The Art of Pricing. Transactions between Indonesia and China - Thesis Example

The modern organizations have been viewed to adopt as well as implement the notion of strategic transfer pricing as an effective business strategy due to certain imperative factors. These factors include increased level of globalization, market competition and internationalization. It is worth mentioning that the rapid advancements especially in the areas like transport as well as communication and technology have eventually led towards the establishment of numerous multinational enterprises by a considerable level.

International transfer pricing as a form of strategic transfer pricing generally explains about why it is necessary to possess a consistent policy of transfer pricing for different organizations in order to respond towards the varying market conditions in which they perform their respective operational functions. In this similar context, it has been apparently observed that the idea of international transfer pricing was regarded as a highlighted issue during the preceding years as different nations revised as well as introduced new transfer pricing laws with the motive of responding towards increasing pace of globalization.

Several organizations belonging to different nations are adopting as well as implementing effective approaches relating to transfer pricing laws in order to accomplish their respective predetermined business targets. The targets include raising market share, enhancing profitability along with productivity and accomplishing superior competitive position over chief business market competitor. The major benefits of international transfer pricing have been viewed to be lessening duty costs by shipping different products at a minimum transfer price especially to high tariff based nations and decreasing income taxes by following the policy of overpricing products in high tax nations.