Selection And Financing Strategies Of The Enterprise Development Strategy Research

Vertical integration is a core matter that an enterprise should consider when deciding its optimal business scope, and which is an important means by which an enterprise seeks to boost its competitiveness. The key is to reach a balance between vertical integration and market transaction so as to gain the benefits of the combination of the two. The enterprise should therefore make its choice as to what approach it should adopt when deciding on re-organization. There are many approaches by which an enterprise grows, among which acquisition is an important method by which the enterprise develops new products and enters a new market.Shougang Concord International Enterprises Company Ltd. (thereafter Shougang Concord International), a subsidiary of Shougang Holding and member of the Shougang Group, is a company listed on the Hong Kong Stock Exchange. It enjoys a unique geographical advantage and a favorable environment of raining funds. After 2002, Shougang Concord International adopted the Shougang Group's two-phase development strategy to relocate its production capacities, took, as an opportunity, the government policy to encourage the production of broad and thick steel plates, and made a comprehensive analysis of the production trend of medium and thick steel plates. Having analyzed a strategic-selection matrix based on resource allocation, Shougang Concord International proposed that it should adopt development strategies– the strategy of vertical integration and that of acquisition.What the strategy of vertical integration is intended to achieve is based on the process of the Plate Mill Co., Ltd. of hot-rolling of medium and thick steel plates, to construct a productive and environmentally-friendly model plant for the metallurgical industry that adopts a shorter new technique- based production process from sintering, pudding, steel-making, continuous casting to rolling of a new type. By the end of the first half of 2008, a production capacity of 2.6 million tons of broad and thick steel plates will have been formed in the Qinhuangdao area, and, on the back of it, a matching project will be constructed for the deep-processing of one million tons of steel. By the year of 2010, in the Qinhuangdao area, an industrial group will come into being which will have a capacity ofproducing 3 million broad and thick steel plates and deep-processing one million tons of steel. That will turn Shougang Concord International into the only largest production base for broad and thick steel plates in North China, which is listed on the Hong Kong Stock Exchange.What the strategy of vertical integration is that, by adopting the strategy, Shougang Concord International expects to acquire plate mill manufacturing companies first, and then to involve itself in or control the production chain of both upstream mining and downstream deep-processing, so as to attain its strategic goal of becoming, in the coming 20 years, one of the most competitive enterprises in China...