Factors about transfer pricing, Strategic Management

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Q. Factors about transfer pricing?

  • Does the supplier have a solid track record for delivery e.g. references from other satisfied customers in terms of the quality of service they provide should be sought.
  • Financially stability of supplier should be investigated e.g. obtain previous sets of accounts and credit ratings.
  • Does the supplier have the resources required to cope with peak periods when demand for their product or service may be high.
  • Will the supplier be increasing prices above their quoted price in long-term?
  • Good service level agreement (SLA) for a minimum standard of service expected and penalties for non-performance.
  • Can the internal seller find external work to fill spare capacity caused by a reduction of internal demand, if the buyer goes elsewhere?

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