Study On The Strategic Alliance Of Finance Lease Company

After Regulations on Financial Lease Companies was introduced by China Banking Regulatory Commission in2007, China’s financial lease industry divided into three-the bank group, the manufacturer group and the third-party. Now the industry has entered a new development stage, during which both the number of companies and their business volume are increasing rapidly. The financial lease companies cooperate with each other in the form of alliances, and this situation is the most obvious in the bank group with a networked tendency. However, academic research on financial lease alliances is far from sufficient, with a host of problems to be solved to guide the industry. This research intensively explores the financial lease alliances in terms of forming mechanism, the alliance network and effectiveness of alliances.By summarizing the current status and reviewing previous literature, this research points out some drawbacks in the industry. Firstly, the range of services needs to be broadened:the financial lease companies are supposed to offer service in different levels and for different fields. Secondly, sources of finance are limited, and are susceptible to policy change. Thirdly, the industry is still in its infancy. Compared with the huge market, companies lack driving forces to compete with each other. Finally, the awareness of forming alliances is insufficient all across the industry. The research conducts case study in three financial lease companies:Caterpillar, Minsheng and Yuandong from the manufacturer group, the bank group and the third-party respectively. Their business models, alliance forms, and risk management modes are different from each other, offering referential experience for each other.Study on the forming mechanism is based on the Resource Dependence Theory, Resource-based Theory, Organizational Learning Theory, Competitive Strategy Theory, Transaction Cost Theory. The financial lease alliances are classified, and the forming mechanisms are matched with each kind. According to the forming mechanism, the alliances will spread to more companies, and tend to cooperate on risk management and knowledge sharing. Additionally, those who can lead the alliances and gains competitive advantage will stand out in the industry.Study on the effectiveness of alliances is based on two game theory models. Business modes of financial lease companies are divided into independent modes and cooperative modes. Then the cooperative modes can be divided into two:entrusting other financial lease company at the cost of administration expense (mode one), or cooperating by sharing the income (mode two). Two dynamic game models of complete information (the basic model and the external income model) are built and solved to compare the effectiveness in the two cooperative modes. The result shows that, in the basic model, mode one is more feasible, while in the external income model, mode two is more feasible, and can offer extra benefits to both players.Study on the alliance networks is based on the social network analysis. By structuring the alliance network, the research analyzes the scale and the centrality of each company, then builds up the role definition model to distinguish different roles in the network. According to the study, the alliances are increasing gradually. There are four roles in the network:the leader, the dependent, the in-betweener, and the marginalized. Roles of financial lease companies in bank group include the leader and the marginalized. In contrast, banks are playing a vital role in the network as leaders and in-betweeners.This research on financial lease strategic alliances uses different methods including the literature review, case study, expert interviews, social network analysis and game theory. It takes three companies as cases, and then studies the alliance network and the effectiveness on the basis of social network analysis and game theory. The conclusions in each part not only lay the foundation for further study, but also provide references for financial lease companies in China.