Nobody downloaded yet

Opportunities and challenges faced by multi-national companies in setting an appropriate transfer price - Essay Example

Comments (0) Cite this document
These corporations can locate activities that will best benefit them in terms of taking advantage of the opportunities in the market. Since financial matters are cardinal to the…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.1% of users find it useful
Opportunities and challenges faced by multi-national companies in setting an appropriate transfer price
Read TextPreview

Extract of sample
"Opportunities and challenges faced by multi-national companies in setting an appropriate transfer price"

Download file to see previous pages Nonetheless, MNEs enjoy substantial discretion in a way that they can structure their business operation models and set their internal trading terms (Runkel 2012). For this reason, the corporations can allocate some of the profits they have made to the member groups in low-tax areas without the need to move corresponding economic activity, risks, assets, and functions. MNEs have challenges and opportunities that face them, this paper will explore some of these.
In most cases, group members have problems facing them whenever they want to set appropriate price for intra-group transactions. Sometimes this happens even when there are no motives to set prices. MNEs are very complex in their operations (Chan 2015). Things happen to become even more intricate in the fact that good number of transactions cannot compare directly to transactions the unrelated parties have undertaken. This makes it very difficult for MNEs to comply with transfer pricing rules.
The organizational structure of MNCs is influenced by several factors. Geographical dispersion remains one of these factors (Gallemore&Labro 2014). Geographical dispersion is essentially the extent related to the cost of information flow within an enterprise and how the flow affects the corporate performance. Boundaries, indeed, may influence this flow between foreign subsidiaries and headquarters in spite of information flow being majorly done through the internet. The result, which is one of the challenges, is an increase of costs incurred in transferring the information and also valuation discount. The geographical dispersion also impacts on critical areas such as the organizational structures of the firm whereby it increases its complexity. The reason is if the headquarters is far from their business units, then it become costly to transfer information. That also limits the transfer of goods and services from the units and becomes even harder to carry out transfer pricing.
There lacks a functioning ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Opportunities and challenges faced by multi-national companies in Essay”, n.d.)
Opportunities and challenges faced by multi-national companies in Essay. Retrieved from
(Opportunities and Challenges Faced by Multi-National Companies in Essay)
Opportunities and Challenges Faced by Multi-National Companies in Essay.
“Opportunities and Challenges Faced by Multi-National Companies in Essay”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Multi National Companies- Boon or bane of globalization a country and sell at a price that might even be less than the cost of production. This way it will outclass the indigenous small producers and eventually throw them out of the market. Hence the much-hyped competitive environment owing to the introduction of the multi-national corporations holds no ground. The technologies these giant firms come with are mostly capital intensive and that is no match for the labor-intensive economic scenario of these developing and less developed countries. Moreover owing to the abolition of indigenous companies after the introduction of the multi-national corporations many workers would be unemployed...
4 Pages(1000 words)PowerPoint Presentation
Issues for Multi-national Organisation
...operating in various economies in the world, these companies have not only enhanced their brand value but have also done the same for the living standard of many individuals worldwide. However, it cannot be ignored that internationalization of business increases the overall risks of the corporate firms in the modern world. The essay will analyze about the various types of business problems faced by the multinational corporations in the contemporary world. Critical Literature Review Comparing and Contrasting Theories Concepts and Research Findings The business challenges and opportunities faced by the multinational corporations in the contemporary world...
6 Pages(1500 words)Essay
Price Setting
...?Part 1. Price setting is often regarded as a complex multi step approach that takes into account various elements such as the external environment, demand for the product, competitors as well as internal elements like operating costs. As such, this paper seeks to evaluate the price mechanism that is used by Kentucky Fried Chicken (KFC), an international fast food restaurant that operates in more than 80 countries. The paper will discuss the benefits as well as challenges that are faced by the company in its pricing mechanism. The main strategy used by KFC is product line pricing....
3 Pages(750 words)Assignment
Business Strategy - multi-national conglomerate
...1. SWOT Analysis 1 Strengths 1 Smith and White Corporation It is a multi-national conglomerate that has dominant shares in market. Adopts a unified strategy for all its product lines including power and non-power tools that helps the company to standardize its processes. The brand equity is developed through massive spending on media advertising. Big Boxes and other retailers are compelled to stock company's products because of high en-user demands. Since the marketing strategy followed is demand pull, the company is able to adopt price skimming strategies; that is it takes higher prices for its products. It also results...
5 Pages(1250 words)Essay
Business for multi national
...Case Discussion Maxwell simply used his powers and ity to misappropriate the funds that we under his domain. Maxwell exercised both control and ownership over the funds that belonged to employees in pension funds and used shares as collateral that did not belong to him. There are several corporate heads and CEOs that are doing these types of things to the disadvantage of their stakeholder. Once this type of thing happens, the organization and the controller lose its value. No other organization would like to lend to a company where misappropriation of funds can done at the discretion of the CEO or own. There is a concept of separate legal identity which differentiates the assets of the company from its owners. However, in the case... of...
2 Pages(500 words)Essay
Marketing Challenges Faced by Gillette
...ranked more to its predecessor SensorExcel thereby reflecting a truly different replacement (Bennett, 2010, p.301). Gillette is found to counter a number of marketing challenges both in regards to its advertising and promotional campaign and also in regards to its pricing efforts in relation to the launching of Mach3 in the international market. The advertising campaign taken by the company to launch Mach3 in the international market had to work on a global tone where potential investment of around $200 million was rendered. Larger part of the investment was made in regards to the creation of an effective web page for the product that would help in educating the global consumers about...
5 Pages(1250 words)Essay
Strategic problems facing HRM operating in multi-national companies
...Running Head: Strategic Problems facing HRM Strategic Problems facing HRM [Institute’s Table of Contents Introduction 3 Discussion 4 Compensation and Reward Systems 4 Training and Development 7 Job Expectations and Motivation Policies 9 Conclusion 11 References 12 Introduction The swiftly changing business scenario indicates that there are at present several human resource management problems which will carry on evolving in the upcoming times. HR departments actually have to be including genuine business value to their companies. Even though the restraints of the economic depression are not ended yet, organizations are becoming aware of the fact that they will have to take steps to...
11 Pages(2750 words)Essay
Opportunities and challenges by multi-national companies in setting an appropriate transfer price
...transfer price that does not favor one side of an enterprise. The fact that these subsidiaries exist in different locations with different tax jurisdiction creates a complex puzzle for the MNE. It has always been a challenging task to come up with a plausible method of setting up the most appropriate transfer pricing that accommodates all these contrasting tax jurisdictions. In most host nations, when a subsidiary transfers goods to another, the local governments usually view the buy-in subsidiary as a target customer from whom to siphon revenues. This perception has led to mandatory...
2 Pages(500 words)Essay
Challenges Faced by Imams
...Insert Challenges Faced by Imams Imams face complex challenges, especially in a Western society such the United s, whereMuslims are a minority in the largely secular society. Since time immemorial, Imams have been facing different challenges arising from special dietary needs, ways of worship, education, different cultural sensitivities and conservation of the religious identity. The American government laws and regulations which are aimed at supporting multiculturalism and cultural inclusion have been mainly theoretical in ensuring that these unique needs are met. Prior to 9/11 terror attacks in the US, these political commitments were...
5 Pages(1250 words)Essay
Opportunities and challenges faced by multi-national companies in setting an appropriate transfer price
...of transfer pricing is demanding and time-consuming (Wintzer 2007). Therefore, many companies that lack effective internal strategies find it difficult to take up this process. In addition, these companies face a challenge of using a third party because they lack an in-depth understanding of their businesses and operations. In some cases, the top officials use this opportunity to embezzle funds from the organization, thereby affecting their positions in the market. Transfer pricing provides an opportunity for the multinational companies to exercise...
2 Pages(500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Essay on topic Opportunities and challenges faced by multi-national companies in setting an appropriate transfer price for FREE!
Contact Us