Enterprise Group Management Study

This paper is an empirical study on the shift from individual enterprises to enterprisegroup.This paper first makes a simple review of the general theory of enterprise and theformation of enterprise group. Then it introduces the development of enterprise and theprocess of formation of enterprise group from a historical view. It summarizes variouskinds of enterprise group and the main characteristics relative to individual enterprise.Afterwards, it emphatically analyses the chosen paths to change from individual enterpriseto enterprise group. The paths include internal expansion and external expansion. The mostpopular way of realizing expansion is external expansion, which includes buy-out,acquisition and mergers. The most important problem for enterprises just developing intoenterprise group is the recombination and integration, including equity right, tactic,operation, assets, personnel, liabilities, technology, system, culture and many other aspects.Whether recombination and integration is successful or not is vital to the existence anddevelopment of enterprise group, and is the key for individual enterprise to becomeenterprise group. After recombination and integration, enterprise group is in the stage ofimplementing group type management. The way of managing enterprise group iselaborated in the aspects of enterprise group governance, organization structure,management at the enterprise group level, control and coordination. The key to enterprisegroup governance is the treatment of relations between member enterprises inside a group.A mechanism in line with the characteristics of the group and the internal and externalenvironments for the group to operate is needed to control, coordinate and inspire memberenterprises for the purpose of taking the overall advantage of the enterprise group. Theorganization structure of enterprise group usually includes U structure, H and M structures.U structure is highly centralization of power;H structure decentralization of power, Mstructure is the innovation of M and H structures. M structure is the most popular onethroughout the world. Management at the group level is one of the main differencesbetween individual enterprise and enterprise group. It sets up administrative committee ofthe group or entrust parent company to conduct management. There are four waysenterprise group can use to control and coordinate member enterprises, namely, capitalcontrol, executive control, power decentralization control and platform control. Controland coordination mainly happen in the areas of personnel, financial affairs, investment,strategy culture and information.