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Transaction Cost Economics: Tim Hortons

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Transaction Cost Economics: Tim Hortons
Transaction Cost
Transaction cost economics applies to Tim Hortons in a very simple way. ‘Transaction cost economics is mainly concerned with the governance of contractual relations.’ (Douma 195) This is due to having their own coffee roasting facilities, they also have their own facility to pre-bake and packaging facilities. Thereby they can avoid suppliers acting bounded rationally or opportunistic. This minimises the interaction to external suppliers and thus minimises dependability, and avoids possible hold-ups. The transaction cost within the firm solely lies in contact, contract and control of the franchise owners.Similar to most other firm, Tim Hortons is not fully vertically integrated, which means they still have contact, contracts,
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