Question: Tech Bicycles Pty Ltd ('Tech Bicycles') sells high performance bicycle products via a range of distribution channels including retail stores and e-commerce. The 'Tech Bicycles'

Tech Bicycles Pty Ltd ('Tech Bicycles') sells high performance bicycle products via a range of distribution channels including retail stores and e-commerce. The 'Tech Bicycles' brand evokes engineering excellence and superior performance throughout the cycling community. With 56 employees, the firm is structured around three business units: Frames; Bicycles; and Sales.

Tech Bicycles' Managing Director, Jack, is pursuing a strategy of vertical integration. Innovation is key - innovative design, innovative manufacturing, and innovative marketing. Jack believes that innovation stems from collaboration between business units.

Jack needs an appropriate internal transfer pricing policy that will allow Tech Bicycles to measure the financial performance of each work-unit.

According to Robert Eccles' (1983) framework, select the two most appropriate internal transfer policies for Tech Bicycles for Jack to consider.

Group of answer choices

1. Full sourcing autonomy and internal transfer price based on market price

2. No sourcing autonomy and internal transfer price based on cost

3. Full sourcing autonomy and internal transfer price based on cost

4. Full sourcing autonomy and internal transfer price based on a dual pricing method

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