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A MULTI-OBJECTIVE DECISION SUPPORT SYSTEM FOR GLOBAL FINANCING STRATEGIES OF THE MULTINATIONAL CORPORATION (GOAL PROGRAMMING (GP), LONG-TERM)

HYUN BOK EOM, University of Nebraska - Lincoln

Abstract

The purpose of this research is to develop a goal programming based decision support system (DSS) for global financing strategies of the multinational corporation. The global financing decision is characterized by the uncertain foreign exchange rates and uncertain political conditions of each operating host country. Because of the nature of the uncertainty involved in the decision process, operations research (OR)/management science (MS) models themselves do not always provide satisfactory solutions for the financing problems of an MNC. On the other hand, managerial judgement alone is also inadequate because of the complexity, size of the decision variables, and numerous and often conflicting objectives of global financing strategies. Therefore, the effectiveness of global financing decisions may only be improved by simultaneous use of managerial judgement and a well designed DSS. The proposed DSS can assist financial managers of the MNC in their strategic, financial planning process through broadening the focus of managers and extending limits on managers as information processors. The global financing decision requires three consecutive stages of interactions between managers and the proposed DSS. The first stage is primarily concerned with the adjustments of the cost of capital and the consolidated firm's financial structure (selection of an appropriate adjusted cost of capital). In the second stage, the financing decision process is analyzed to identify and select a best priority structure. In the third and final stage, with the information derived about the fixed cost of financing and priority structure, managers can incorporate their "what if" types of managerial queries in their decision making process. The DSS allows MNC financial managers to choose an appropriate global financing strategy to satisfy multiple, and often conflicting management goals and to effectively analyze the trade-offs among costs, foreign exchange risks, political risks, and managerial motivation goals.

Subject Area

Management

Recommended Citation

EOM, HYUN BOK, "A MULTI-OBJECTIVE DECISION SUPPORT SYSTEM FOR GLOBAL FINANCING STRATEGIES OF THE MULTINATIONAL CORPORATION (GOAL PROGRAMMING (GP), LONG-TERM)" (1985). ETD collection for University of Nebraska-Lincoln. AAI8526620.
https://digitalcommons.unl.edu/dissertations/AAI8526620

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