Organization and transaction costs

Transaction costs are the necessary expenses your organization has to pay in order to participate in the market.  When organizations decide to merge it will always have transaction costs to complete the move.  This summer, I had a job with a food distribution company and halfway through the summer our company merged with a company called Rouquette that was the producer of the food we shipped.  This merger allowed our company to expand but had transaction costs involved in it.  We had to buy another warehouse to be able to hold all the inventory they were going to be providing us which was very expensive.  The new warehouse we bought also needed some renovations in order to meet FDA standards which required us to hire people to do the labor and had to buy all the necessary equipment to meet the standards.  All of this took just over a month which set the company's profits back in the short term due to the transaction costs but now the company is doing better than ever due to the expansion the merger allowed.  The company is now the main sugar distributer for all Wrigley Gum products.  It was a great experience being able to be apart of two organizations merging because it let me see first hand how effective transaction costs can be and it was interesting to see the micromanagement of each company when the merger was occurring.

Bio

Donald John Roberts, who went by John, had a very lucrative career between studying and teaching at a number of prestigious universities.  Receiving his bachelors University of Manitoba, a doctorate  in economics at University of Minnesota, and a Doctor of law degree from University of Winnipeg he had very high credentials in his field coming out of college.  He was the associate dean of the Stanford Graduate school of business and a complimentary economics professor there as well.  He helped introduce the use of games of incompletion into economic modeling and is now involved in an ground breaking experiment to find the effects of changes in management practices.  His works do apply to our course because the majority of his work is done towards the design and management of organization.