(b) Both divisions have recognised the need for a strategic alliance to help them achieve a successful entry intoEuropean markets.Critically evaluate the advantages and disadvantages of the divisions using strategic alliances to develop theirrespective bu

正确答案：
(d) The change in ownership represents a major change in the life of any organisation and the opportunity to convince the various
stakeholders of the strategic direction the firm is going in should not be missed. Mission statements are not something that
can be created at five minutes notice and once created need to be revisited to ensure they are still relevant and engaging.
Some experts argue that the mission can only be developed once the firm’s competitive strategy has been developed. Others
argue that it is the starting point for the whole strategic planning process.
A mission statement expresses the purpose of the business and great care will need to be taken to clarify the new role and
status of the buyout directors. Two other critical stakeholders are the workforce and the customers – alienation of either group
will have serious consequences for the firm. Customers need to be convinced that they should stay with the firm and staff
that there is a future for them in the new set up. Bonar Paint needs to ensure that its reputation for customer care is part of
the statement.
The strategy of the firm in terms of where and how it is going to compete again should create confidence in the key
stakeholders. Developing this clear sense of where Bonar Paint is going and how it is going to get there will be of particular
interest to its financial backers. Expressing the mission of the business will be a key part of any business plan. Bonar Paint
may also choose to emphasise the standards of behaviour that will underpin the way it does business. This may include an
explicit commitment to innovative products and customer service. Once again the impact and relevance to both internal and
external stakeholders is important.
Finally, the buyout managers have to convince stakeholders that the culture and values associated with that culture will be
retained after the change in ownership. Bonar Paint, under the Bonar brothers’ ownership and direction, did not feel that
strategic planning was a necessary activity. A succinct and meaningful mission statement may be an excellent way to
communicate the new ownership and sense of purpose in Bonar Paint.
Creating mission statements that convey a sense of purpose may not be easy for the buyout team. The time spent creating
the statement has to have positive outcomes or it will be time wasted. Creating such a statement with no previous experience
increases the difficulties. Seeing it as an integral part of a strategic planning process is important. Care must be taken to
involve other stakeholders in the process or statements may be made with little meaning for them. The degree of involvement
is also significant; most stakeholders are more likely to be useful as ‘sounding boards’ for testing and refining the statement.
The danger is that a statement is produced that few stakeholders buy into and does not affect attitudes or behaviours towardBonar Paint.

正确答案：
(b) The three strategic goals are to become the leading premium ice cream brand in the UK; to increase sales to ￡25 million;
and to achieve a significant entry into the supermarket sector. On the basis of performance to date these goals will certainly
be stretching. All three strategies will involve significant growth in the company. Johnson and Scholes list three success criteria
against which the strategies can be assessed, namely suitability, acceptability and feasibility. Suitability is a test of whether a
strategy addresses the situation in which a company is operating. In Johnson and Scholes’ terms it is the firm’s ‘strategic
position’, an understanding of which comes from the analysis done in the answer to the question above. Acceptability is
concerned with the likely performance outcomes of the strategy and in particular whether the return and risk are in line with
the expectations of the stakeholders. Feasibility is the extent to which the strategy can be made to work and is determined
by the strategic capability of the company reflecting the resources available to implement the strategy. It is interesting to see
that the three growth related goals are compatible in that becoming the leading premium brand will involve increased market
penetration, product development and market development. If achieved it will increase sales and necessitate a successful
entry into the supermarket sector. Time will be an important influence on the success or otherwise of these growth goals –
five years seems to be a reasonable length of time to achieve these ambitious targets.
Suitability – Churchill is currently a small but significant player at the premium end of the market. This segment is becoming
more significant and is attractive because of the high prices and high margins attainable. This is leading to more intense
competition with global companies. One immediate question that springs to mind is what precisely does ‘leading brand’
mean? The most obvious test is that of market share and unless Churchill achieve the access to the supermarkets looked for
in the third strategic goal, seems difficult to achieve. If ‘leading brand’ implies brand recognition this again looks very
ambitious. On the positive side this segment of the ice cream market is showing significant growth and Churchill’s success
in gaining sponsorship rights to major sporting events is a step in the right direction. The combination of high price and high
quality should position the company where it wants to be. Achieving sales of ￡25 million represents a quantum shift in
performance in a company that has to date only achieved modest levels of sales growth.
Acceptability – as a family owned business the balance between risk and return is an important one. The family to date has
been ‘happy’ with a modest rate of growth and modest return in terms of profits. The other significant stakeholder group is
the professional managers headed up by Richard Smith. They seem much more growth orientated and may be happier with
the risks that the growth strategy entails. The family members seem more interested in the manufacturing side than the
retailing side of the business and their bad previous experiences with growing the business through international market
development may mean they are risk averse and less willing to invest the necessary resources.
Feasibility – again this is linked to how ‘leading brand’ is defined. If as seems likely the brand becomes more widely known
through increasing the number of company owned ice cream stores then a significant investment in retail outlets will be
necessary. Increasing the number of franchised outlets will reduce the financial resources required but may be at the expense
of the brand’s reputation. Certainly there would seem to be a need for increased levels of advertising and promotion –
particularly to gain access to the ice cream cabinets in the supermarket chains. This is likely to mean an increase in the
number of sales and marketing staff. Equally important will be the ability to develop and launch new products in a luxury
market shaped by impulse buying and customers looking to indulge themselves.
Overall, becoming the leading brand of premium ice cream may well be the key to achieving the desired presence in the
supermarket ice cream cabinets, which in turn is a pre-requisite for increasing company sales to ￡25 million. So the three
strategic goals may be regarded as consistent and compatible with one another. However each strategic goal will have to be
broken down into its key elements. For example in achieving sales of ￡25 million what proportion of sales will come from its
own ice cream stores and what proportion from other outlets including the supermarkets? Sales to date of Churchill ice cream
are dominated by impulse purchases but in achieving sales of ￡25 million penetrating the take home market will be essential.
Finally, what proportion of these take home sales will be under the supermarkets own label brands? Over reliance on own
label sales will seriously weaken Churchill’s desire to become the leading national brand of premium ice cream. It looks to
be an ambitious but attainable strategy but will require a significant planning effort to develop the necessary resources andcapabilities vital to successful implementation of the strategy.

正确答案：
(b) Clearly, there is a link between the ability to write a business plan and the willingness, or otherwise, of small firms to carry
out strategic planning. Whilst writing a business plan may be a necessity in order to acquire financial support, there is much
more question over the benefits to the existing small business, such as Gould and King, of carrying out strategic planning.
One of the areas of greatest debate is whether carrying out strategic planning leads to improved performance. Equally
contentious is whether the formal rational planning model is worthwhile or whether strategy is much more of an emergent
process, with the firm responding to changes in its competitive environment.
One source argues that small firms may be reluctant to create a strategic plan because of the time involved; small firms may
find day-to-day survival and crisis management prevents them having the luxury of planning where they mean to be over the
next few years. Secondly, strategic plans may also be viewed as too restricting, stopping the firm responding flexibly and
quickly to opportunities and threats. Thirdly, many small firms may feel that they lack the necessary skills to carry out strategic
planning. Strategic planning is seen as a ‘big’ firm process and inappropriate for small firms. Again, there is evidence to
suggest that owner-managers are much less aware of strategic management tools such as SWOT, PESTEL and mission
statements than their managers. Finally, owner-managers may be reluctant to involve others in the planning process, which
would necessitate giving them access to key information about the business. Here there is an issue of the lack of trust and
openness preventing the owner-manager developing and sharing a strategic plan. Many owner-managers may be quite happy
to limit the size of the business to one which they can personally control.
On the positive side there is evidence to show that a commitment to strategic planning results in speedier decision making,
a better ability to introduce change and innovation and being good at managing change. This in turn results in better
performance including higher rates of growth and profits, clear indicators of competitive advantage. If Gould and King arelooking to grow the business as suggested, this means some strategic planning will necessarily be involved

正确答案：
(b) In many ways Lawson Engineering and its performance explains why Kaplan and Norton developed the balanced scorecard
to overcome the reliance on traditional, and they would argue flawed, financial measures of performance such as return on
capital employed (ROCE). Lawson Engineering as a privately owned company does not have the same pressure to maximise
shareholder wealth, which is the overarching long-term goal of publicly quoted companies. The intangible resources discussed
above – both internal and external – reflect the success of the company in meeting the expectations of the other key
stakeholders in the business, namely customers, employees and suppliers. In terms of the other measures of performance
used in the balanced scorecard the customer perspective seems to be very much a positive area of performance. Lawson
Engineering has developed a clear niche strategy based on the excellence of its products. Market share as a measure of
customer satisfaction is not too relevant as the company has chosen to develop its own markets and is not looking for large
volumes and a dominant market share. The growth of the company suggests that it is both retaining its existing customer
base and acquiring new ones. Clearly there need to be measures in place to show where its growth is coming from. Customer
acquisition is usually an expensive but necessary activity and cutomer retention a more positive route to profitability. Today
there is increasing emphasis on customer relationship management (CRM) and measures to show the share of a particular
customer’s business the company has, rather than the overall market share the company has achieved. Michael Porter has
drawn attention to the fact that having the biggest market share is not necessarily associated with being the most profitable
company in that market. Customer acquisition and retention are both useful indicators of customer satisfaction which many
companies have problems in measuring. Finally, knowing which customers are profitable ones is a key requirement.
Surprisingly there is a lot of evidence to suggest that many companies are unsure which of their products and which
customers actually contribute to their profits.
The third measure in the balanced scorecard is an internal one – the effectiveness or otherwise of the firm’s internal processes.
In turn there are three areas where performance should be measured – innovation, operational processes and after sales
service (where appropriate). Innovation itself is a result of effective internal processes and Lawson Engineering through its
patents and awards has tangible evidence of its success. Many firms are measuring the contribution of products introduced
in the last three or four years – 3M, a global manufacturer of consumer and industrial products looks to achieve 30% of its
sales from products that are less than four years old. Equally important in a company such as Lawson Engineering is the time
taken to develop and get new products to their customers. The strategy of being ‘first to market’ can be a very effective
competitive strategy.
Equally important for the customers are the operational processes that produce and deliver the inputs from their suppliers.
The introduction of JIT and the use of technology to shorten and simplify the links between supplier and customer are ways
of shortening lead times and increasing customer satisfaction. Lawson Engineering has looked to innovate its processes as
well as its products and can look to develop measures of key areas of operational performance. Finally it is worth stressing
that financial performance, customer satisfaction and effective internal processes are all dependent on the people who make
things happen in the firm. Employees and the way they learn and grow in their jobs will determine whether or not the firm
succeeds. Again there is evidence to suggest that Lawson Engineering’s employees are being trained and developed and as
a consequence are well motivated.
The balanced scorecard has been criticised on a number of accounts. Firstly, such a comprehensive set of performance
measures will take considerable time and commitment on the part of senior management to develop. There is a need to avoid
over-complexity and assess the costs and benefits of the process. Secondly, there is the question of whether all the key
stakeholders have shared goals and expectations and whether the measures are focused on short-, medium- or long-term
performance. Thirdly, its focus on internal and external processes may not come easily to firms that have organised themselves
on traditional lines. Most organisations have retained departments within which functional specialists are located, e.g.
production, marketing etc. Changing the way performance is measured may need a radical change in culture and meetsignificant resistance.

正确答案：
(ii) Advantages and disadvantages of being non-executive rather than executive
The UK Combined Code, for example, allows for risk committees to be made up of either executive or non-executive
members.
Advantages of non-executive membership
Separation and detachment from the content being discussed is more likely to bring independent scrutiny.
Sensitive issues relating to one or more areas of executive oversight can be aired without vested interests being present.
Non-executive directors often bring specific expertise that will be more relevant to a risk problem than more
operationally-minded executive directors will have.
Chen’s four members, being from different backgrounds, are likely to bring a range of perspectives and suggested
strategies which may enrich the options open to the committee when considering specific risks.
Disadvantages of non-executive membership (advantages of executive membership)
Direct input and relevant information would be available from executives working directly with the products, systems
and procedures being discussed if they were on the committee. Non-executives are less likely to have specialist
knowledge of products, systems and procedures being discussed and will therefore be less likely to be able to comment
intelligently during meetings.
The membership, of four people, none of whom ‘had direct experience of Chen’s industry or products’ could produce
decisions taken without relevant information that an executive member could provide.
Non-executive directors will need to report their findings to the executive board. This reporting stage slows down the
process, thus requiring more time before actions can be implemented, and introducing the possibility of some
misunderstanding.

参考答案：C

答案：C

解析：

答案：D

解析：

正确答案：

(c) Within the strategy clock, ONA might consider both differentiation and focus. A differentiation strategy seeks to provide
products or services that offer different benefits from those offered by competitors. These benefits are valued by customers
and so can lead to increased market share and, in the context of ONA, higher seat utilisation. Differentiation is particularly
attractive when it provides the opportunity of providing a price premium. In other words, margins are enhanced through
differentiation. Air travellers may be willing to pay more to travel with an airline that offers seat allocation and free in-flight
food and drinks.
However, such a broad-based differentiation strategy may be inappropriate for ONA because of the need to service both
business and leisure travellers. Consequently, the potential strategy also has to be considered in the context of the two sectors
that the company perceives that it services. In the regional sector a focused differentiation strategy looks particularly attractive.
Here, the strategy focuses on a selected niche or market segment. The most obvious focus is on business travel and building
the company’s strengths in this sector. This focus on the business traveller might be achieved through:
– Ensuring that flight times are appropriate for the business working day. This is already a perceived strength of the
company. This needs to be built on.
– Providing more space in the aircraft by changing the seating configuration – and the balance between business and
standard class. ONA currently has a low seat occupancy rate and a reduction in seat capacity could be borne.
– Fewer passengers in the aircraft may also lead to improved throughput times. Loading and unloading aircraft is quicker,
minimising the delays encountered by the traveller.
– Providing supporting business services – lounges with fax and internet facilities.
– Speeding the process of booking and embarkation (through electronic check-in), so making the process of booking and
embarkation easier and faster.
– Providing loyalty schemes that are aimed at the business traveller.
Although this focused differentiation is aimed at the business customer it is also likely that particular aspects of it will be
valued by certain leisure travellers. Given the strong regional brand (people from Oceania are likely to travel ONA) and the
nature of the leisure travel in this sector (families visiting relatives) it seems unlikely that there will be a significant fall off in
leisure travel in the regional sector.
In the international sector, the strategic customer is less clear. This sector is serving both the leisure and business market and
is also competing with strong ‘no frills’ competitors. The nature of customer and competition is different. A strategy of
differentiation could still be pursued, although perhaps general differentiation (without a price premium) may be more effective
with the aim of increasing seat occupancy rate. This sector would also benefit from most of the suggested improvements of
the regional sector – providing more space in aircraft, faster passenger throughput, electronic check-in etc. However, these
small changes will not address the relatively low flight frequency in this sector. This could be addressed through seeking
alliances with established airlines in the continental countries that it services. Simple code share agreements could double
ONA’s frequencies overnight. Obviously, ONA would be seeking a good cultural fit – the ‘no frills’ low-cost budget airlineswould not be candidates for code shares.

ONA’s perception of market segmentation, reflected in splitting regional from international travel and distinguishing leisure
from business appears to be a sensible understanding of the marketplace. However, it might also be useful for them to
consider on-line customers and commission customers (travel agents) as different segments. Perceiving travel agents as the
strategic customer would lead to a different strategic focus, one in which the amount and structure of commission played an
important part.
Finally, whichever strategy ONA adopts, it must continue to review its operational efficiency. An important strategic capability
in any organisation is to ensure that attention is paid to cost-efficiency. It can be argued that a continual reduction in costs
is necessary for any organisation in a competitive market. Management of costs is a threshold competence for survival. ONA
needs to address some of the weaknesses identified earlier in the question. Specific points, not covered elsewhere, include:
– Improved employee productivity to address the downward decline in efficiency ratios.
– Progressive standardisation of the fleet to produce economies of scale in maintenance and training. This should reduce
the cost base.
– Careful monitoring of expenditure, particularly on wages and salaries, to ensure that these do not exceed revenue
increases.
Candidates may address this question in a number of ways. In the model answer given above, the strategy clock is used –
as it uses the term ‘no frills’ in its definition and so it seems appropriate to look at other options within this structure. However,
answers that use other frameworks (such as Ansoff’s product/market matrix) are perfectly acceptable. Furthermore, answerswhich focus on the suitability, acceptability and feasibility of certain options are also acceptable.

正确答案：
(c) Each of the strategic goals will have a profound impact on the marketing mix as it currently exists. As each goal affects the
market position of Churchill developing an appropriate marketing mix will be the key to successful implementation of the
overall growth strategy. The product, the brand and the reputation it creates are at the heart of the company’s marketing
strategy. Their focus on the premium segment of the market seems a sensible one and one which allows a small family-owned
business to survive and grow slowly. Evidence suggests this is a luxury indulgence market reflecting changing consumer tastes
and lifestyles. Managing the product range will be a major marketing activity. While the core products may develop an almost
timeless quality there will be a need to respond to the product innovations introduced by its much larger competitors. The
company’s emphasis on the quality of its products resulting from the quality of its ingredients is at the heart of its competitive
advantage. Growing the product range will also bring the danger of under performing products and a consequent need to
divest such products. Packaging is likely to be a key part of the products’ appeal and will be an area where constant innovation
is important.
Pricing raises a number of issues. Why is Churchill’s core product priced at ￡1 less than its immediate competition? What is
the basis on which Churchill prices this product? Each of the methods of pricing has its advantages and disadvantages. Using
cost plus may create an illusion of security in that all costs are covered, but at the same time raises issues as to whether
relevant costs have been included and allocated. Should the company price in anticipation of cost reductions as volume
increases? Should the basis for pricing be what your competitors are charging? As a luxury product one would assume that
its demand is relatively price inelastic: a significant increase in price e.g. ￡1 would lead to only a small reduction in quantity
demanded. Certainly, profit margins would be enhanced to help provide the financial resources the company needs if it is to
grow. One interesting issue on pricing is the extent to which it is pursuing a price skimming or price penetration policy –
evidence from the scenario suggests more of a price skimming policy in line with the luxury nature of the product.

Place is an equally important issue – the vertical integration strategy of the company has led to company-owned shops being
the main way customers can buy the product. At the same time, this distribution strategy has led to Churchill’s sales being
largely confined to one region in the UK – although it is the most populous. If Churchill has a desire to grow, does it do this
through expanding the number of company owned and franchised outlets or look for other channels of distribution in
particular the increasingly dominant supermarket chains? Each distribution strategy will have significant implications for other
elements in the marketing mix and for the resources and capabilities required in the company.
Finally, promotion is an interesting issue for the company. The relatively recent appointment of a sales and marketing director
perhaps reflects a need to balance the previous dominance of the manufacturing side of the business. Certainly there is
evidence to suggest that John Churchill is not convinced of the need to advertise. There are some real concerns about how
the brand is developed and promoted. Certainly sponsorship is now seen as a key part of the firm’s promotional strategy. The
company has a good reputation but customer access to the product is fairly limited. Overall there is scope for the company
to critically review its marketing mix and implement a very different mix if it wants to grow.
The four Ps above are very much the ‘hard’ elements in the marketing mix and Churchill in its desire to grow will need toensure that the ‘softer’ elements of people, physical evidence and processes are aligned to its ambitious strategy.

正确答案：
(b) Franchising is typically seen as a quick and cost effective way of growing the business but Ramon should be aware of both
the advantages and disadvantages of using it as the preferred method of growth. Franchised chains are argued to benefit from
the sort of brand recognition and economies of scale not enjoyed by independent owner/managers. When combined with the
high levels of motivation normally associated with owner/managed businesses, franchises can be argued to get the best of
both worlds.
Franchising is defined as ‘a contractual agreement between two legally independent companies whereby the franchisor grants
the right to the franchisee to sell the franchisor’s product or do business under its trademarks in a given location for a specified
period of time. In return, the franchisee agrees to pay the franchisor a combination of fees, usually including an up-front
franchise fee, royalties calculated as a percentage of unit revenues, and an advertising conbribution that is also usually a
percentage of unit sales.’
Ramon is considering a type of franchising called ‘business-format franchising’, where the franchisor sells a way of doing
business to its franchisees. Business-format franchising is a model frequently found in the fast food and restaurant industry,
hotels and motels, construction and maintenance, and non-food retailing. Often these franchises are labour intensive and
relatively small-scale operations.
Franchising is seen as a safer alternative to growing the business organically, so while this may be true of well established
global franchises, failure rates among franchised small businesses were greater than those of independent businesses (in one
US study a 34·7% failure rate for franchises as opposed to 28·0% for independents over a six or seven year period). Often
it is the failure of the franchisor that brings down its franchisees. Failure stems from the franchisee not only having to rely on
their own skills and enthusiasm but also the capacity of the franchisor and other franchisees to make the overall operation
work.
The advantages to the franchisee are through gaining access to a well-regarded brand name that will generate a higher level
of demand and use of a tried and tested business model that should reduce the franchisee’s operating costs. Both of these
benefits stem from being a member of a well-established franchised system. Yet La Familia Amable along with many other
franchises will be new and small. These smaller franchises tend to be regional in scope, and fairly unknown outside their
regional market. This has a significant effect on what the franchisees can expect to gain from their franchisors and their
prospects of success. Both parties need to carefully assess the strengths and weaknesses of the system. Companies growing
via franchises need to take the time to understand their business model thoroughly and determine how franchising fits with
their long-term strategy. Care must be taken with the franchise agreement that creates a genuine partnership with the rightbalance between freedom and control over the franchisees.

正确答案：
(b) Strategic and operational risks
Strategic risks
These arise from the overall strategic positioning of the company in its environment. Some strategic positions give rise to
greater risk exposures than others. Because strategic issues typically affect the whole of an organisation and not just one or
more of its parts, strategic risks can potentially concern very high stakes – they can have very high hazards and high returns.
Because of this, they are managed at board level in an organisation and form. a key part of strategic management.
Operational risks
Operational risks refer to potential losses arising from the normal business operations. Accordingly, they affect the day-to-day
running of operations and business systems in contrast to strategic risks that arise from the organisation’s strategic positioning.
Operational risks are managed at risk management level (not necessarily board level) and can be managed and mitigated by
internal control systems.
The secrecy option would be a strategic risk for the following reasons.
It would radically change the environment that SHC is in by reducing competition. This would radically change SHC’s strategic
fit with its competitive environment. In particular, it would change its ‘five forces’ positioning which would change its risk
profile.
It would involve the largest investment programme in the company’s history with new debt substantially changing the
company’s financial structure and making it more vulnerable to short term liquidity problems and monetary pressure (interest
rates).
It would change the way that stakeholders view SHC, for better or worse. It is a ‘crisis issue’, certain to polarise opinion either
way.
It will change the economics of the industry thereby radically affecting future cost, revenue and profit forecasts.
There may be retaliatory behaviour by SHC’s close competitor on 25% of the market.
[Tutorial note: similar reasons if relevant and well argued will attract marks]

正确答案：
(b) Code of ethics and strategic positioning
Strategic positioning is about the way that a whole company is placed in its environment as opposed to the operational level,
which considers the individual parts of the organisation.
Ethical reputation and practice can be a key part of environmental ‘fit’, along with other strategic issues such as generic
strategy, quality and product range.
The ‘fit’ enables the company to more fully meet the expectations, needs and demands of its relevant stakeholders – in this
case, European customers.
The ‘quality’ of the strategic ‘fit’ is one of the major determinants of business performance and so is vital to the success of
the business.
HPC has carefully manoeuvred itself to have the strategic position of being the highest ethical performer locally and has won
orders on that basis.
It sees its strategic position as being the ethical ‘benchmark’ in its industry locally and protects this position against its parent
company seeking to impose a new code of ethics.
The ethical principles are highly internalised in Mr Hogg and in the company generally, which is essential for effective strategic
implementation.

正确答案：
(a)MaximisinggroupprofitDivisionLhasenoughcapacitytosupplybothDivisionManditsexternalcustomerswithcomponentL.Therefore,incrementalcostofDivisionMbuyingexternallyisasfollows:CostperunitofcomponentLwhenboughtfromexternalsupplier:$37CostperunitforDivisionLofmakingcomponentL:$20.ThereforeincrementalcosttogroupofeachunitofcomponentLbeingboughtinbyDivisionMratherthantransferredinternally:$17($37–20).Fromthegroup’spointofview,themostprofitablecourseofactionisthereforethatall120,000unitsofcomponentLshouldbetransferredinternally.(b)CalculatingtotalgroupprofitTotalgroupprofitswillbeasfollows:DivisionL:Contributionearnedpertransferredcomponent=$40–$20=$20Profitearnedpercomponentsoldexternally=$40–$24=$16(c)ProblemswithcurrenttransferpriceandsuggestedalternativeTheproblemisthatthecurrenttransferpriceof$40perunitisnowtoohigh.Whilstthishasnotbeenaproblembeforesinceexternalsupplierswerecharging$42perunit,itisaproblemnowthatDivisionMhasbeenofferedcomponentLfor$37perunit.IfDivisionMnowactsinitsowninterestsratherthantheinterestsofthegroupasawhole,itwillbuycomponentLfromtheexternalsupplierratherthanfromDivisionL.ThiswillmeanthattheprofitsofthegroupwillfallsubstantiallyandDivisionLwillhavesignificantunusedcapacity.Consequently,DivisionLneedstoreduceitsprice.Thecurrentpricedoesnotreflectthefactthattherearenosellinganddistributioncostsassociatedwithtransferringinternally,i.e.thecostofsellinginternallyis$4lessforDivisionLthansellingexternally.So,itcouldreducethepriceto$36andstillmakethesameprofitonthesesalesasonitsexternalsales.ThiswouldthereforebethesuggestedtransferpricesothatDivisionMisstillsaving$1perunitcomparedtotheexternalprice.Atransferpriceof$37wouldalsopresumablybeacceptabletoDivisionMsincethisisthesameastheexternalsupplierisoffering.

答案：D

解析：

答案：D

解析：