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Transfer Pricing in International Business by Geoff Turner

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CHAPTER 4

Changes in the Business Model

Introduction

Organizations competing on an international basis face choices in terms of resource allocation, the balance of authority between the central office and business units, and the degree to which products and services are customized in order to accommodate tastes and preferences of local markets. These choices have historically resulted in MNEs adopting either a global or domestic business model with their associated strategies.

A global strategy involves a high degree of concentration of resources and capabilities in the central office and centralization of authority in order to exploit potential scale and learning economies. Customization at the local level is thus necessarily low.

A variable ...

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