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fp16 - increased competition government regulation rapidly...

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Ashley Stephens MAR 456 Professor Tucker Focal Problem 16 Transfer pricing is the rates or prices that are utilized when selling goods or services between company divisions and departments, or between a parent company and a subsidiary. This transfer pricing is set for exchange and may be the original purchase price of the goods or a rate that is reduced to account for internal depreciation. Multinational corporations require the central management of the corporation to establish transfer price to achieve: competitiveness in international marketplace, reduction of taxes and tariffs, management of cash flows, minimization of foreign exchange risks, avoidance of conflicts with home and host governments, and internal concerns such as goal congruence and motivation of managers. Transfer pricing is significantly related to global pricing. In a world where there is
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Unformatted text preview: increased competition, government regulation, rapidly increasing inflation, fluctuating exchange rates, global marketers must spend time planning a pricing strategy. Transfer pricing allows for a smooth exchange of goods across countries. In situations where the transportation of goods is involved in the transaction, the transfer pricing may include both a fixed price per unit transferred, plus additional charges to cover the cost of shipping. This model is especially helpful when the transfer takes place between a parent company and a subsidiary. The larger entity can arrange the shipping through a discounted shipping plan that the smaller entity may not be able to access. The end result is that the transfer pricing makes it possible to move the goods with the smallest amount of expense to the company as a whole....
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