Research On Financial Risk Under The Diversification Strategy Of C Group

Financial risk and diversification development strategy are hot issues of the academic research,diversified development strategy implementation since the 1980 s boom began to become popular in China,after accumulation,most companies will have surplus resources after they have distributed profits to investors.At the same time,the intensified competition leads to the compression of profit margins,enterprises are unable to achieve breakthrough development.At this context,enterprises will choose to implement the diversified development strategy to seek new profit growth points.However,with the development of diversification,enterprises have multiple geographical or industrial distribution,so they are faced with a more complex environment.The complexity of the environment will make the financial risks of enterprises more complex.Therefore,the research on enterprise financial risk prevention and control under diversified development strategy has important research value.As one of the earliest enterprises to implement the diversified development strategy in China,C Group has missed the development opportunities due to insufficient attention to financial risks and poor management in the process of implementing the diversified development strategy,which is representative.This paper adopts case analysis method to study the financial risks of C Group in the process of implementing diversified development strategy.This paper first outlines the concepts related to financial risk 、 diversification development strategy,elaborates the theoretical basis of resource-based theory,synergistic effect theory,principal-agent theory,etc.,and then uses the analysis method of financial statements to carry out financial risk identification.At the same time,it uses the analytic hierarchy process and the improved efficiency coefficient method to carry out risk assessment.This paper believes that the reason why C Group has financial risks in the process of implementing the diversified development strategy is that there are both operational risk management mistakes and strategic management mistakes,which are the products of the comprehensive action of financial and non-financial factors.First of all,in terms of nonfinance,the original resource base of C Group is too weak to support the subsequent blind expansion of diversification,and the principal-agent problem is becoming increasingly prominent.The failure to achieve coordinated development between diversified businesses and original businesses intensifies financial risks.Secondly,C Group also has some deficiencies in financial management.The irrational debt financing structure,incomplete accounts receivable risk management and internal control system,lack of systematic management of investment projects and other factors lead to the occurrence of financial risks.In order to improve the C group diversification development strategy of the implementation of the status quo,and improve the C group of response capacity in the prevention of financial risks,this article gives suggestions both from the aspects of non-financial and financial.Including aligning diversification with the resource base of the enterprise,diversifying the diversified choices for cautious,perfecting the supervision and incentive mechanism,realizing the whole process of fundraising risk control,establishing project investment risk management system,perfecting the accounts receivable risk management and internal control system.