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Delays and incorrect orders are viewed as agency costs because they represent inefficiencies that arise when the interests of the parties involved—typically the principal (such as a company) and the agent (such as a supplier or employee)—are misaligned. These costs can lead to wasted resources, diminished customer satisfaction, and potential loss of revenue, ultimately impacting the overall performance of the business. When agents fail to fulfill their responsibilities effectively, it reflects a lack of accountability and can erode trust in the relationship, further complicating decision-making and resource allocation.

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1mo ago

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