Page 86 - BA1 Integrated Workbook STUDENT 2018

Chapter 8

7.3 Triple bottom line reporting (TBL)

TBL takes a wider view of divisional performance and includes an
additional focus on the division’s environmental impact and the
sustainability of its operations.

TBL sets targets in three key areas (the 3Ps):

 profit (economic prosperity)
 people (social justice)

 planet (environmental quality).

While such an approach can attract ethically minded customers and
staff, appropriate measures can be hard to quantify and measure and
may conflict with each other.

7.4 Transfer pricing

Where divisions trade with one another it is common for transfer prices to
be set for these transactions.

The aims of transfer pricing are:

 realistic performance appraisal for all divisions
 congruent decision making

 reduced impact on global tax liability.

However it often has a number of problems, including:

 easy to set an inappropriate transfer price, which can be de-
motivational

 may be issues with controllability

 can lead to conflict between divisional managers.

Illustrations and further practice

Now review TYU 11, 13 and 14 in Chapter 8 of the text.

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