Class notes
Pricing and Intra Company Transfers
- Course
- Institution
Pricing and Intra Company Transfers
[Show more]
Seller
Follow
bnotes
Reviews received
Content preview
Lecture 7: Pricing and Intra Company TransfersDecentralization:
The benefits:
(1) Creates greater responsiveness to local needs; better informed about their
customers, competitors, suppliers, employees and about factors
influencing the performance of their jobs such as ways to decrease costs
and increase quality.
(2) Leads to quicker decision making.
(3) Increases motivation.
(4) Aids management development and learning.
(5) Sharpens the focus of managers; better able to adapt to fast developing
market opportunities.
The problem - the structure of the organization and performance:
• Many firms use business models that are decentralized, allowing
managers to make decisions for their division.
• Decentralization can stimulate market conditions within a company
between autonomously acting business units.
• The role of performance measurement and performance assessment
within responsibility centers is critical, leading managers to consider
transfer prices.
• Even in cases where the buyer is not permitted to buy externally, a
transfer price will influence the level of output of the buying and selling
divisions.
Transfer pricing defined:
• A transfer price is the price charged when one segment of a company
(i.e. A business unit, division, department) provide goods (intermediate
products) to another segment of the company.
• Treats business unit managers decisions as identical to the decisions of
the group’s top managers
The goal in using transfer prices is to motivate managers to act in the
best interest of the overall company!
Functions of transfer pricing:
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller bnotes. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.87. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
52510 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now