Comparative Financial Analysis And Evaluation Of Gome Strategic Transformation

With the rapid growth of the national economy, the economy opening-up expands continuously, which brings the development of retail industry. China has become the world’s manufacturing base of household electrical appliance, and formed a pattern of large-scale production base of home appliances and home appliance chains. The scale of home appliance retail industry continues to expand, presenting a development tendency of diversification. With the accelerating process of global economic integration, international giant retailers have chosen to invest in China and Chinese retail market-share. The ever-changing science and technology promoted the rapid development of Internet, and the rise of online shopping gradually changed residents’ consumption habits. In an increasingly competitive consumer electronics market, foreign retailers and online shopping brings tremendous challenge to traditional retail industry. In the "Internet +" new market situation,the traditional retailers are facing serious challenges of low growth and losses, many traditional bricks-and-mortar retail business started to make transformation and take the path of e-commerce in order to break through the dilemma. As China’s largest entity GOME retail enterprise embodies industry leadership and representation, it is also facing the problem of strategic transformation. Owning to e-commerce makes impact on traditional retail industry,GOME, a leader in home appliance chain business, began to seek restructuring and make the layout of electrical business.This paper reviews the related research including strategic management theory and retail transformation, and traditional retailers GOME was selected for the study case analysis.With the methods of traditional strategic analysis tools and financial analysis evaluation index, this paper analyze the competitive environment and operating characteristics of GOME in the times of internet, the reasons, the specific content and the strategies of transformation, as well as the change of financial situation before and after the transformation from the perspective of finance, and analyze the profitability, growth, cash flow and other aspects within five years of transformation by using financial analysis, to explore the effectiveness of GOME strategic transformation. The analysis revealed that in early stage of strategic transformation GOME’s financial index fell in many aspects,especially in profitability. Through the financial analysis of the data we found that the profitability rise gradually after the transformation and the growth ability gradually rise,indicating that the transformation is conducive to the long-term development of enterprise.This paper argues that GOME’s restructuring and the strategy of e-commerce is a sound policy, the strategic transformation is in line with the current trend of the overall development of the retail industry, and there emerged financial indicators decline in the transition process. GOME should pay attention to optimize the capital structure, strengthen its financing capacity, reduce costs and enhance operational capacity in transformation. This paper argues that enterprises in the process of transformation should pay close attention to changes in financial indicators, and provide information support for enterprise development strategies and implementation plans, which can also help enterprises to avoid financial risk.