As per Chapter V, Annex I of the OECD Transfer Pricing Guidelines, multinationals should provide information about their main value drivers.

Value drivers are about how a specific product or service creates value for customers and it is the unique way in which multinationals try to differentiate themselves and create value for their owners.

Relevant value drivers will derive from the characteristics of the multinational’s industry and the competitive strategy choices it has made to be successful in that industry. For example, a multinational aiming to be the lowest-cost competitor would have value drivers such as e.g., procurement excellence, manufacturing efficiency, and supply chain efficiency. A niche brand multinational would be more likely to rely on, e.g., superior brand management, product development, and top retail locations.

Value drivers typically relate to:
✔️ Human capital – employees’ knowledge, skills, experiences, abilities, motivation, and tasks.
✔️ Customer – knowledge embedded in relationships with customers.
✔️ Process – expressions of key business activities focused on economies of scale, quality and efficiency.
✔️ Innovation – innovation measured as patents obtained and the importance of new products.
✔️ Regulatory – anticipation of legislative changes, increased compliance, and the importance of changes with regard to environmental, social, and governance responsibilities.

Examples of value drivers can be found in publicly available annual reports of listed companies or simply by searching on Google and typing “value drivers [company]”.

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