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Business and Economics New classical approach to outsourcing Dr George Rivers Caulfield Campus 23 February 2012.

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Presentation on theme: "Business and Economics New classical approach to outsourcing Dr George Rivers Caulfield Campus 23 February 2012."— Presentation transcript:

1 Business and Economics New classical approach to outsourcing Dr George Rivers Caulfield Campus 23 February 2012

2 Scope/size of the firm Today’s talk will be about the determination of firm size (scope of firm’s activities) within the context of maximising economies of specialisation and the roundabout production.

3 Example of hierarchical production Take the production of Z = chip and pinned credit cards:

4 Roundabout production ICT services = X Credit card= Z Hard/ software = W Hard/ software = W Manag’t services = Y

5 Corner solutions

6 More outsourcing If TC of labour > TC of intermediate goods/services = outsourcing

7 Less outsourcing If TC of labour < TC of intermediate goods/services = outsourcing

8 Drivers of transaction costs


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