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Enhancements of the ModelFiled Under: General

Although this table already reveals potential benefits and disadvantages of certain technologies, its explanatory power is limited to ordinal statements. Assuming that the chosen type of transaction costs can be measured on a relational scale, the values above can be transformed into numerical values. Thus it is possible to introduce a simple scoring model and to deduce more tangible conclusions than those derived from these first ordinal assessments.

The assumption is made that there are equal occurrences of transaction costs for bank transfers and stock exchanges. No matter which of the two transactions is investigated in the model, the same amount of costs (or reduction of transaction costs) is measured for each combination of mode of coordination and phase of the transaction. In more precise terms, the difference between a bank transfer and a stock purchase is the importance of the specific phase in the evolution of the transaction as a whole. This is
taken into account by weighting the different steps according to their relevance in the transactional process. Thus it is crucial for an order to be transmitted to the stock market immediately, whereas a bank transfer may even take one more day without serious consequences. Table 2 gives an overview of all assigned weightings.

Taken From: 10 Minute Guide to Conducting a Job Interview