situation Xerox used a market-based transfer price (market price less a discount). This method conformed to the US tax laws and to the rules of most the other taxing authorities. In addition, market price followed the OECD guidelines. The transfer price denomination (currency) varied based on the product value added (explained in the next section). The market-based transfer price provided a margin to the selling unit as well as sufficient margin to the buying unit. This enabled the buying unit to be competitive in their local market. The buying unit was responsible for duty and regulatory compliance. The geographic sales offices cooperated with the factories and kept them well apprised of their country regulations and routinely communicated changing requirements to the factories. They also ensured that production facilities were aware of the competitive pressures.
Xerox sales units constantly encouraged quality and price improvements (part of the TOL program).
The new Xerox culture enhanced the awareness of the customer. The selling unit knew that they must respond to their internal customer (the buying unit).
At the same time, they understood that the source of successful business was the satisfaction of the outside customer.