CIMAPRO19-P03-1 Exam - Topic 6 Question 66 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 66
Topic #: 6

M is a multinational IT company with headquarters in Asia and with operations in all continents.

It is now trying to expand its operations in Europe.This is seen as a major challenge as the European market is very well developed with established players in fierce competition against each other.

As well as developing and producing its own products, it sources products across Asia, America and Europe as part of infrastructure deals which have to include as much of its own equipmentas possible. In doing this, transfer prices can be set in YEN, USD, EURO, GBP. Transfer prices are revised every month in line with production times as most goods are made on short order timeswith sales cycles running at 3-4 months.

The longer sales cycle against committed transfer pricing presents problems as customers expect quotes to be valid for 90 days whereas M's suppliers reserve the right to revise pricing at the end of every month with quotes only valid for 8 days in the following month.

How should M deal with this problem?

AUse a centralised treasury function to set up unilateral netting so that all trades can be balanced off against each other before any money is transferred.

BOffer a small discount for anycustomers who pay in M's home currency.

CDo nothing, everyone is in the same situation.

DIncentivise sales personsto be more accurate whenforecasting prices.

Show Suggested Answer

Suggested Answer: B, E, F

by Terina at Apr 26, 2024, 01:56 PM

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Caprice

3 months ago

Surprised they haven't thought of this sooner!

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Loreen

3 months ago

Really? Do salespeople actually have control over pricing accuracy?

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Kimbery

3 months ago

Offering discounts for home currency payments (option B) could attract more customers!

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Madonna

4 months ago

I disagree, option C seems like a cop-out.

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Regenia

4 months ago

M should definitely go with option A, centralised treasury sounds smart.

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Letha

4 months ago

Doing nothing feels risky, but I guess if everyone is in the same boat, maybe it’s not as bad? Still, I wouldn’t want to be the one to take that chance.

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Chandra

4 months ago

I recall a similar case study where a company faced pricing challenges in Europe. They ended up incentivizing their sales team, which seemed to improve forecasting accuracy.

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Sina

4 months ago

I think offering a discount for payments in the home currency could help stabilize cash flow, but I’m unsure if it’s enough to solve the pricing issue.

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Rasheeda

5 months ago

I remember we discussed the importance of managing transfer pricing in our last class, but I'm not sure if unilateral netting is the best approach here.

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Cecil

5 months ago

Option C of doing nothing doesn't seem like a great idea. We need to be proactive in addressing this challenge. I'll have to weigh the pros and cons of the other options.

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Minna

5 months ago

Hmm, the centralized treasury function idea in option A could help balance things out, but I'm not sure if that's the most practical approach. I'll have to think this through.

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Judy

5 months ago

This seems like a tricky situation with the fluctuating transfer prices and long customer quote periods. I'll need to carefully consider the options to find the best solution.

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Daren

5 months ago

Offering a discount for customers who pay in the home currency, as in option B, might be a good way to incentivize that and reduce the impact of the price changes. I'll keep that in mind.

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Jennie

5 months ago

This looks like a straightforward SQL question. I'm pretty confident the answer is A, CREATE FUNCTION, since that's the standard command used to define user-defined functions in a database.

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Denny

5 months ago

I think the key is to prioritize requirements after the maintain requirements task is complete. That way you have a solid understanding of all the requirements before prioritizing.

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Edda

5 months ago

I think I know the difference between default zones and immutable zones, but I want to double-check the details before answering.

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Ashton

9 months ago

I'd say M should just start a new currency, the 'M-coin,' and force all their customers to use it. Problem solved!

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Estrella

9 months ago

Incentivizing sales people to forecast prices more accurately is a good idea, but it doesn't directly address the underlying issue of the misaligned sales cycle and supplier pricing.

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Tasia

9 months ago

Doing nothing is not a viable option. The company needs to proactively address this challenge to stay competitive in the European market.

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Karrie

8 months ago

D) Incentivise sales persons to be more accurate when forecasting prices.

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Eleni

8 months ago

Doing nothing is not a viable option. The company needs to proactively address this challenge to stay competitive in the European market.

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Jess

8 months ago

B) Offer a small discount for any customers who pay in M's home currency.

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Nancey

8 months ago

A) Use a centralised treasury function to set up unilateral netting so that all trades can be balanced off against each other before any money is transferred.

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Yvonne

10 months ago

Offering a discount for the home currency might work, but it could create complications with the transfer pricing and supplier relationships.

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Jennifer

9 months ago

C) Do nothing, everyone is in the same situation.

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Wilburn

9 months ago

B) Offer a small discount for any customers who pay in M's home currency.

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Mozell

10 months ago

A) Use a centralised treasury function to set up unilateral netting so that all trades can be balanced off against each other before any money is transferred.

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Shayne

10 months ago

Option A seems like the most logical choice. A centralized treasury function can help manage the currency risk and cash flows more effectively.

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Silva

9 months ago

Option A seems like the most logical choice. A centralized treasury function can help manage the currency risk and cash flows more effectively.

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Shayne

10 months ago

A) Use a centralised treasury function to set up unilateral netting so that all trades can be balanced off against each other before any money is transferred.

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