Type: Business
Pages: 2 | Words: 586
Reading Time: 3 Minutes

Today’s global market is volatile and uncertain than ever before. This calls for new ways in doing business. Such ways should help minimize the cost of doing business. Costs incurred while doing business e.g. in the process of making products available to customers are referred as transaction costs. Another example is transport expenses incurred when going to purchase a certain product or the effort used in selecting various products in order to find what suits you best. According to transaction cost theory, companies try their best to lower the costs of exchanging resources with the business environment, thus, they will outsource those services they fill are expensive to produce by their own means. An example is where a firm is considering outsourcing services in the production of a certain product; it may be forced to weigh the 2 options i.e. between in-house production and outsourcing. In-house production is associated with bureaucratic costs while transaction costs of monitoring the outsourced services maybe high.

The relationship marketing takes different forms and practices in various countries. These practices of relationship marketing are hugely determined by historical and cultural factors. Keiretsu concept emerged from Japan. It’s a concept aimed at creating a monopolistic market by making it difficult for outsiders to compete in the market. It involves supplier- manufacturer linkage in order to enhance team work and good cooperation. The keiretsu system has contributed to growth of major companies in Japan such as Toyota Company. Companies in a keiretsu structure enjoy several benefits; one, they are protected against market slump and the relief of financial risks. Second, they incur low transaction costs. In addition, keiretsu groups’ pools financial burdens incase of economic crisis and facilitate profit maximization within the structure.

Keiretsu concept applies mostly in Asian markets. It a concept associated with car manufacturing industries of Japan. The companies that comprise the structure must be involved in the same line of production. The concept has come under criticism for making it rather difficult for foreign investors to do business in countries where Keiretsu system exists. The bad thing about the concept is that it promotes inflexibility hence dragging innovation. Also their pricing is not competitive to the market as it is a form of transfer price. The system creates dependency of the supplier on its sole customers. This results to the supplier being out of touch with the real world market. Lack of flexibility on the part of the supplier may have adverse effects on the manufacturer’s market position. This will in return threaten the existence of the supplier. The system has been blamed for limiting foreign investment and competition in the global market. Western firms have borrowed the good things about the system but shun its defects.

The article “Administration in Social work” relates to the theory of Organizational Environment. This theory describes how an organization relates with its surrounding environment. The article discusses the managers’ role in human service organizations. It starts by reviewing the 3 main theories of organization-environment relations. These theories are; adaptation theories, ecological theories and firm’s theories. Emphasis is placed on a number of organizational behaviors such as strong behavior that complies with the expectations of the organization and the government; reactive and passive firm’s behavior; accepting environmental challenges; proactive plans that creates new strategies and attempts to identify pitfalls and opportunities in an organization’s environment. Given the rapid changes experienced in organizations environment, it’s important for directors to develop strategies aimed at managing the external environment in a similar manner as they manage the internal environment.

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