经济类课件汇集_INTERNATIONAL MARKETING_Chapter 18 Global Pricing Strategies

INTERNATIONAL MARKETING 6e Chapter 18 Global Pricing Strategies Copyright 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc, 6277 Sea Harbor Drive, Orlando, Florida 32887-6777

Copyright © 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc., 6277 Sea Harbor Drive, Orlando, Florida 32887-6777. INTERNATIONAL MARKETING 6e Global Pricing Strategies Chapter 18

Transfer Pricing The allocation of resources through the intracorporate pricing of sales to members of the extended corporate family. The Parent Corporation Subsidiary Subsidiary Subsidia A B C North America Latin America Africa Copyright 2001 by Harcourt, Inc. All rights reserved 18-2

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-2 Transfer Pricing The Parent Corporation Subsidiary B Latin America Subsidiary A North America Subsidiary C Africa $$$ $$$ The allocation of resources through the intracorporate pricing of sales to members of the extended corporate family

Objectives of Transfer Pricing Competitiveness in the international marketplace Reduction of taxes and tariffs Management of cash flows Minimization of foreign exchange risks o Avoidance of conflicts with home and host governments over tax issues and repatriation of profits Internal concerns- goal congruence or subsidiary manager motivation Copyright 2001 by Harcourt, Inc. All rights reserved 18-3

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-3 Objectives of Transfer Pricing Competitiveness in the international marketplace Reduction of taxes and tariffs Management of cash flows Minimization of foreign exchange risks Avoidance of conflicts with home and host governments over tax issues and repatriation of profits Internal concerns - goal congruence or subsidiary manager motivation

Corporate Use of Transfer Prices Transfer prices are set by the major financial officer to achieve corporate objectives Transfer price setting approaches Cost-based approach uses an internally calculated cost with a percentage markup added Market-based approach uses the market selling price with a discount to the buying division Cost-based pricing(subject to manipulation Fu∥cost Variable cost Marginal cost Copyright 2001 by Harcourt, Inc. All rights reserved 184

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-4 Corporate Use of Transfer Prices Transfer prices are set by the major financial officer to achieve corporate objectives. Transfer price setting approaches • Cost-based approach uses an internally calculated cost with a percentage markup added. • Market-based approach uses the market selling price with a discount to the buying division Cost-based pricing (subject to manipulation) • Full cost • Variable cost • Marginal cost

influences on Transfer Pricing decisions Market decisions in the foreign country Competition in the foreign country Reasonable profit for the foreign affiliate U.S. federal income taxes Economic conditions in the foreign country Import restrictions Customs duties o Price controls Taxation in the foreign country EXchange controls Source: Jane O Bums, "Transfer Pricing Decisions in Copyright 2001 by Harcourt, Inc. All rights reserved U.S. Multinational Corporations, Joumal of Intemational Business Studies 11(Fall 1980): 23-39 18-5

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-5 Influences on Transfer Pricing Decisions Market decisions in the foreign country Competition in the foreign country Reasonable profit for the foreign affiliate U.S. federal income taxes Economic conditions in the foreign country Import restrictions Customs duties Price controls Taxation in the foreign country Exchange controls Source: Jane O. Burns, “Transfer Pricing Decisions in U.S. Multinational Corporations,” Journal of International Business Studies 11 (Fall 1980): 23-39

Corporate Use of Transfer Prices Three philosophies of transfer pricing are used to achieve corporate objectives Cost-based. direct or cost-plus(most used) Market-based: discounted"dealer pricing Arm's-length. same pricing as for unrelated parties Transfer pricing and environmental influences Attempts to minimize tax liability of subsidiaries in high income tax countries and report profits in lowest tax rate jurisdictions may coincidentally 2r increase other import taxes and duties Copyright 2001 by Harcourt, Inc. All rights reserved 18-6

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-6 Corporate Use of Transfer Prices Three philosophies of transfer pricing are used to achieve corporate objectives • Cost-based: direct or cost-plus (most used) • Market-based: discounted “dealer” pricing • Arm’s-length: same pricing as for unrelated parties Transfer pricing and environmental influences • Attempts to minimize tax liability of subsidiaries in high income tax countries and report profits in lowest tax rate jurisdictions may coincidentally increase other import taxes and duties

Atransfer pricing challenges 是强 Internal and external problems for the multinational corporation Performance Measurement The clouding effect of manipulating intracorporate prices on a subsidiary's apparent and actual profit performance Difficulty in maintaining relationships with subsidiaries that are negatively impacted by transfer pricing Taxation Tax and regulatory jurisdictions contribute to and compound transfer pricing problems. Pricing that is justified and reasonable in the home country may not be perceived as such in the host country. Copyright 2001 by Harcourt, Inc. All rights reserved

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-7 Transfer Pricing Challenges Internal and external problems for the multinational corporation • Performance Measurement – The clouding effect of manipulating intracorporate prices on a subsidiary’s apparent and actual profit performance – Difficulty in maintaining relationships with subsidiaries that are negatively impacted by transfer pricing. • Taxation – Tax and regulatory jurisdictions contribute to and compound transfer pricing problems. Pricing that is justified and reasonable in the home country may not be perceived as such in the host country

Taxation 学 Section 482 of the Internal revenue code recognizes four methods to determine arms length prIcing The comparable uncontrolled price method The resale price method The cost-plus method Any other reasonable method Copyright 2001 by Harcourt, Inc. All rights reserved 18-8

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-8 Taxation Section 482 of the Internal Revenue Code recognizes four methods to determine arm’s length pricing: • The comparable uncontrolled price method • The resale price method • The cost-plus method • Any other reasonable method

Arms Length pricing methods n The comparable uncontrolled price method MNC member sales made to unrelated parties MNC member purchases from unrelated parties Sales between unrelated parties n The resale method Pricing determined by subtracting the subsidiary's profit from uncontrolled selling price The cost-plus method Pricing determined by consistently adding a profit markup to the internal seller's total product cost Any other reasonable method Typically the functional analysis approach of comparing the proportional contributions is used Copyright 2001 by Harcourt, Inc. All rights reserved 18-9

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-9 Arm’s Length Pricing Methods The comparable uncontrolled price method • MNC member sales made to unrelated parties • MNC member purchases from unrelated parties • Sales between unrelated parties The resale method • Pricing determined by subtracting the subsidiary’s profit from uncontrolled selling price The cost-plus method • Pricing determined by consistently adding a profit markup to the internal seller’s total product cost Any other reasonable method • Typically the functional analysis approach of comparing the proportional contributions is used

Pricing Within Individual Markets Pricing decisions are determined by Corporate objectives for profitability(ROl) and competitiveness in the market(market share) Market situation pricing Skimming Penetration Product line positioning premium and mass markets n Costs Resource input costs are a frequently used basis of pricing determinations procurement, manufacturing, logistics, marketing costs Copyright 2001 by Harcourt, Inc. All rights reserved

Copyright © 2001 by Harcourt, Inc. All rights reserved. 18-10 Pricing Within Individual Markets Pricing decisions are determined by • Corporate objectives for profitability (ROI) and competitiveness in the market (market share) • Market situation pricing – Skimming – Penetration • Product line positioning – premium and mass markets Costs • Resource input costs are a frequently used basis of pricing determinations – procurement, manufacturing, logistics, marketing costs