A

Case of
Transfer pricing in a multinational
corporation-Del Notre Paper Company

Presented By :
Priyank Shah
Mehul Gadhiya
Sachin Nandha
Pravin Kothari
Mrunal Vaza
 Summary
 Del Norte paper company was a large integrated
manufacturer in U.S.
 DNP-Deutschland was a subsidiary of DNP-Italia.
 The African Bid.
 Reasons for DNP-mill price was higher.
• Different prices for domestic &
international market.
• Profit added to the converting plant’s profit.
• Profit decided on the basis of full allocation.
• If commitment fails then converting plant
will bare the charges of mill down
proportional cost.
 Transfer pricing
• Transfer pricing is the set of rules an
organization uses to allocate jointly earned
revenue among responsibility centers
• The Transfer price should be similar to the
price that would be charged if the product
were sold to outside customers or purchased
from outside vendors
• Can be arbitrary when a high degree of
interaction exists among the individual
responsibility centers
 Approaches to Transfer Pricing
• Organizations choose among four main
approaches to transfer pricing:
– Market-based transfer prices
– Cost-based transfer prices
– Negotiated transfer prices
– Administered transfer prices
• the goal of using transfer prices is always to
motivate the decision maker to act in the
organization’s best interests
 International transfer pricing
• International transfer pricing is the pricing
that an organizations uses to transfer
products between a unit in one country and
unit ion another country.
• Transfer are not at arms length.
• Taxation.
• Quota
 Administered Transfer Price
• Del Norte Paper Co.
Is it a cartel or Strategic
Alliance????

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