The Edge Corp., a manufacturer and seller of electric guitars, sources input products for its guitars from various suppliers. Recently, there have been massive problems with some suppliers. In addition to a manufacturer of strings for the guitars not meeting delivery times, there are increasingly heated price discussions with the supplier of the special wood for some of the company’s high-end guitars.
The string manufacturer is a supplier the company has been working with for decades, and there are personal connections to the management. The wood supplier is a relatively new supplier that provides unique wood quality not found elsewhere in the market.
Analyze the situation using transaction cost economics (TCE). What is your recom-mendation for the management of The Edge Corp.?