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Organisational Structure and Transfer Pricing (Structures (Types…
Organisational Structure and
Transfer Pricing
Structures
Types
Functional
Business-unit
Matrix
Network
Contingency theory
Style
Centralisation
Decentralisation
Purpose
Effeciency
Responsiveness
Accountability
Vertical
Horizontal
Reasons to change
Organic growth
Expansion
Contraction
Responsibilty centres
Objectives
generate relevant information for decision making
Not distort financial statements
Measures
Revenue
Expense
Profit
Investment centres
Transfer pricing
Purpose
Maximise firm-wide profits
Fair evaluation of centre performance
Encourage cooperation
Problems
Quality
Capacity
Individual centre vs firm
Methods
Cost based
Market based