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F. EXCERPTS FROM FINANCIAL CONTROL OF MULTINATIONAL OPERATIONS, BY EDWARD C. BURSK, JOHN DEARDEN, DAVID F. HAWKINS AND VICTOR M. LONGSTREET

FINANCIAL CONTROL

OF

MULTINATIONAL OPERATIONS

A research study
prepared for

FINANCIAL EXECUTIVES
RESEARCH FOUNDATION

by

Edward C. Bursk

Editor, Harvard Business Review, and
Chairman, International Management and
Marketing Group

John Dearden

Herman C. Krannert Professor of Business
Administration, Harvard Business School

David F. Hawkins, Professor of Business
Administration, Harvard Business School

Victor M. Longstreet, Vice President
International Management and Marketing Group

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Financial Control of Multinational Operations
Copyright 1971

Financial Executives Research Foundation
50 West 44th Street, New York, N.Y. 10036

Library of Congress Catalog Card Number 75-153410 Printed in the United States of America

$6.00

First Printing

As the research arm of Financial Executives Institute, the basic objective of the Research Foundation is to sponsor fundamental research and publish authoritative material in the fields of business management with particular emphasis on the principles and practices of financial management and its evolving role in the management of business.

Publication of a research study should not be interpreted as constituting endorsement by the Board as a whole, or by individual Trustees.

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Preface

IN THE

IN THE PAST TWO DECADES THE RISE OF THE MULTINATIONAL CORPORATION has been one of the most remarkable phenomena of the business scene. Numerous authorities have cited the statistics on the growth of these firms in terms of product output and sales dollars. However, it is important to note that the great multinational companies of today not only export products but also export technology, technicians and know-how outside of their own. national borders.

One area of management "know-how" is financial control but many multinational companies have found that this technology is difficult to export. As a result, existing control systems have been adapted to meet the specific needs of a multinational firm which operates in many countries and whose management may be drawn from the citizenry of many countries also.

How effective have these controls been for multinational firms? To what degree do they differ from controls used for domestic operations? Should new financial control systems be developed specifically for multinational operations?

This study has been designed to answer these questions, to codify the methods of financial control currently in use by multinational companies, to evaluate the success of these control systems and to suggest new and improved methods of control.

Each of the four researchers who contributed to this study is an internationally recognized authority on management control. It is our hope that the results of their efforts and those of the Project Steering Committee (see page 2) will be of significant value to every financial executive who, if he has not already had to grapple with the problem of controlling multinational operations, will certainly have to face this problem in the near future.

Donald P. Jones

President

Financial Executives Research Foundation

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