in Oil refining and petrochemicals industry with a range of products…...

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