Verified Document

Transfer Pricing System Transfer Pricing Article Review

Table 2, Relationships in MNSC problem provide an analysis of these factors in the form of a decision matrix of transfer prices, transport cost allocations and trade quantities from an import and expert standpoint (Villegas, Ouenniche, 2008). This is one of the more useful aspects of this article, in that it extrapolates the near-term decisions of transfer pricing systems directly and materially into the financial reporting of the firm in the same fiscal period. There is also the quantification of the MNSC purely from the effects of cross-supplier and supplier-buyer collaboration which gets much coverage in the industry press, yet lacks the quantification from a financial standpoint this article provides. The quantification of MNSC-based decisions purely on transfer pricing that is market-based leads to higher levels of volatility and uncertainty of earnings yet also gives firms a great control over the competitiveness of fulfilling their own demand over time. The authors point out that there is a material effect of market-priced transfer pricings if the originating division has the ability to trim costs significantly over time and attain business process management (BPM) objectives for process re-design followed by Business Process Rengineering9BPR) and the reduction of losses...

Parts of this document are hidden

View Full Document
svg-one

What the models lack however is the use of longitudinal data and the use of time series analysis to provide greater empirical analysis. Second, the authors admit that MNSCs are by nature multi-modal, multi-process and therefore resist optimization even when there is data to be used for correlation. The models lack a true test over years of MNSC data across industries with varying supply chains, cross-channel conflicts and heterogeneity of buyer-supplier relationships. The authors also fail to show how this model can be used as an analytical construct for measuring divisional relative to corporate performance across competitors as well. The models are useful in their analysis of the key relationships yet need more optimization to be of use in MNSCs.
References

Villegas, F., and J. Ouenniche. 2008. A general unconstrained model for transfer pricing in multinational supply chains. European Journal of Operational Research 187, no. 3, (June 16):…

Sources used in this document:
References

Villegas, F., and J. Ouenniche. 2008. A general unconstrained model for transfer pricing in multinational supply chains. European Journal of Operational Research 187, no. 3, (June 16): 829.
Cite this Document:
Copy Bibliography Citation

Related Documents

Transfer Pricing Disputes Current Profit Inc./Dec Costs
Words: 781 Length: 3 Document Type: Essay

Transfer Pricing Disputes Current Profit Inc./Dec Costs Costs Division A Internal @ $1,000 3,000,000 2,000,000 1,800,000 Total Costs 3,900,000 3,800,000 Division B Internal @ $2,000 2,000,000 1,000,000 External @ $1,900 1,900,000 2,850,000 Total Costs 3,900,000 3,850,000 Inc 50,000 Division C Part 101 @ $1,000 3,000,000 2,000,000 Part 201 @ $2,000 2,000,000 Total Sales 2,100,000 1,400,000 Part 201 @ $1,200 1,200,000 Total Costs 3,300,000 2,000,000 Profit 1,700,000 Company as a whole (100,000 + 50,000) -- 700,000 = 550,000 loss To enforce the proposed plan would cause a $550,000 loss for the company as a whole. The increases in profits for division A and B, $100,000 and $50,000 respectively, are not enough to

Transfer Price Evaluation Under the Proposed Plan,
Words: 988 Length: 3 Document Type: Essay

Transfer Price Evaluation Under the proposed plan, Division A would have a cost reduction of $100,000, Division B. would have a cost reduction of $50,000, Division C. would have a profit reduction of $700,000, and the company would have an increase in profits of $80,000. If Division C. would drop their prices to meet market prices and the other divisions agree to them doing all the production, they would still loose

Transfer Pricing Implementing Transfer Pricing:
Words: 686 Length: 2 Document Type: Essay

Next, the project management teams implementing the transfer pricing system need to benchmark existing processes, systems and pricing methodologies to evaluate their relative strengths and weaknesses (Sijmonsbergen, Carey, Schmid, 2007). Documentation of the processes and the planned improvements, including the methodologies for defining market-based pricing are completed. These are often process flow diagrams that provide insight into the extent of the change planned to ensure the organization can accomplish

Windows 7 Operating System Guide to Operating
Words: 1501 Length: 5 Document Type: Essay

Windows 7 Operating System Guide to Operating Systems The role of operating systems continues to be critical to the overall performance of enterprise information systems globally. In the majority of enterprises today there is a wide variation in the type of operating systems used, as the information needs vary significantly across organizations. The intent of this analysis is to evaluate the Microsoft Windows XP, Windows 7 and Linux operating systems. The architectures,

Cmi and Transfer Pricing
Words: 1546 Length: 4 Document Type: Case Study

Accounting Transfer Pricing Case Study; Coffee Makers Incorporated The decision to make or purchase a good that can, or already is supplied internally requires careful consideration. Different departments may look at the issue differently, especially if the internal transfer pricing does not reflect the market conditions. However, although different departments may have different budgets, the firm will also need to take a broader view and consider the bottom line for the firm. In

Saturn's Pricing Strategy
Words: 2029 Length: 5 Document Type: Term Paper

Saturn's Pricing Strategy The Unique Project - Saturn The Saturn Project was an experiment by General Motors to stop the heavy loss in terms of sales that GM was undergoing to the Japanese car manufacturers. This was an attempt to manufacture and market cars in a way different from the traditional methods of GM. This was the reason that GM did not set up the Saturn Project as a division of GM

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now