قیمت گذاری انتقالی برای هماهنگی با تصمیمات بخشی و شرکت ها
|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|17083||2008||7 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Business Horizons, Volume 51, Issue 5, September–October 2008, Pages 411–417
Discussions about transfer pricing normally presume the firm's objective is to maximize profit while making the best use of existing capacity. This article differs by exploring the impact of transfer pricing on capital budget decisions. In decentralized firms, decision authority for investment is assigned to division managers whose capital budgets include revenues from internal transfers. When a selling division is under capacity, economic theory recommends a transfer price based on differential cost. Here the seller generates sufficient revenues to recoup operating costs, but not enough to recover capital costs. Consequently, division managers will reject some investments that otherwise would have increased corporate shareholder value. Market-based transfer pricing overcomes this conflict by allocating savings on inter-company transactions to the selling division. However, market transfer pricing may result in shortfalls to corporate profit. Nonetheless, we argue in favor of the use of transfer pricing on the presumption that long-term value creation takes precedence over short-term profit.
Suppose you are a division manager deciding whether to make a new investment. Some of the new product output would be sold to other corporate divisions. Company policy requires that sales between divisions are made at a discount. Other divisions would gladly buy from you and pay lower prices. Senior management likes this arrangement because it costs less to make the goods instead of going outside the firm to buy them. Both the buying division and the firm as a whole then boost profits. It is clear that the investment increases shareholder value. Here is where the dilemma arises: If the manager of the selling division makes the investment, he or she will recover cost but won’t increase division profits. So, why should the manager invest when the benefits go to others in the firm? The source of conflict in this situation is the firm's transfer price. It is the amount one division pays for goods transferred from another division. Transfer prices provide internal signals that direct the allocation of resources and profits within the firm. Academic discussions about transfer price focus on motivating managers to choose levels of internal sales and purchases that maximize current period profits. Economic theory offers guidelines for setting the correct transfer price to achieve this short-term objective. But as we saw with the investing manager dilemma, the right transfer price for generating profit may discourage a manager from making the investment in the first place. One solution would be for corporate managers to step in and mandate that the selling division make the new investment. However, such directives fly in the face of decentralized organizational structures that rely on division managers to identify and champion investment proposals. Division managers prepare capital budgets to determine whether it makes sense to pursue investment projects. Their calculations are based on estimates for revenues, including those derived from internal sales. Thus, discounted transfer prices that are good for corporate profit may be bad for justifying investment. In this article, we explore the impact of transfer prices on the decision to make capital investments and, by extension, we examine whether transfer prices for maximizing short-term profits are consistent with long-term value creation. We break from the traditional manner of looking at transfer pricing in two ways. First, instead of assuming the goal is short-term profit, we base our model on increasing shareholder value. Second, whereas traditional transfer pricing presumes that the selling division seeks to make best use of existing capacity, we examine whether the division will choose initially to invest in capacity, particularly when its use involves sales to other divisions. We are particularly interested in determining whether the chosen transfer prices support long-term goal congruence between the division and the corporate entity. Ideally, both will make the same investment decision. We find that whenever the transfer price is less than market price, long-term goal congruence is jeopardized. On the other hand, a market transfer price ensures that the division and corporate will both invest, but it may result in lower short-term profits. Nonetheless, we recommend market transfer prices on the presumption that long-term value creation takes precedence.