shared service Flashcards
Definition
-Concentration of support services that are spread across a decentralized organisation to service the needs of multiple internal customers.
-aim is to reduce costs and quality taken for the service to be delivered
-Might focus on non strategic operations such as account payable, finances, payroll and IT
-Shared services are usually classified as profitt centers rather that cost centers
-if something is classified as a cost center rather than a profit center it creates a disincentive for the managers to seek valuue adding processes
- so if shared services were classified as a profit cenetr, managers are usully encouraged to break evn ratther than profits.
-so the prices charged for shared services should be high enough to recover costs but not high enough to make internal customers look at it as a burden.
-so this problem is solved by a process called transfer price where business units decie the price.
