Designing a resource allocation model in order to reduce undesirable outputs based on data envelopment analysis, an applied study in provincial telecommunications companies.

Academic Thesis for obtaining a master's degree Field: Business Administration Major: Financial Management

Abstract

In today's world, due to the increasing speed of science and knowledge, organizations are forced to use communication technology to adapt to changing environmental conditions, and in this direction they must invest. With the entry of a telecommunications company into the stock market, information on the performance status and efficiency of provincial telecommunication companies is inevitable for the officials, especially the shareholders of this company. is In this research, in order to evaluate the financial performance and optimal allocation of financial resources in order to reduce the unfavorable output of telecommunications companies, the method of data coverage analysis has been used. Data envelopment analysis is a non-parametric linear programming technique that is used to measure the relative efficiency of organizational units. Considering the importance of the telecommunications company as the leader in the country's communication technology and the need to evaluate its performance, in this research, using the audited financial statements of 27 provinces of the country ending in March 2012, favorable and unfavorable input and output variables were extracted and analyzed through GAMS software. In the first stage, the results showed that the joint-stock telecommunications companies of North Khorasan, Kohgiluyeh, Boyer-Ahmad and Isfahan provinces had the best financial performance, respectively, and other companies were less efficient. In the next stage, optimal allocation of resources to decision-making units was done in order to reduce the undesirable output, and in the final stage, after optimal allocation of resources, we re-evaluated the efficiency, and we came to the conclusion that according to the above conditions, all the provincial telecommunications joint stock companies were efficient. In this way, we found that if we use the resource allocation model in order to reduce the undesirable output for the decision-making units, all the units will be at the efficiency limit.

Key words: performance evaluation, data envelopment analysis, undesirable outputs, telecommunications joint-stock companies, efficiency

In the classical methods of production theory in general and data envelopment analysis in specific expression, at the level of technology, the goal is to minimize inputs and maximize outputs. While the units and organizations in the process of activity and production may produce undesirable outputs in addition to producing the required desirable outputs. The presence of undesirable outputs plays an important role in estimating the efficiency of these units. In the evaluation of such units, the goal is to use a method that, in addition to being compatible with the concepts of production theory, can help reduce undesirable outputs and increase desirable outputs. Therefore, in this research, we design a resource allocation model with regard to the undesirable outputs between different decision-making units based on the framework (DEA [1]).

1-2- Statement of the problem

Nowadays, experts and thinkers in the field of management emphasize the importance and place of performance evaluation models as one of the most reliable indicators of the development of societies and organizations and also as an important and effective factor in realizing development goals in individual and social dimensions (Paul and Jim [2], 2005). The complexity of the environment in the competitive field of business and the increase in customer expectations have revealed the necessity of knowing the strengths and weaknesses of the organization and continuous improvement of productivity. Therefore, one of the basic concerns of current organizations is to achieve a comprehensive, reliable and flexible performance evaluation method, so that by using it, they can obtain accurate and sufficient information about their current position and, looking to the future, learn from past mistakes (Imad [3], 2006).

Meanwhile, the financial structure has also been proposed as the most important factor affecting the valuation of companies and for their direction in the capital markets. The current changing and changing environment has made the rating of companies in terms of credit dependent to some extent on their financial structure. This situation has brought their strategic planning closer to the selection of effective resources for the goal of "maximizing shareholders' wealth" (Ferguson and Listiko [4], 1998).

In fact, it should be said that the optimal performance of the economic and financial system in any institution and company is dependent on the existence of an efficient and powerful financial sector (1997. [5] Boquist, Milbourn, Thakor, Bacidore). The financial performance of an organization is one of the most important components of the process of evaluating the financial performance of organizations.Data Envelopment Analysis (DEA), one of the valid methods in evaluating the financial performance of similar companies, is based on inputs and outputs. In this method, by using mathematical planning models, a border consisting of companies with the best relative efficiency is obtained, and this border is considered as a criterion for evaluating performance and formulating strategies to improve the performance of companies. In data envelopment analysis, due to the non-use of the production function, no prejudgment is made about the investigated companies, and hence, DEA models, due to the use of fewer hypotheses in the evaluation process of companies, have achieved a special position compared to similar models.

Institutions and organizations related to clients are the most important parts that need to evaluate financial performance and considering that on the threshold of the knowledge and information century, any type of planning, decision making And in general, any kind of vital activity, without the use of communication and its organization based on new information technologies, is far from the realities of the global society, communication is the most important factor in social, economic and cultural development and has a very important place. Undoubtedly, societies will have a more suitable situation that, using various communication tools, always try to get information about the current issues and various events in different parts of the world. Therefore, it can be said that in the current era, information and communication are considered a national capital and support for realizing the goals of development programs and finally, the independence and self-sufficiency of countries. Telecommunication technology has developed rapidly in recent years and has provided the possibility of offering a wide range of services to home subscribers and organizations.  In addition, the growth of communication has caused the telecommunications industry to undertake a variety of tasks to support the growth of financial developments. However, in the new millennium, this industry has faced with the increasing growth of the unpredictable business environment, the competitive market caused by the globalization of business. The penetrating effect of global competition has required telecommunication organizations to evaluate their financial performance (Loomis, and Taylor [6], 2001). In such a situation, performance measurement can be a good basis for comparing the current conditions of the organization with the past conditions, and it can be used as a tool for future planning of the organization. At the same time, performance measurement can be used as a tool for modeling. In this method, among similar units, the unit that is more efficient is selected as a model and in order to increase efficiency, it is taken as a model.

Efficiency of economic units in order to optimize scarce resources is extremely important. In order to find effective techniques for evaluating efficiency, economics has turned to mathematics, especially mathematical programming. In many studies in this field, they seek to increase the output or decrease the input, in these models, the presence of unfavorable factors has not been taken into account, if when evaluating the performance, the way we approach favorable and unfavorable factors should be different. In this research, we have focused on the data coverage analysis model with unfavorable factors, and based on that, the results of the evaluation of the efficiency of 27 provincial telecommunications companies of the country in the fiscal year ending March 2013 will be examined.

According to The mentioned points, in the present research, we seek to determine the efficiency of the provincial telecommunication joint stock companies and also considering the problem of adverse outputs, we seek to reduce the undesirable output defined in the financial performance of the companies (trade receivables from other parties) to the minimum possible amount by optimally allocating the resources defined in the financial performance of the provincial telecommunication joint stock companies (asset volume, capital volume, number of employees, personnel cost, operating cost) and we must know that if new resources are generated in a process, how can it be added to Is there a fair way to reduce the undesirable outputs and distribute them among the units?

1-3-Importance and necessity of research

In this century, new developments have caused the service sector to expand at a very fast pace, so that according to the available statistics, nearly 70% of the workforce is working in the service sector. Telecommunication technology has developed a lot in recent years and provides the possibility of offering a wide range of services to household subscribers and organizations. and along with this development, privatization has also played an important role in this field (Loomis, and Taylor, 2001).