Question

Questions: What are the 7 steps of the TCA Methodology and describe each step?

What does Eco-Efficiency mean?

What are the objectives of the TCA Methodology?

What is the best way to implement the TCA methodology?

Answer 1

2.Eco-efficiency is all about reducing ecological damage to a minimum while at the same time maximizing efficiency. Specifically, maximizing the efficiency of a company’s production process. It is a management philosophy that many companies across the world have adopted. Eco-efficient companies use less water, material, and energy while recycling more.

Companies that embrace this management philosophy also strive to eliminate hazardous emissions or by-products. They aim to reduce their ecological impact. Eco-efficient companies try to reduce human demands on our ecosystem, i.e., they try to reduce the ecological load.

Put simply, eco-efficiency means being an efficient business while at the same time protecting our environment.

It applies to every aspect of business, from producing and purchasing to distribution and marketing.

1.Definition – A transaction cost is any cost involved in making an economic transaction. For example, when buying a good or buying foreign exchange, there will be some transaction costs (in addition to the price of the good.)

The transaction cost could be financial, extra time or inconvenience.

Transaction costs could involve.

• Paying a margin to an intermediary. For example, when buying foreign exchange a broker may take a commission of 0.5% of total purchase.
• Search costs. When purchasing foreign exchange, you will look around for the dealer with best commission rate.
• Contract costs. For transactions, you may need to sign a contract to specify what the parties need to stick to. This can involve bargaining to gain the best contract and ensuring the contract is honoured. If there is little respect for property rights, these transaction costs may be quite significant. (e.g. if you have to take a landlord to court to complete purchase of house)

In a simple barter economy, transaction costs will be greater because of problems, such as searching and finding someone to trade with. Money helps to reduce transaction costs.

An argument in favour of a single currency is that it reduces the transaction costs of exchanging foreign currency when moving between different European countries. (benefits of Euro)

Transaction cost theory

Transaction cost theory suggests that the growth of firms is partly explained by the desire to reduce transaction costs from the market mechanism and concentrate production within a firm.

Transaction costs and internet

The internet has helped to reduce transaction costs for firms. Markets are more competitive enabling firms to get lower prices from suppliers. It has also made it easier and more convenient to search price comparison sites.

TCA Defination and Explanation :

Transaction cost analysis is the method used by businesses and institutional investors to find out the effectiveness of their portfolio transactions.

In the corporate world, TCA is becoming a regular procedure for an increasing number of treasurers and CFOs of international businesses who want to measure the quality of their company’s FX operations.

The analysis consists on a rating of the spread between two possible prices: the price of the transaction at the time the manager decided to execute the operation and the actual price of the operation including all operating costs. The resulting differential between these two prices is called “slippage”.

In these cases FX transaction costs analysis consists in finding out whether the trades got executed at favourable prices with high ones for sales and low prices for purchases. Furthermore, it helps management to assess the performance of their trading activity and might often be used to try to improve its effectiveness.

However, there are some challenges to take into account when determining whether a trade price is high or low according to market conditions when the trade was executed. The experts recommend comparing different benchmarks such as implicit and explicit costs, delay costs and opportunity costs to reach more reliable measurements.