Transfer pricing objectives
Taught by Nick Drape · AI tutor support included
In this lesson, you'll learn the four key objectives of transfer pricing and why achieving them all simultaneously presents a real challenge in practice.
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In this lesson
- 0:00 Transfer pricing objectives overview
- 0:31 Goal congruence and opportunity cost approach
- 0:52 Autonomy and divisional manager motivation
- 1:35 Fair evaluation of divisional performance
- 2:09 Tax minimisation in multinational organisations
About this lesson
Transfer pricing systems must balance goal congruence—ensuring divisional managers' decisions benefit both their division and the overall business—with divisional autonomy, which protects motivation and commitment. You'll also explore how transfer pricing enables fair performance evaluation across divisions, and in multinational organisations, how it can be used to optimise global tax positions across different tax territories. Understanding these objectives is essential for Performance Management and Strategic Business Leader papers, as transfer pricing directly affects divisional performance assessment and organisational decision-making.
Duration: 3m
Transcript
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