If a company has two profit centers where one supplies the other with necessary ingredients to a company product, and if the relationship between two centers is clearly inimical to company success, then:

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Quizplus · Accepted Answer

If the relationship between the two profit centers is clearly inimical to company success, it is indicative of a larger organizational problem. In such a situation, the company should probably reorganize to address the underlying issues of coordination and communication between the two profit centers. Implementing transfer pricing systems or changing the management control system may not address the root cause of the issue and may only provide temporary solutions.

If a Company Has Two Profit Centers Where One Supplies