Research On The Motivation And Financial Effect Of Diversified Development Of Gree Electric Appliances

The process of global economic integration is accelerating step by step,the tide of information age is booming,technology,trade,financial capital and other resources are constantly circulating,the future has come,we are moving towards the era of intellectualization,the trend of interdependence and integration of global economy and trade is irresistible.Faced with the coexistence of risks and opportunities in the economic situation,the market competition is becoming more and more fierce,and the environment faced by enterprises has undergone tremendous changes,which has prompted many large group companies in China to gradually explore a diversified development path that is compatible with the development of enterprises.Gree Electrical Appliances,which has been focusing on specialized management,is one of them.Since 1991,Gree Electric has been committed to air-conditioning manufacturing.As the leader in the field of air-conditioning,Gree Electric has not continued its specialization mode to the end,but strived for comprehensive diversification and expansion.What is the reason why it chooses diversified development? Can it benefit from the exploration of diversified roads and what risks exist? With these considerations,this paper aims to combine the relevant literature and theoretical basis,through case studies,in-depth analysis of the motivation and financial effects of diversified development of Gree Electric Appliances.Firstly,combined with macro-external environment and based on diversification theory,this paper analyzed the motivation of diversification development of Gree Electric Appliances from the aspects of strategic mission of enterprises,integration and optimization of resource allocation,construction of internal capital market and industrial policy support;secondly,it elaborated the current situation of diversification development of Gree Electrical Appliances from household appliances,smart home,smart equipment manufacturing,new energy and other industries.And the degree of diversification is analyzed by using the Herfindahl index.Finally,the financial effect of diversification is studied.The results show that the diversification degree of Gree Electric Appliances has been strengthened and gradually turned to diversified depth layout from 2013 to 2017.Through the analysis of financial indicators,we can see that after the diversified development of Gree,the profitability and growth ability are developing in a good direction,and the overall profitability is considerable.However,Gree Electric also needs to improve its cash flow management model and formulate a scientific and reasonable account receivable management policy.Gree's asset-liability ratio is significantly higher than the industry's median value,indicating that the solvency of enterprises is weak and the capital structure needs to be adjusted.According to Z value,the financial situation of enterprises is not stable,which indicates that enterprises have certain potential risks.In the future development,we should pay attention to continuously improving the risk control ability of enterprises.This paper chooses typical cases of household appliances industry,aiming to further enrich the case study of diversification development of enterprises in order to provide reference for other enterprises in the household appliances industry.