The Dynamical Behaviour and Control of an Enterprise

Abstract

This thesis develops a method to forecast the cash flows that determine the value of an enterprise. From a control engineers perspective, three stages arise to develop such a method: the research, the system and the control part. The research part presents the results of a control theoretic analysis of PricewaterhouseCoopers’ (PwC) valuation methods. The subject of the analysis in this thesis considers an enterprise in the car leasing business. It addresses the fact that current cash flow forecast methods have limitations that can be overcome by using the tools of Systems and control. This part determines that three important agents influence the cash flow of an enterprise: the firm, its management and its consumer. The system part develops an LTI model in such a way that its dynamical behaviour aligns with the behaviour of the firm and its consumer. This part uses bond graphs and the analogies of economic engineering to build a fifth-order mechanical system that corresponds to the firm and its consumer. The system includes the interaction between the firm and its customer in order to determine price, output, and resource allocation decisions. The control part designs two controllers that align with the control actions of management in various market situations. Proportional-integral-derivative (PID) control as management deals with growth reference signals and unexpected disturbances in future market situations. Furthermore, management strives to maximize profit. This part designs an optimal controller that optimizes energy flows to maximize the profit of an enterprise by analogizing cash flow as energy. The benefit of modeling an enterprise with a control theoretic approach is that the model incorporates high-order effects such as price changes and management decisions, which results in a more realistic representation of reality.