{"content":{"sharePage":{"page":0,"digests":[{"id":"47885928","dateCreated":"1323434431","smartDate":"Dec 9, 2011","userCreated":{"username":"RWentink","url":"https:\/\/www.wikispaces.com\/user\/view\/RWentink","imageUrl":"https:\/\/ssl.wikicdn.com\/i\/user_none_lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/47885928"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Review","description":"This paper covers a case about Rolex, the luxury watchmaker. Rolex USA was among 20 defendant Swiss watch companies named in a complaint by the US Department of Justice in 1954 as having conspired to engage in anti-competitive practices. There was an agreement, called the Collective Convention of the Swiss Watch Industry, which restrained competition.
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\nRolex has been able to maintain not only its luxury brand but also its high prices. It refuses to allow dealers to use non-Rolex parts to repair its watches, and its pricing is set to enhance its own profits, rather than those of the retailers selling its watches. It was accused of coercing the watch retailers to maintain the high prices.
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\nThe DOJ\u2019s final judgment enjoined it from certain behaviors, including entering into any agreement with a reseller to fix or control the markup, maximum or minimum price. However, as the author of the paper points out, Rolex\u2019s 1996 policy statement is in violation of the judgment.
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\nThe author concludes the paper with three key concept definitions: retail price maintenance, transfer pricing and credible threats.","replyPages":[{"page":0,"digests":[],"more":0}]},{"id":"47020570","dateCreated":"1322398534","smartDate":"Nov 27, 2011","userCreated":{"username":"RWentink","url":"https:\/\/www.wikispaces.com\/user\/view\/RWentink","imageUrl":"https:\/\/ssl.wikicdn.com\/i\/user_none_lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/47020570"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Double Marginalization Within Intel","description":"This excerpt from Inside Intel: Andy Grove and the Rise of the World's Most Powerful Chip Company<\/em> by Tim Jackson describes a classic transfer problem with a twist. It involves the use of previously unusable chips, which did not meet Intel's standard specifications. An engineer discovered they could be utilized in memory systems sold to mainframe vendors and customers, and still perform adequately. Intel never solved the problem. This business was less profitable than microprocessors, so the problem simply went away after a number of years.
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\n"It was only when the memory systems operation was up and running smoothly that stresses began to emerge. The issue was how the new division's accounting should be done. Should the chips that it obtained from the components' business and then built into systems be charged at their full arm's-length price, just as if the memory operation had bought parts in the market\/ Or should they be valued at cost, since the parts that were now going into Jordan's memory systems had simply been thrown away before his arrival?
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\nBoth approaches had problems. Booking the incoming units at the full price hardly reflected their opportunity cost to Intel, since the company had never tried to find any takers in the market for components that failed to meet specifications. Equally, it seemed too generous simply to give the chips to the new division; this might give rise to such accounting distortions that the company would be tempted to pour money into the memory systems operation because the figures made it look more profitable than it really was.
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\nClearly the sensible answer was to choose some number between the two. But since each division manager was supposed to be responsible for the profit and loss of his own operations, the question was more than merely academic. Every extra penny that Bill Jordan was forced to pay for his chips would increase the profits of the components business and cut his own division's profits; every penny that he managed to negotiate away in price breaks would make the components business look worse but him look better. The outcome could make or break careers.
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\nThe question would remain unresolved for nearly seven years, and both Gordon Moore and Bob Noyce would resist pressure to arbitrate between the two sides." (pgs. 100-101)
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\nAccording to our economics text the answer is to produce the chips at a marginal cost so that it equals the net marginal revenue of the downstream division. NMR downstream = MR downstream - MC downstream = MC upstream. They would then have to determine the output level that maximizes overall firm profits, and provide an incentive to the upstream manager to produce at that level. (pg. 418)
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\nThe challenge here is that the substandard chips are not intentionally produced. They are an accidental by-product, which means Intel stumbled on a cost complementarity. Setting an output for the substandard chips might be difficult as it would cause the overall chip output to change to one that could have been unprofitable for Intel.","replyPages":[{"page":0,"digests":[{"id":"47562554","body":"It would be ironic if the mainframe division sold mainframe computers to the microchip division using the chips that it discarded to make more chips. Infinite loop marginalization.","dateCreated":"1323055605","smartDate":"Dec 4, 2011","userCreated":{"username":"Steve_Speece","url":"https:\/\/www.wikispaces.com\/user\/view\/Steve_Speece","imageUrl":"https:\/\/www.wikispaces.com\/user\/pic\/1316392514\/Steve_Speece-lg.jpg"}}],"more":0}]},{"id":"46776316","dateCreated":"1321920825","smartDate":"Nov 21, 2011","userCreated":{"username":"Steve_Speece","url":"https:\/\/www.wikispaces.com\/user\/view\/Steve_Speece","imageUrl":"https:\/\/www.wikispaces.com\/user\/pic\/1316392514\/Steve_Speece-lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/46776316"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Transfer Pricing Watch","description":"Bloomberg site dedicated to transfer pricing news.
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\nhttp:\/\/www.transferpricingwatch.com\/<\/a>","replyPages":[{"page":0,"digests":[],"more":0}]},{"id":"46267896","dateCreated":"1321299211","smartDate":"Nov 14, 2011","userCreated":{"username":"kfraymer","url":"https:\/\/www.wikispaces.com\/user\/view\/kfraymer","imageUrl":"https:\/\/ssl.wikicdn.com\/i\/user_none_lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/46267896"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Transfer Pricing Turmoil","description":"A recent article about transfer pricing in Mumbai:
\nhttp:\/\/www.moneycontrol.com\/news\/management\/transfer-pricing-turmoil_616535.html<\/a>","replyPages":[{"page":0,"digests":[],"more":0}]},{"id":"45688380","dateCreated":"1320533186","smartDate":"Nov 5, 2011","userCreated":{"username":"Steve_Speece","url":"https:\/\/www.wikispaces.com\/user\/view\/Steve_Speece","imageUrl":"https:\/\/www.wikispaces.com\/user\/pic\/1316392514\/Steve_Speece-lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/45688380"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Playmobil dealing with union dispute in Malta","description":"The Maltese General Worker's Union(GWU) has made demands that Playmobil apparently thinks to be unreasonable. Pending resolution of the dispute, there has been a lockout of the Playmobil facility in Malta. How this might impact the supply of Playmobil toys this holiday season is unclear from the article.
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\nNote: Malta is an EU member and party to the Schengen agreement.
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\nhttp:\/\/www.timesofmalta.com\/articles\/view\/20111027\/local\/Playmobil-collective-agreement-distant-from-original-claims.390917<\/a>","replyPages":[{"page":0,"digests":[],"more":0}]},{"id":"45254250","dateCreated":"1319937928","smartDate":"Oct 29, 2011","userCreated":{"username":"Steve_Speece","url":"https:\/\/www.wikispaces.com\/user\/view\/Steve_Speece","imageUrl":"https:\/\/www.wikispaces.com\/user\/pic\/1316392514\/Steve_Speece-lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/45254250"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Transfer Pricing in China","description":"The PRC has some very unique laws on transfer pricing. In their system the burden of proof lies on the taxpayer to show compliance. It seems that this system makes written advanced pricing agreements a necessity. The new Chinese regulations may intend to retain more export profits in China through incentivising the creation of Chinese subsidiaries of overseas firms.
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\nhttps:\/\/docs.google.com\/viewer?url=http<\/a>:\/\/www.lehmanbrown.com\/Shanghai%2520Business%2520Review\/Jan_Feb2004\/1.%2520Transfer%2520P.pdf&embedded=true&chrome=true","replyPages":[{"page":0,"digests":[],"more":0}]},{"id":"43973066","dateCreated":"1318272195","smartDate":"Oct 10, 2011","userCreated":{"username":"Steve_Speece","url":"https:\/\/www.wikispaces.com\/user\/view\/Steve_Speece","imageUrl":"https:\/\/www.wikispaces.com\/user\/pic\/1316392514\/Steve_Speece-lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/43973066"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Credible Threats: The Evolution of Cooperation","description":"If you are unfamiliar with this book, it is absolutely fascinating- one of my all-time favorites.
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\nhttp:\/\/books.google.com\/books\/about\/The_evolution_of_cooperation.html?id=KFf2HXzVO58C<\/a>","replyPages":[{"page":0,"digests":[],"more":0}]},{"id":"43580928","dateCreated":"1317668636","smartDate":"Oct 3, 2011","userCreated":{"username":"JASCHAEFER","url":"https:\/\/www.wikispaces.com\/user\/view\/JASCHAEFER","imageUrl":"https:\/\/ssl.wikicdn.com\/i\/user_none_lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/43580928"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Minimum Resale Price Policy","description":"Found an interesting article on price policy, and how companies handle discounting concerns of higher quality products:
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\nhttp:\/\/www.freebornpeters.com\/docs\/publications\/20030801_Article.pdf<\/a>
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\nAlso found an article on Rolex and its development into a luxury item:
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\nhttp:\/\/w4.stern.nyu.edu\/sternbusiness\/fall_winter_2004\/rolex.html<\/a>","replyPages":[{"page":0,"digests":[{"id":"43941788","body":"Both great, thank you. Interesting bit about Rolex maintaining demand through restricting supply, rather than prices directly- very similar to the Playmobil case.","dateCreated":"1318219784","smartDate":"Oct 9, 2011","userCreated":{"username":"Steve_Speece","url":"https:\/\/www.wikispaces.com\/user\/view\/Steve_Speece","imageUrl":"https:\/\/www.wikispaces.com\/user\/pic\/1316392514\/Steve_Speece-lg.jpg"}}],"more":0}]},{"id":"43564256","dateCreated":"1317656349","smartDate":"Oct 3, 2011","userCreated":{"username":"Hornbaker","url":"https:\/\/www.wikispaces.com\/user\/view\/Hornbaker","imageUrl":"https:\/\/www.wikispaces.com\/user\/pic\/1316446772\/Hornbaker-lg.jpg"},"monitored":false,"locked":false,"links":{"self":"https:\/\/mbaeconfall2011.wikispaces.com\/share\/view\/43564256"},"dateDigested":1532762628,"startDate":null,"sharedType":"discussion","title":"Transfer Pricing","description":"This article discusses transfer pricing, and may be useful.
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\nBALACHANDRAN, K. R., SHU-HSING, L., TAYCHANG, W., & HSIAO-WEN, W. (2010). The Role of Transfer-Pricing Schemes in Coordinated Supply Chains. Journal of Accounting, Auditing & Finance, 25(3), 375-404. Retrieved from EBSCOhost.","replyPages":[{"page":0,"digests":[],"more":0}]}],"more":false},"comments":[]},"http":{"code":200,"status":"OK"},"redirectUrl":null,"javascript":null,"notices":{"warning":[],"error":[],"info":[],"success":[]}}