Enterprise Group Management

On the whole, the formation process of enterprise groups has the following forms:

Fission type: In the development of enterprises, large enterprises gradually separate one or several departments of their enterprises. FSC professional certification makes these departments become a new enterprise independently, and has legal personality, and becomes an independent entity in law. .

Investment expansion type: Enterprises have strong investment capabilities in the course of their operations, and establish new independent enterprises through investment. When the number of such investment enterprises reaches a certain level, they become enterprise groups.

Acquisition holding type: The company acquires shares of other companies to achieve the degree of holding, that is, becomes the major shareholder of the controlled company, thereby controlling the production and operation of the controlled company and forming a group.

Consolidated type: an enterprise group formed by a combination or merger of a number of independent enterprises.

Hybrid: This is the mode formed by most enterprise groups, which includes both the fission component of the original enterprise, investment and expansion of newly established enterprises and holding enterprises, and joint or merged enterprises.

The formation of enterprise groups does not have a standardized path. Instead, companies are gradually formed in different periods of business development, according to the requirements of business development, combined with their own resources and capabilities. Property rights are one of the main links for the formation and sustainability of enterprise groups. The supply-demand relationship between technology, production, and the upstream and downstream of the value chain will also form a corporate group, but the mutual relationship and closeness of the member companies in the group are different.

Group operation is an important form for enterprises to realize resource integration and structural adjustment. In the actual implementation process, there are often unstandardized internal management systems of the enterprise group, disordered strategic development structure, lack of ability to integrate resources of the parent company, and inability to manage control. Effective follow-up, when faced with these problems, managers inevitably have to re-examine and position the future development and management problems of the enterprise group. These problems can be classified into "strategy", "organizational structure", and "organizational structure" according to the usual management theories. Categories such as "Human Resources" and "Capital Operation", however, based on our experience in a number of consulting projects, when we talk about "grouping", the key issues generally focus on:

 Business scope selection

Before group management, there were multiple co-existing business entities with scattered businesses. For example, many entrepreneurs invested in several industries that were almost unrelated in order to seize market opportunities in the early stage of their business. However, once the group-based standardized operation is selected, part of the original business will be abolished or sold, and some new businesses may be added. The determination of the new business portfolio will become the first issue that the corporate group strategy should solve.

 New business (project) demonstration

After the business scope is determined, in order to better realize resource sharing or improve the original industrial chain, enterprise groups will face the choice of starting new businesses, and such new businesses must be demonstrated in the context of new group management. Different from sporadic individual project investment.

 Value chain integration-mergers and acquisitions

Vertical and horizontal value chain integration is one of the typical ways for companies to move towards grouping. In order to intensively operate and obtain stable supply channels or market channels, enterprise groups can choose to merge or acquire other mature companies based on their own capital operation capabilities. Then, determining the target company, evaluating the value of the target company, and demonstrating the overall value-added status of the group after the merger or acquisition are all questions that must be answered in advance.

 Regional market segmentation and management

Group operations are not all business diversification models. Many large single-product and single-service companies operate in multiple regional markets, such as supermarkets, hotels, telecommunications equipment and other industries. They need to manage different regional markets at the same time. The operation also presents a grouping form of parent and subsidiary companies. How to effectively divide the market, guide each management team, and fight against each regional competitor is the focus of this type of enterprise.

 Division of powers and responsibilities between parent and subsidiary

The big difference in management between a corporate group and a single company is that the group should focus on the power and responsibility relationships between member companies, and even the relationship between different boards of directors, while the single company should focus on the internal issues. The nature of the power and responsibility relationship between departments is completely different. Both effective control and independent operation must be ensured. This is a major contradiction that enterprise groups should treat with caution in the division of powers and responsibilities between parent and subsidiary companies.

 Subsidiary business performance evaluation-plan, budget, evaluation system

As a subsidiary company is an independent legal entity, the parent company cannot and should not intervene in the specific business and management work of the subsidiary company. In order to achieve effective control and incentives to the subsidiary company, the parent company and the subsidiary company must form a "contractual type". ”Management model, to realize the effective agreement on the three terms of “what to do (plan)”, “how much to do (budget)”, and “what to do after doing it (assessment)”, instead of the commonly used in the management of a single enterprise "Supervision", "Tracking" and "Inspection". Otherwise, the enterprise group will face the dilemma of intense conflicts between the parent and subsidiary companies, high management costs, and low business efficiency.

 Group financial integration operation

For some highly centralized enterprise groups, the main control methods are "financial approval" and "personnel appointment and removal", among which "financial approval" also reflects the unified adjustment and full sharing of internal resources of the group, which is the fundamental purpose of enterprise group operation One, therefore, we believe that it is necessary to design an integrated financial management system based on the power characteristics of enterprise groups. Years of consulting practice has also confirmed that this is the part that entrepreneurs pay more attention to.

 Group financing strategy

According to the "Boston Matrix", there are inevitably various business modules with different development levels within an enterprise group. The different performance of current cash flow, expected income and other factors will have different effects on different financing channels, such as: cash flow Good member companies have advantages in borrowing and financing, and member companies with good expected returns have advantages in attracting venture funds. Enterprise groups should coordinate and utilize the different financing advantages of member companies to optimize overall financing efficiency and financing costs. It needs to be designed carefully and professionally.

 Standardization of the management platform of member companies

The member companies within the group may be in different business areas or stages of development. However, in order to ensure a unified style and image of the group, there must be some basic management systems, processes, and logos that must be unified and standardized. Balance must be handled properly at the beginning of the establishment of the group. Only in this way can the group form a whole in the culture.

In view of the above-mentioned understanding of group management, our service in group management consulting will also decompose the above 9 parts, the logical relationship in operation.