As the commercial world continues its exponential rate of change, every organization looks to find ways that will satisfy the insatiable appetite of financial markets for continuous growth. To this end, FDI plays an extraordinary and growing role in global business. It may provide an enterprise with new markets and marketing channels, cheaper production facilities, and access to new technology, products, skills, and financing. For a host country, or the foreign enterprise that receives the investment, FDI may provide a source of new technologies, capital, processes, products, organizational technologies, and management skills and, as such, is able to provide a strong impetus to economic development.
In the past decade, FDI has come to play a major role in the internationalization of business. Reacting to changes in technology, growing liberalization of the national regulatory framework governing investment in enterprises, and changes in capital markets, profound changes have occurred in the size, scope, and methods of FDI. New information technology systems, and the decline in global communication costs, have made the management of foreign investments far easier than in the past. Furthermore, the sea change during the same period of time in trade and investment policies and the global regulatory environment, including trade policy and tariff liberalization, easing of restrictions on foreign investment and acquisition in many nations, and the deregulation and privatization of many industries, has probably been the most significant catalyst for FDI’s expanded role.
For small- and medium-sized companies, FDI represents an opportunity to become more actively involved in international business activities, which, in the fullness of time, will inevitably lead to an active involvement in transfer-pricing activities. No doubt many of you will consider it premature to be thinking of things that don’t apply in the present. You may be right, but when you are making substantial investments in knowledge-management activities within your organization, thinking about the possibilities that the future will bring is a critical part of the planning process. Nowhere is this more apparent than in the design of management systems that are intended to bring transparency to business processes and relationships.
The aim of this book was to provide, which I trust I have done, new thinking of how we determine the price of goods and services exchanged between economic units belonging to the same organizational family—one that will reduce friction and conflict between all of the interested factions. Of course, nothing may ever be considered all encompassing and this surely also applies to what I have written in this book. The ideas and concepts are mine, and mine alone, so there is every possibility that they could be improved upon. I can only hope that the model I have described will act as a catalyst in many organizations for thinking about a more comprehensive way of ensuring that their transfer prices more accurately reflect the drivers of economic wealth in each and all of their many functional areas.
We have now come to the end of this book. I hope you have enjoyed reading it and that, in some way, it will provide you with some good ideas for your organization. But, to quote a statesman1 from an earlier era: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
Thank you so much!