Mastering the Group--The Formation of the Enterprise Group. Organization and Strategy

Author: Song Bingfang
Publisher:
Publish Date: 2001-08-01
Features: Enterprise groups play an irreplaceable role in the economic development of a country, which other economic organizations cannot match. The post-war economic resurgence of Japan and the rapid takeoff of the Korean economy in a short period are strong proof of this point. In our country, with the deepening of the economic system reform, especially with the establishment of the socialist market economy system, enterprise groups have also developed rapidly. Against this backdrop, this book conducts specialized research on the formation, organization, and strategy of enterprise groups in China, based on a research approach that unifies history and logic and draws on relevant theories and methods. The book is divided into three parts, including 8 chapters. The first part is the Formation Section, covering Chapters 1–3. This section explores the nature, formation, and organization of enterprise groups.
Chapter 1: The Nature of Enterprise Groups
This chapter provides a relatively comprehensive analysis of the nature of enterprise groups from three aspects: connotation, characteristics, and functions. It points out that as an economic organization, an enterprise group is a coalition of economic entities formed around a small number (or even one) of large enterprises with legal status as the core, with a group of legal enterprises with common interests that are differently controlled or influenced by this core as the periphery, and are linked together through various forms of interest ties such as capital and contracts. It has characteristics such as large-scale size, integration of industry and finance, diversified operations, and international market expansion. In addition to the above characteristics, enterprise groups in China also have the following specific features: (1) the core enterprises are almost large and medium-sized state-owned enterprises; (2) while pursuing diversified operations, they still maintain a primary focus on one industry; (3) they have a strong dependence on relevant government departments. During the transition from a planned economy to a market economy, enterprise groups in China play multiple special roles, including promoting the rationalization of enterprise and industrial structures, facilitating the reasonable flow of asset stocks and optimizing resource allocation, enhancing competitiveness in international competition, driving the development of small and medium-sized enterprises, and improving the effectiveness of government macro-control.
Chapter 2: The Formation of Enterprise Groups
Section 1, first reviews several viewpoints on the driving forces behind the formation of enterprise groups, then, through empirical research, points out that the general driving forces for the formation of enterprise groups can be expressed in three aspects: the pursuit of profit, the need for social productivity development, and the need for market economy development. This section also elaborates on the relationship between this general discussion and other viewpoints on formation driving forces.
Section 2 points out that from the perspective of integration, the formation of enterprise groups in the West has gone through three stages: the stage of operational integration, the stage of production and operational integration, and the stage of enterprise group formation development.
Section 3 first describes the historical trajectory of the formation of enterprise groups in China, then explains the uniqueness of the formation of enterprise groups in China. This section also summarizes the current problems of enterprise groups in China from the aspects of organization and strategy.
Chapter 3: The Organization of Enterprise Groups
Section 1 points out that enterprises should be the main body for the formation of enterprise groups in China, but the government should fully play its guiding role.
Section 2 first classifies group models from different perspectives, then points out that in the actual process of forming enterprise groups, different enterprises should consider the advantages and disadvantages of various models, based on their actual conditions, and make a scientific and reasonable choice by comprehensively considering various factors.
Section 3 discusses the issue of selecting members for enterprise groups.
Section 4 points out that there are two extreme tendencies in the formation of enterprise groups. One tendency is to blindly form enterprise groups without any feasibility analysis, and the other tendency is to rigidly understand the formation procedures of enterprise groups, still following the steps in conditions that permit, thus missing the good opportunity for formation. Both tendencies should be opposed.
The middle part is the Organization Section, covering Chapters 4–5. This section explores the organizational issues of enterprise groups from the aspects of structure and behavior.
Chapter 4: The Structure of Enterprise Groups
This chapter provides a relatively systematic analysis of the structure of enterprise groups from six aspects: organizational structure, control structure, decision-making structure, information structure, incentive structure, and constraint structure. When analyzing each structure, it first discusses its generality, then uses this as a reference to summarize the problems of enterprise groups in this structural aspect and proposes corresponding countermeasures. At the end of this chapter, it also analyzes the systematic optimization of the structure of enterprise groups in China.
Chapter 5: The Behavior of Enterprise Groups
This chapter first analyzes some basic issues related to the behavior of enterprise groups, including the behavior of enterprise groups and its constraints, methodological principles for examining group behavior, and standards for the rationalization of group behavior. Then, from the perspectives of theoretical analysis and empirical research, it explores the behavior goals of enterprise groups, pointing out that the behavior goals of enterprise groups in China have already incorporated elements of the behavior goals of enterprise groups under market economy conditions, while still retaining certain traces of the planned economy system. The last section of this chapter discusses the issue of the rationalization of the behavior of enterprise groups.
The lower part is the Strategy Section, covering Chapters 6–8. This section focuses on the scale strategy, transnational operation strategy, and brand strategy of enterprise groups.
Chapter 6: The Scale Strategy of Enterprise Groups
This chapter first defines the scale of enterprise groups, then analyzes the necessity of implementing scale strategies for enterprise groups. It points out that the determination of the appropriate scale of enterprise groups should be based on a comprehensive consideration of multiple relevant factors and should adopt appropriate steps and scientific methods. The basic steps for determining the appropriate scale of enterprise groups are: determining the production and operation scale of the core products of the group's core layer → determining the scale of the group's core layer → determining the overall scale of the group. The last section of this chapter points out that large-scale development is the basic direction for the development of enterprise groups in China; the main ways for large-scale development include "strong alliances," mergers, and controlling or holding stakes; when enterprise groups are developing in the direction of large-scale, they should pay attention to combining it with issues such as industrial structure adjustment and technological transformation.
Chapter 7: The Transnational Operation Strategy of Enterprise Groups
This chapter first analyzes the necessity of implementing transnational operation strategies for enterprise groups, then explores three key issues for the implementation of transnational operation strategies by Chinese enterprise groups: how to select target markets, how to select entry methods, and how to select control organizations. It also points out that enterprise groups should take various effective measures to accelerate the pace of their transnational operations, while the state should also create favorable external conditions for the smooth implementation of transnational operations by enterprise groups.
Chapter 8: The Brand Strategy of Enterprise Groups
This chapter first analyzes the necessity of implementing brand strategies for enterprise groups. Then, it explores the relevant factors for the implementation of brand strategies from two aspects: favorable factors and restrictive factors. Next, this chapter discusses the implementation process of brand strategies for enterprise groups in the order of selecting brand cultivation targets → cultivating brand products → forming a series of brand products → shaping the image of the brand group. The last section of this chapter proposes several suggestions on how to establish a guarantee mechanism for the implementation of brand strategies by enterprise groups.