Management Practices With Respect to Internal Transfer Pricing in Large Manufacturing Companies.

Abstract The article focuses on management practices with respect to internal transfer pricing in large manufacturing companies. Intracompany transfer pricing has achieved wide-spread but not universal use among large manufacturing corporations. As a management tool it may fulfill different roles and in addition, there exists various pricing methods, the choice of which is influenced by factors both within and external to the individual company. A mail survey was undertaken to provide an insight into the role played by intra-company pricing as a management tool and the related management practices, developed more or less independently by manufacturing companies. The most important factor influencing the adoption of a particular transfer pricing method, market, cost, or negotiated price is the existence of a market for the product. Other factors include organization structure of the company, the volume of intracompany transfers, operations in both extractive and manufacturing stages, the history of a particular company and individual preferences of corporate officers.