Jane Fleming recently graduated from college with a degree in landscape architecture. Her father runs a tree, shrub, and perennial-flower nursery, and her brother has a business delivering topsoil, mulch, and compost. Jane has decided that she would like to start a landscape business. She believes that she can generate a nice profit for herself, while providing an opportunity for both her brother?s and father?s businesses to grow.
One potential problem that Jane is concerned about is that her father and brother tend to charge the highest prices of any local suppliers for their products. She is hoping that she can demonstrate that it would be in her interest, as well as theirs, for them to sell to her at a discounted price.
Write a memo to Jane explaining what information she must gather, and what issues she must consider in working out an arrangement with her father and brother. In your memo, discuss how this situation differs from a ?standard? transfer pricing problem, but also how it has many of the characteristics of a transfer pricing problem.
This question was answered on: Jul 11, 2017
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