Research Of Financial Crisis Base On The Michael Porter’s Five Force Model

Financial crisis pre-alarming is an important aspect of enterprise’s management ofproduction and business operation, which was used to be a wide range of subject byscholars all over the world. Because of the change of the environments in and out of theenterprise, the enterprise would always survive and develop with crisis. With themarketization and internationalization of Chinese economy, the crisis which enterprisesfaced would increase gradually, so that the number that enterprises fail in production andbusiness operation and then become bankrupt since of financial crisis increase graduallytoo. From the reform and opening up, financial crisis, enterprise failure, bankrupthappened frequently due to different kind of reason, which result in a large number ofworkers laid off, and badly affect the stability of society and finance.Now researches mostly concentrate in the internal environment of enterprises whilepay less attention to the environment outside enterprises. Enterprises’ financial situationrelate to their production and business operation, while the production and businessoperation of enterprises have close relationship with environment they survived. So, inorder to pre-alarm the financial crisis, we have to pay attention to the environmentsoutside enterprises. Therefore, we introduce the Michael Porter’s Five Force Model,which we can introduce the information outside enterprises when we build the financialcrisis model.We used the data from the years of2007,2008,2010,2011. According to ourresearch direction, we defined the company which was specially treated with as droppinginto financial crisis. We use the data of "t-3" period to forecast a company whether itwould be specially treated or not in the "t" period. The data we need in this paper wasfrom the annual reports of public company, CSMAR and statical yearbook. Firstly,according to the relationship between the Michael Porter’s Five Force Model andfinancial crisis, we put forward five assumptions, and establish some indicators for eachassumption. These indicators contain both of the information inside and outside of thecompany. Secondly, we collected the data we need according to the samples we chose. Thirdly, we begin to analysis the data we collected, include Descriptive Statical Analysis,Independent-Sample Test and Pearson Correlation Test. From the test, we found that thevariable in assumption3and assumption4were not notable, it means that there were lessrelationship between financial crisis and industry the company in. However, maybe therewere some defects in these variables. In the follow analysis, we eliminated thesevariables. Finally, we conducted Principal Component Analysis and built regressionmodel. From the result of regression, we found that a positive correlation betweenfinancial crisis and Bargaining Power of suppliers, financial crisis and Bargaining Powerof the buyers, financial crisis and Ability to compete of the enterprise in the industry. Theresults were in accord with the assumptions.According to the conclusions of the empirical analysis, we put forward the proposalin three aspects, enhance the Bargaining Power of suppliers, enhance the BargainingPower of buyers and enhance the Ability to compete of the enterprise in the industry.