Question

6.5 Question

What are the competitive implications for firms if they assume that all potential exchange partners cannot be trusted?

Please write a paragraph and do not use another answer already posted on Chegg.

Answer 1

A Thumbs Up! Would be really helpful for me. If you have any questions, please leave a comment and I will get back to you as soon as possible.

The most important opportunity for these businesses is the vertical integration of all value chain activities. You should not cooperate with external partners in this way, so you should avoid trust issues altogether. Another option is to establish a long-term agreement with the ironclad contracts. These agreements cover all unexplained events, so the companies are protected from the negative actions of exchange partners.

In economic transactions, three types of trust are recognized: trust in a weak form, a semi-strong form of trust, and a strong form of trust. It is clear that trust in a weak way can lead to the competition if investments are made in uncertain and costly management mechanisms. Belief in a semi-powerful form can be a source of competition when competitors are in control of the communication skills and different skills, and when these skills and abilities are not worth giving away. The condition is also determined that a strong loyal form can be a source of competition. These companies, by the way, are the victims of their own success because of their reputation and the proven scientific predictions that copy of their revenue provides. Many businesses today value the value of personal customers and serve them differently; to find valuable customers, better prices, discounts or other offers.