You Are Working for a Global Electronic Parts Manufacturing Company

question 66

Essay

You are working for a global electronic parts manufacturing company with divisions in Taiwan,Malaysia,Australia,and Germany,that has embarked on developing a global enterprise system.To ensure that overseas divisions comply with the new system,they are considering a cooptation strategy in which they will permit each country unit the opportunity to develop one transnational application first in its home territory,and then throughout the world.What are the benefits and drawbacks to this approach? Are there any other solutions for the company's cooptation strategy?

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Definitions:

Intercompany Profit

Intercompany profit arises from transactions between units of the same company, requiring elimination during the consolidation process to avoid inflating revenues and profits.

After-tax Gain

The net profit that remains after subtracting the tax due from the total gain of a transaction or investment.

Equity Method

An accounting technique used to record an investor's earnings proportional to their stake in an associates company.

Cost Method

An accounting technique used to value investments, where the investment is recorded at purchase cost without recognizing subsequent changes in market value.