Fitting responsibility center structures to strategy: Bakery Products International

•Bakery Products International faced major dysfunctional behavior after changing its strategy.•Students, in the role of business consultants, analyze and solve the issues associated with responsibility centers, transfer prices, and changes in company strategy.•Responsibility centers and transfer prices should align managers’ goals with strategy. This case is about Bakery Products International, a family-owned company headquartered in Belgium that produces bakery ingredients. It owns 40 sales subsidiaries around the world that operate as profit centers. The transfer pricing system is based on standard manufacturing cost plus a profit mark-up. The company has been following a product leadership strategy focusing on the artisanal market, but due to changes in the market environment top management wishes to increase market share in the price-sensitive industrial market. You are hired as a business consultant to redesign the responsibility center structure and transfer pricing system in line with the new competitive strategy.