As a manager understand of the organizational culture and the factors that effect to the organizational culture and how it relates to the effectiveness of the organization are more important for organizational success.
When you walk into a shop, bank hotel what you notice first? What do first impression tell you about the organization that has just entered? What kind of behaviour is expected of you? These all are the aspects of the organizational culture. Nature of culture is more significant, both for those who work there and for customers and client. Culture seems to be from organization to organization. Managers today have incorporated culture into their everyday vocabulary hence those who want to be an effective and efficient manager should understand, control, and change the culture when necessary.(Miner, 2007) When consider the definitions of the organizational culture there are lot of definitions among of them Hucznski and Buchanan offered definition is much important they stated that organizational culture is the collection of relatively uniform and enduring values, beliefs, customs, traditions and practices that are shared by an organizations members, learned by new recruits, and transmitted from one generation of employees to the next.
Full cost transfer price
When external market price does not reflect the correct price or viewed as an unfair price, a firm can use cost based transfer price. When using cost basis the actual cost of production cannot be captured to a single unit price easily. Thus a standard cost will be used as the transfer price. Also it should be noted that the cost captured as price will be correct at one output level only. Thus when the division produce varied amount of goods it will not cover the actual cost of production.
But when cost based transfer price is used it is likely to be treated as an input variable cost by the receiving department and if selling prices are based on costs the selling prices may not produce the best results for the firm as a whole as it’ll be low priced in the market. With a full cost based transfer price divisional performance appraisal become meaningless as it will result in a breakeven point or even a loss. So transacting just at a cost will make the employees demotivated. (Sharman, Paul, 2003)Use of cost basis will turn the strategic business unit to a cost center. In situations where actual costs include inefficiencies of the division, the transfer price set on the basis of such inefficiencies may lead to incorrect management decisions on pricing and using full cost as price will not encourage management to control such inefficiencies.
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