In a Large Conglomerate, While the Enterprise on a Whole

question 136

True/False

In a large conglomerate, while the enterprise on a whole will have a corporate strategy, each SBU will have its own business strategy.

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Definitions:

Transfer Price

The price charged one decentralized unit by another for the goods or services provided.

Transfer Pricing

The pricing of goods, services, and intangibles between related legal entities within an enterprise to optimize tax liabilities and profit allocation.

Division Manager

An individual responsible for overseeing a specific division within a company, ensuring its operational and financial performance.

Residual Income

Income that remains after deducting all costs, including the cost of capital, from business or investment earnings.