Case 15-5 Xerox Corporation Recommendations

Domestic Transfer Pricing • Using the market price can help Xerox better respond to a competitive pricing threat. • Less arbitrating of transfer price disputes by corporate controller.

Multinational Transfer Pricing • Current method may not conform to foreign laws and carries a greater taxation risk than solutions tailored to each country. • Use outside consultants

Transaction Exposure • Transaction currency exposure is best handled through centralized coordination of the corporate’s overall hedging needs.

Translation Exposure • Compare budgets and actual results using the same metric • Initial-initial, projected-projected, or ending-ending

Economic Exposure • Real exchange rate changes require important strategic and operating decisions.

Performance Evaluation of Foreign Subsidiaries • Evaluating its business units according to their legal entities makes local subsidiary managers see more of a direct link between their decisions and actions, including related evaluative feedback.