Document Type

Article

Publication Date

1-2015

Subject: LCSH

Capital investments

Disciplines

Finance and Financial Management

Abstract

The objective of this paper is to describe how a valuation decision model for a firm in a multi-country environment can be used to determine the optimal value chain. The paper extends the initial work of Rainish and Mensz (2012). The paper examines how a global firm can optimize its value chain and how that chain will be affected when the value of various key variables change. Variables were selected (e.g. labor costs, transportation costs and transfer price tax rates) from recent studies by consulting firms Deloitte (2013) and the Boston Consulting Group (2014). The data used in the model was extrapolated from the financial statements of a publicly traded multinational corporation and modified slightly in order to preserve anonymity. The model conclusively demonstrates that a firm's production decision to buy or build, the customer location and tax effects are interdependent and that the model to optimize the value of the firm and its value chain is a function of the interdependencies of the input and financing factors. The paper also briefly discusses its implications on government policy for the economy and the firm. The conclusions, recommendations and implications reached in this paper are generalizable and appropriated for developing best practices in value chain modeling global capital investment.

Comments

© 2015 by the authors. Authors retain the copyright to the manuscripts published in AABRI journals. Please see the AABRI Copyright Policy at http://www.aabri.com/copyright.html

Robert Rainish is Professor Emeritus in the Department of Finance at the University of New Haven.

Publisher Citation

Rainish, R. M., Mensz, P., Mohs, J. N. (2015). Global financial model for the value chain. Journal of Finance and Accountancy, 18(January 15, 2015), 16.

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