Question

This passage requires critical responss and analysis

In Coase’s theory of the firm, he goes over several definitions to discover why a firm exists. In the end, he states that firms exist because it is cheaper to have employees rather than a handful of individual contracts (Lasky, 2017). To put it in Coase’s words, “A factor of production (or the owner thereof) does not have to make a series of contracts with the factors with whom he is co-operating within the firm, as would be necessary, of course, if this co-operation were as a direct result of the working of the price mechanism” (1937). The theory is that, given the supply and demand, a contract would have to be negotiated with an independent contractor for any require service. If that service has a high demand, the price may go up. Therefore, the prices will be fluctuating and having to negotiate a contract between many contractors can be pricey. Having a set price with a group of specialists that work for you is cheaper than negotiating the contracts.

One thing that many studies of leadership will emphasize is delegation. It is often assumed that one man cannot do everything himself. This is, in part, some of the concept of marriage (where two people come together to raise a family), and the same in business. For example, to build a cell tower, maintain it, advance technology, upgrade technology, build a device, sell the device, repair the device, balance the money, and so on and so forth. It is possible to get individual contracts to do all of those things. In theory, however, the independent contractors will have different bids from different people to do the same work and may not be available. Not everyone is working together and so one man may produce 4G while another produces LTE while another is on 3G and so no one is able to produce 5G.

By bringing everyone together with a common goal and a pay that is competitive to their independent contracts, innovation can move forward and competition can arise in a way that benefits society. This makes the firm more efficient than how independent contracting would. It brings minds together to build advancement, rather than an individual looking for their own interests.

Answer 1

COASE'S THEORY  OF FIRM

The coase's theory of firm explains about the emergence of firms, and the boundaries or the frameworks of the firms and how these firms are maintained. It also explains about the organisation set up of firms that means how the firms are constructed. And further more it explains about the different actions of the firms.

The theory of firms is coined by Ronald Coase, a British economist. Actually a firm is formed as an organisation of more partners and people began to organize the firm when the transaction cost of theory of coordinating production through market knowledge is greater than within the firm.

If a form operated under in control of market, it require many contracts. But actually in sense that a real firm has very few contracts, about the powers of the managers and the guidelines of the employees and for exchange of that the employee is being paid { it is a mode of give and take policy}. And also it is a fact that the success of the firm depends upon the organizing power of the entrepreneur.

The act of togetherness( delegation ) is also an important thing to maintain the goodness of the firm. Because in reality is that only a group with a collective consciousness over a particular thing can only lead the business route and it is not possible with an individual's single effort.

If everyone moves on with the same aim or the goal everyone can achieve their goal and the firm will move on and the progress will be achieved.And it can be achieved with a great success without more stress and strain. This is one of the most important point that to be highlighted.

And finally it result in a situation in which there will be a combined effort in which the interest of firm will over headed by the interest of the individual's stake or interest.