Which of the Following Is a Disadvantage of Using Negotiated

question 99

Multiple Choice

Which of the following is a disadvantage of using negotiated transfer price?

• A) It requires each division manager to put forth effort to increase division operating income.
• B) Negotiated transfer prices take away the divisional autonomy as prices depend on bargaining strength.
• C) Negotiations usually require much time and energy thereby consuming precious managerial time.
• D) It may lead to divisional enmity because negotiation process may cause frictions among departments.

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Definitions:

High Distinctiveness

A feature or attribute that makes an individual or object stand out significantly from others in the same category or context.

Kelley's Covariation Model

A theory in psychology that describes the way people assign reasons to events by evaluating the event's consistency, distinctiveness, and the level of agreement among observers.

Internal Factor

Psychological or physiological conditions within an individual that influence their behaviors and decisions.

External Factor

Influences that impact an individual or organization but originate outside of their control.