Research On The Motivation And Performance Of Dandong Port Group's Expansionary Financial Strategy Implementation

With the rapid economic and social development,a number of world-class port enterprises are established in China.Port construction has an important impact on urban development.The integration of port and urban is the development direction of various port cities in China.However,due to depressed macro-economic environment,the problem of structural overcapacity in China's ports is more serious.The research object of this paper is Dandong Port Group,which was established in 2005.Since 2010,Dandong Port has implemented an expansionary financial strategy.The company's asset scale has expanded rapidly,and port throughput has increased accordingly,reaching its highest point in 2016.The methods of literature review and case analysis are used in this paper.This paper summarizes the literature on financial strategies at home and abroad by using literature review methods,and uses case analysis to study the motivation and performance of Dandong Port Group's implementation of expansionary financial strategy.In the case introduction section,this paper first describes the basic situation of Dandong Port Group and the macro environment and industry status faced by Dandong Port Group.Next,motivation for adopting the expansionary financial strategy by Dandong Port Group was introduced: the promotion of the Development Strategy of Liaoning Coastal Economic Belt and the “Thrive the City by Relying on the Port” Strategy of Dandong City;requirements for enhancing the Industry competitiveness of Dandong Port;required by the strategic planning of the “13th Five-year Plan” of Dandong Port;the management has optimistic expectations for the company's prospects;Dandong Port intends to build a complete industrial chain and realize integrated operation.Finally,the specific measures for implementing the expansionary financial strategy of Dandong Port are summarized: raising funds through intensive issuance of bonds and applying mortgage loan from banks to carry out large-scale expansion of the port infrastructure.Balanced Score Card method was adopted to analyze the performance of expansionary financial strategy adopted by Dandong Port Group from financial dimension,customer dimension,internal operation dimension and learning and growth dimension.On performance of the financial strategy: financial dimension analysis showed that the expansionary financial strategy caused negative impact on the overall financial status of Dandong Port;analysis of customer dimension and internal operation dimension showed that blind expansion reduced the market competitiveness of Dandong Port;the analysis of the learning and growth dimensions shows that the quality of the Dandong Port Group's workforce has improved slightly but it still has a large gap compared with the main competitors.The performance analysis showed that the expansionary financial strategy adopted by Dandong Port Group has a negative impact on corporate performance.Reasons leading to such result are as follows: great capital pressure was caused by over-indebted operation,resulting in capital chain crack at last;over-investment in port infrastructure exacerbates the company's overcapacity,making the company trapped in cut-throat competition;the impact of economic cyclical fluctuation on port operation was increased by concentrated,single industry chain investment,causing more severe financial risks.In view of issues existing during the implementation of expansionary financial strategy adopted by Dandong Port Group and relevant reasons,the following enlightenment was obtained: reasonable financial strategies should be formulated by enterprises with consideration of the macro-economic environment and industry status;financial strategies should be adjusted timely according to their own financial status;enterprise administrators should build risk awareness and establish a perfect,effective financial risk control mechanism.