BUS 322 Lecture Notes - Lecture 11: Opportunity Cost, Perfect Competition, Transfer Pricing

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In response to increasing competitive pressures and the opening up of former monopolies to competition, many organizations are changing the way they are organized and the way they do business. Necessary because they must be able to change quickly in a world where technology, customer tastes, a(cid:374)d (cid:272)o(cid:373)petito(cid:396)s" st(cid:396)ategies a(cid:396)e (cid:272)o(cid:374)sta(cid:374)tl(cid:455) (cid:272)ha(cid:374)gi(cid:374)g. Bei(cid:374)g adaptive (cid:396)e(cid:395)ui(cid:396)es that the o(cid:396)ga(cid:374)izatio(cid:374)"s se(cid:374)io(cid:396) (cid:373)a(cid:374)age(cid:373)e(cid:374)t delegate o(cid:396) de(cid:272)e(cid:374)t(cid:396)alize de(cid:272)isio(cid:374)- making responsibility to more people in the organization. May have the ability to sell its goods and/or services both inside and outside the organization. The price charged when one segment of a company exchanges goods or services with another segment of the company. Necessary in order to calculate costs in a cost, profit, or investment center. From a performance perspective, it is a mechanism which is used to: evaluates a divisio(cid:374) (cid:373)a(cid:374)age(cid:396)"s pe(cid:396)fo(cid:396)(cid:373)a(cid:374)(cid:272)e (cid:271)ased o(cid:374) the profits that the manager generates, helps (cid:272)oo(cid:396)di(cid:374)ate the divisio(cid:374)s" de(cid:272)isio(cid:374)s to a(cid:272)hieve the o(cid:396)ga(cid:374)izatio(cid:374)"s goals.

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