Opportunities and challenges faced by multi-national companies in Essay

Opportunities and challenges faced by multi-national companies in setting an appropriate transfer price - Essay ExampleNonetheless, MNEs enjoy substantial discretion in a way that they can coordinate their business operation models and set their internal trading terms (Runkel 2012). For this reason, the corporations can allocate some of the profits they have made to the member groups in low-tax areas without the need to crusade corresponding economic activity, risks, assets, and functions. MNEs have challenges and opportunities that face them, this paper will explore some of these.In almost cases, group members have problems facing them whenever they want to set appropriate price for intra-group transactions. Sometimes this happens even when in that respect are no motives to set prices. MNEs are very complex in their operations (Chan 2015). Things happen to cash in ones chips even more intricate in the fact that good number of transactions cannot compare directly to transaction s the unrelated parties have undertaken. This makes it very difficult for MNEs to comply with transfer pricing rules.The organizational structure of MNCs is square upd by several factors. Geographical strewing remains one of these factors (Gallemore&Labro 2014). Geographical dispersion is essentially the consummation related to the cost of information flow within an enterprise and how the flow affects the corporate performance. Boundaries, indeed, may influence this flow between foreign subsidiaries and headquarters in spite of information flow being majorly make through the internet. The result, which is one of the challenges, is an increase of costs incurred in transferring the information and also valuation discount. The geographical dispersion also impacts on critical areas such as the organizational structures of the firm whereby it increases its complexity. The reason is if the headquarters is far-off from their business units, then it become costly to transfer informatio n. That also limits the transfer of goods and services from the units and becomes even harder to track down out transfer pricing.There lacks a functioning