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Bullwhip effect
Relatively Interdependence
High
Powerful Effective Relationship
Organization
Low Level of Relatively
Low Interdependence
Powerful
Low High
Partner’s Dependence
© 2004 Prentice-Hall, Inc. 16-27
Creating Effective Contracts
◆ Create contracts that encourage negotiation
when unplanned contingencies arise
◆ It is impossible to define and plan for every
possible occurrence
◆ Informal relationships and agreements can fill
in the “gaps” in contracts
◆ Informal arrangements may eventually be
formalized in later contracts