Pricing Mechanisms

“Pricing Mechanisms and Shared Service Centres” Ye Lu

Ye began her studies here at the School of Business and Economics, Loughborough in April 2012.  She has began defining problems through researching literature on SSCs and pricing mechanisms.  Find more detail about Ye’s project below…:

The focus of this study is the pricing mechanism used in the decentralised firms. Pricing, as one of the four elements of marketing mix, is the only one factor that brings revenue to the company and can be used to balance the other factors. However, pricing strategy has been neglected by accounting researchers.

The research in pricing strategies has plenty of practical implementations for Shared Service Centres (SSCs). Facing the threats from other outsourcing companies, the SSC’s aim is to provide the best service to other divisions at a lower price, whilst ensuring that the price should cover the full cost and make sure that it operates efficiently. Also in the future, if the SSC wishes to provide service to another organisation, its price should be competitive.

Usually within a normal firm, transfer pricing mechanisms will be the tool used to balance the interests of different divisions. The service providing divisions have the power to set the price because they are the only choice. However, in the shared service organisation, the situation is different. The Shared Service Centre is a semi-autonomous division within the firm and, in theory, the divisions have the right to choose the service provided by the SSC or the outsourcing companies. In light of this, the pricing strategy goes beyond the pure internal transfer pricing issues, for example, power, politics, overarching corporate strategy, asymmetric information etc. The appropriate pricing method should balance the benefits of both SSC and other departments and add value to the firm.

If you are interested in completing a PhD within the SSR Research team then please contact Tracey Preston at phdinbusiness@lboro.ac.uk for further information and funding details.

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