Transfer Pricing
As Sach described the transfer pricing policy, purely domestic transfers utilized a full standard cost price method while foreign transfers used an arm's-length market price method. This was the general rule, but the system was quite flexible, which enabled a quick response to changing market conditions. docu processing industry was extremely competitive, and Xerox management realized that they must respond to various global market pressures and com petitive challenges. A manager from the Xerox Brazilian operation asserted the following: "The transfer pricing system is designed to attack the market place. We drive the products in the market place, and Xerox knows the source of the revenue is the customer." than the international The domestic transfer pricing was less complicated ituation. The controller for the US customer operations explained