Transfer Pricing in International Business

Resolving Internal Conflict

The overriding ambition of an organization’s endeavors should be to maximize its return on capital employed as a whole. It is vital that managers responsible for taking decisions about transfer pricing cotton on to the importance of the organization’s interests and understand that it is not necessary for each division to earn the same return, either by reference to sales or the level of investment. Any attempt by a divisional manager to increase his own division’s returns at the expense of another division will lead to suboptimization and work against the fundamental purpose of the organization.

Think!

Does this sort of thing happen in your organization? What do you do to overcome it?

Unfortunately, unless the calculation ...