The Study Of Financial Risksin Core-Competence-Guided Enterprise Merger And Acquisition

Extracts: In 1990, the celebrated American scholars Praharad C.K. and Hamel G. published together, in the Harvard Business Review, an article titled The Core Competence of the Corporation, which stated that the strategic success of the corporation originated from the core competence in its development, and for the first time they formally put forward the theory of the Core Competence. The aim of a corporation in its development, is to maximize its own value. However, this aim cannot be attained but to improve fundamentally its core competence. Then, the proper mergers and acquisitions—one of the easy ways to enhance the core competence of the corporation, as well as an inexorable trend which isformed through the deep-going course of economic globalization.Following this trend, more and more enterprises, with the property rights as dealing objects, begin their attempts at the transfer of the enterprise's control right and the reconstitution of resources, by means of transferring the property rights. The mergers and acquisitions play an increasingly important role in the capital market, however, to view from a point of their characters and the practice home and abroad, there is a high risk in such a capital managerial course, because of which, many enterprises never can regain their original power and then diminish then after. Therefore, there is a practical significance in enhancing the study on finance risk during its mergers and acquisitions.In this essay, a finance risk during its mergers and acquisitions is defined as following: a finance risk during its mergers and acquisitions refers to the uncertainty of the financial deterioration and loss of the financial fruits, caused by such financial policies on the fixed price of a merger purchase, pool capital, payment and so, and also refers to the enterprise's finance straits and crisis, brought about by a negative deviation of the realized value of the enterprise after mergers and acquisitions from the previous expectant value. Or rather, the finance risk during the mergers and acquisitions is a kind of value risk, an overall reflect of various risks of mergers and acquisitions on the magnitude of value, and the negative effects, caused by the uncertain factors throughout the whole course of the mergers and acquisitions, on the expectant value.Generally speaking, there are three types of finance risks during the mergers and acquisitions: risk of the target enterprise's value evaluation, of pool capital, and of payment. Here, the discussion is mainly focused on the causes of the formation of such risks, which is guided by the core competence of the corporation, and how to predict and then effectively manage these risks.On the basis of researches home and abroad, this essay , with a combined method of regular research and actual evidence analysis, goes on further. The introduction tells clearly the background knowledge of the research, practically and theoretically, and the topic and contents it will touch on. The following four chapters present that, under the guide of the core competence, the mergers and acquisitions and finance risks, the formation of such kinds of risks, the finance risks the evaluation of the target enterprises' value, and the preventive measures of such risks that should be taken.Finally, the research results of the essay is concluded there, and the advantages and disadvantages of this research are also presented clearly.