Sunday, August 10, 2008

Exchange and transaction

Exchange and transaction
People can obtain products in one of four ways. The first was is self-production. People can relieve hunger through hunting, fishing or fruit gathering. They need not interact with anyone else. In this case, there is no market and no marketing. The second way is coercion. Hungry people can wrest or steal food from others. No benefit is offered to the others except that of not being harmed. The third way is begging. Hungry people can approach others and beg for food. They have nothing tangible to offer except gratitude. The fourth way is exchange. Hungry people can approach others and offer a resource in exchange, such as money, another good, or service. Marketing unmerges when people decide to satisfy their needs and wants through exchange.

Exchange is the act of obtaining a desired product from someone by offering something in return. For exchange to take place, five conditions must be satisfied:
There are at least two parties.
Each party has something that might be of value to the other party.
Each party is capable of communication and delivery.
Each party is free to accept or reject the offer.
Each party believes it is appropriate or desirable to deal with other party.

Whether exchange takes place depends upon whether the two parties can agree on terms of exchange that will leave them both better off than before the exchange.

Exchange is frequently described as a value creating process because it normally leaves both parties better off. Exchange must be seen as a process rather than as an event. Two parties are said to be engaged in exchange if they are negotiating and moving toward an agreement. If an agreement is reached, it can be said that a transaction takes place. Transactions are the basic unit of exchange. A transaction is a trade of values between two parties. It must be able to say: A gave X to B and received Y in returned. Transactions however do not require money as one of the traded values. A barter transaction consists of the trading of goods or services for other goods or services.
Exchange and transaction

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