Quiz 15: Contracting, Governance, and Organizational Form


Amazons warehouses web pages and one click sales methods are fully redeployable to other products being an efficient redeployment durable asset it can be redeployed to other products also. Some such products can be garments, vehicles, etc.

Borders fixed assets are fully redeployable. This is so because being popular finished durable goods they can be easily allocated through spot markets causing little or no loss of value or of efficiency.

a) Suppose an enhanced effectiveness of cooperative advertising occurs if the distributor shares its superior on the spot information about current trends in the marketplace with the manufacturer in the case, where all the details of cooperative advertising are agreed to up front in the franchise contract. Then it will be beneficial for the distributor to share its superior information with the manufacturer as it will better enable them to pursue their common objective of maximizing their benefit. b) In the case where advertising is pursued independently by the manufacturer and the distributer, it is better for the manufacturer not to share his superior information as the retail distributer will try to maximize his benefit while the distributer is concerned with his. c) If cooperative advertising allowance is rebated to the distributer then the better strategy will be to withhold the relevant information.

There is no answer for this question

There is no answer for this question