Strategic Analysis Of Combined Industry And Finance Conglomerate

For the long-term development strategic considerations and their own capital requirements, some business groups which focus on industrial capital get involved in the financial industry through holding shares in financial institutions or directly setting up financial companies in the process of continuous development and growth. Among the business groups of implementing industry and finance combination, some achieve effective integration of financial capital and industrial capital, while others only driven by high profits and ignoring the financial risk management and control, eventually collapsed by sudden fund chain breaks. The combination of industrial and financial capital has different impact on the business groups. Only those business groups which pay attention to strategic management and control and take efforts to reduce the negative impact to achieve the strategic synergy of industrial and financial capital can get long-term development. Due to the limitations of China’s relevant laws and regulations, among the enterprises which implement the combination of industrial and financial capital, there are more state-owned enterprises than private enterprises. The two types of enterprises use different ways and means in the implementation of the combination. The purpose of this paper is to find out what are the similarities and differences between the two types of enterprises, how to implement effective strategic management and control, and what we can learn from the case study. In this paper, on the basis of research at home and abroad, combined with the content of this study, the combination of industrial and financial capital and related concepts are clearly described and defined. And then the development history of the combination of industrial and financial capital, current status and problems are analyzed. Based on the enterprise resource theory and transaction costs theory, the effects brought by the combination of industrial and financial capital are different. Due to positive economic effects, such as to reduce the transaction costs, broaden the sources of funds, many non-financial enterprise groups invest into the financial sector to get high profits in the financial industry, and get more funds for the operation and expansion of industrial capital. At the same time, the negative economic effects increase the difficulty of internal risk management and control during the process of diversification. This paper describes the basic content of the strategic management and control of business groups and framework for strategic control. For the case study, Fosun Group and China Resources Group are selected as the study object representing the state-owned enterprises and private enterprises. Finally, the conclusion is given based on the case analysis. The similarities and differences of the two groups’strategic management and control during the implementation of the combination process are summarized, and the recommendations based on the existing problems are given at last.The innovation of this paper is to analyze the combination of industrial and financial capital from strategic viewpoint, and to select two types of enterprises for analysis, and summarize the successful cases for further study. This paper provides a new perspective for the research on the combination of industrial and financial capital, as well as provides a reference for other business groups when do the implementation of the strategic management and control of the process of the combination. During the comparing process, the characteristics of industry development strategy and mode of the two companies are displayed. Then the paper makes analysis on how to balance development and the proportion of industrial capital and financial capital, and how the two types of capital to achieve synergy and enhance the overall strength of the enterprise group in the process of the combination implementation.