Transfer pricing--better decisions for greater savings

Area of Science:

• Business Administration
• Financial Management
• Healthcare Management

Background:

• Restructuring initiatives often face economic losses due to misaligned operational and financial systems.
• Uninformed decisions stemming from this mismatch can negate potential benefits.
• A clear economic framework is crucial for successful organizational change.

Purpose of the Study:

• To highlight the role of transfer pricing in mitigating economic losses during restructuring.
• To demonstrate how transfer pricing aligns operational and financial systems.
• To present transfer pricing as a tool for effective economic planning and target setting post-restructuring.

Main Methods:

• Implementing a transfer pricing system where restructured units "pay" for centralized services.
• Analyzing the financial and operational alignment facilitated by this system.
• Utilizing transfer pricing for economic target setting in centralized departments.

Main Results:

• Elimination of the mismatch between operational and financial systems.
• Creation of a more cost-effective vision for restructured entities.
• Facilitation of economic target setting for right-sizing centralized departments.

Conclusions:

• Transfer pricing is an invaluable tool during and after restructuring initiatives.
• It enhances cost-effectiveness and supports a beneficial vision of a restructured future.
• Transfer pricing is essential for leaders navigating future market challenges and prioritizing economics.