Question

How can transfer pricing affect the successful use of a multi-divisional structure?

How could a large, academic hospital use a multi-divisional structure?

Answer 1

1.How can transfer pricing affect the successful use a multidivisional structure?

(a)difficult to establish a fair price
(b)intra-firm competition is high increases difficulty of negotiation
(c)market price vs production costs
(d)duplication, inefficiencies

2.How could a large,academic hospital use a multidivisional structure?

(a)functions are not centralized
(b)divisions of autonomy encourage innovation and quicker response to localized needs.
(c)improve management decision making