Module 2: L3

Question 1

Contracts specify a transaction. What are the four listed considerations of these transactions?

Answer 1

1. A deliverable is specified
2. Conditions of delivery are included
3. A price is set
4. Conditions for payment are set

Question 2

When using contractors, sometimes the contract needs to be amended. In essence, many business operations are not so simple. List the 3x points regarding why this is from the lecture.

Answer 2

1. Performance may not be easily specified
2. Multiple negotiations are needed when unanticipated events occur
3. Costs of transaction rises

Question 3

Types of external uncertainties: they depend on the nature of the deliverable. What are the 3x points the lecture brought up re: the reasons the deliverable may not past muster for the customer?

Answer 3

1. Specifications may not be complete at the beginning
2. Costs of production may not be fully predictable
3. Quality of processes and work may not be observable

Question 4

The deliverable may not pass muster for the customer [at first]. This creates pressure to…(4x points)

Answer 4

1. Connect client with the contractor
2. Include organizational devices in the contract
3. Periodic inspections
4. Process specifications

Question 5

What are the 5x components of bureaucracies?

Answer 5

1. Labor contracts establishing authority
2. Fiduciary relations (investors who expect to make a profit)
3. Legal responsibility
4. Standard operating procedures
5. Meetings with controlled agenda

Question 6

What are the uncertainties in the functions of labor and fiduciary relations?

Answer 6

Labor:
1. Specific activities in the future
2. What workers are willing to do at a given wage level

Fiduciary relations:
1. Can the organization be trusted with stakeholder money?

Question 7

What are the uncertainties in the function of standard operating procedure (2x)?

Answer 7

1. How to best operate a system
2. Extent of incremental improvements over time

Question 8

What are the uncertainties in the function of meetings (3x)?

Answer 8

1. Level and resolution of disagreement
2. Most decisions are outcomes of meetings
3. Not made by individuals

Question 9

The general principle regarding bureaucracies and uncertainties are: Bureaucracies are created ____ _________ ____________ _____________

Answer 9

to manage greater ongoing uncertainty

Question 10

Contracts may contain bureaucratic elements. What are some of these elements (5x listed)?

Answer 10

1. Command structures and authority systems
2. Incentive systems
3. SOPs
4. Dispute resolution procedures
5. Cost adjusting