Analysis
Redesign Transfer Pricing for a German Auto Supplier
Overview
What this challenge is about.
Build a transfer pricing model for one EV component line (e.g., e-axle housing) flowing Germany → Hungary → Mexico → US OEM. Compare cost-plus, market-based, and negotiated approaches against three criteria: tax/regulatory robustness (OECD arm's length), goal congruence with divisional KPIs, and managerial motivation. Use publicly available financial data from automotive supplier annual reports as benchmarks. Success means a defended recommendation with a worked numerical example showing divisional P&L impact and a memo addressing how plant managers will react. Constraint: assume German hub holds the IP and bears R&D risk.
The Brief
What you'll do, and what you'll demonstrate.
How should the firm set internal transfer prices for EV components across three jurisdictions to satisfy tax authorities while preserving divisional accountability and motivation?
Earning criteria — what you'll demonstrate
- Apply transfer pricing theory (cost-based, market-based, negotiated) to a multinational setting
- Analyze tension between tax optimization, goal congruence, and divisional autonomy
- Evaluate behavioral consequences of accounting choices on managerial decisions
- Integrate contingency factors (regulation, IP location) into control system design
Program Fit
Where this fits in your program.
Sharpens the same skills your degree expects you to demonstrate.
Skills
Skills you'll demonstrate.
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Roles this prepares you for.
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