global investor
Marshall School of Business
University of Southern California
Global Investors, Inc.
Teaching Note
Purpose of Case
This case was written to illustrate a transfer pricing problem in a service setting, here an investment management company. The issues and solutions are not as obvious as in a manufacturing setting where one division produces parts that are transferred to another division for further processing.
The case is a disguised version of a real conflict in which emotions were running high.
The case exposes students to a broad range of issues that can be raised when negotiating transfer pricing. These include cost allocation methods, managers’ interests and perceptions, organizational roles and conflicts, taxes, ownership structure and manager compensation, and ethics. The case also illustrates that there are often no obvious, clean solutions to transfer pricing problems.
Suggested Assignment Questions
1. What transfer pricing model is in the best interest of Global Investors, Inc.?
2. If management evaluation and compensation were the primary purpose of the transfer pricing system, how should the choice of the transfer pricing method be made?
3. How should Bob Mascola run the transfer pricing task force meeting that will include
GI’s CEO?
This note was prepared by Professors Kenneth A. Merchant (University of Southern California), Tatiana Sandino
(University of Southern California), and Wim A. Van der Stede (London School of Economics) for the sole purpose of aiding classroom instructors in the use of the Global Investors, Inc. case. It provides analysis and questions that are intended to present alternative approaches to deepening students' comprehension of business issues and energizing classroom discussion.
Teaching Note Source:
Copyright 2007 by Kenneth A. Merchant, Tatiana Sandino, and Wim A. Van der Stede. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted
University of Southern California
Global Investors, Inc.
Teaching Note
Purpose of Case
This case was written to illustrate a transfer pricing problem in a service setting, here an investment management company. The issues and solutions are not as obvious as in a manufacturing setting where one division produces parts that are transferred to another division for further processing.
The case is a disguised version of a real conflict in which emotions were running high.
The case exposes students to a broad range of issues that can be raised when negotiating transfer pricing. These include cost allocation methods, managers’ interests and perceptions, organizational roles and conflicts, taxes, ownership structure and manager compensation, and ethics. The case also illustrates that there are often no obvious, clean solutions to transfer pricing problems.
Suggested Assignment Questions
1. What transfer pricing model is in the best interest of Global Investors, Inc.?
2. If management evaluation and compensation were the primary purpose of the transfer pricing system, how should the choice of the transfer pricing method be made?
3. How should Bob Mascola run the transfer pricing task force meeting that will include
GI’s CEO?
This note was prepared by Professors Kenneth A. Merchant (University of Southern California), Tatiana Sandino
(University of Southern California), and Wim A. Van der Stede (London School of Economics) for the sole purpose of aiding classroom instructors in the use of the Global Investors, Inc. case. It provides analysis and questions that are intended to present alternative approaches to deepening students' comprehension of business issues and energizing classroom discussion.
Teaching Note Source:
Copyright 2007 by Kenneth A. Merchant, Tatiana Sandino, and Wim A. Van der Stede. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted