A Research On The Effect Of Strategic Reorganization And Integration Of Central Enterprises

At present,the industries are facing enormous pressure to upgrade their structure for decline economic growth in China.The mergers and acquisitions(M&A)of central enterprises can enhance their capital utilization and improve their operating efficiency.Moreover,it can accelerate industrial concentration and rea lize it’s operation in scale.Their capital structure can be upgraded by cleaning up the unscrupulous assets.What’s more,the management mode,technology and capacity could be improved after the effective merger of central enterprises.Nowadays,the merge r of central enterprises is the key point in deepening the state-owned reform in China’s central enterprises,which is the trend of the times for central enterprises to become a world-class enterprise to coping with international competition.Therefore we should make central enterprises bigger and stronger,so that Chinese enterprises will possess a voice and pricing power in the competition.Based on the case of Baosteel merging the WISCO,this paper analyzes the effect of the M&A of central enterprises by the methods of literature research,case study and comparative analysis,expounding the background,the progress,the project and the result of this merger.This paper tries to analyse the merging motivation from the M&A motivation theory.What’s more,this paper focus on the analysis of content and the integration effect of this merge through the method of financial index and the decomposition of affecting factors(ROE).This research results are as follows: firstly,from the motivation for M & A,the motivation of the merger of central enterprises is different from the general enterprise merger in the market because it’s under the background of deepening the reform of state-owned enterprises and the policy of supply-side reform.Therefore the motivation o f central-owned enterprises merger is not only the enterprise’s own behavior,but also has relationship with the government policy and the national strategic,which reflects the effectiveness and foresight of the central-owned enterprises merger under the government policy background.Secondly,from the integration of M & A,this paper studies the integration of strategy,business,organization and management,human resources and culture,and finds that the integration of Baosteel and WISCO is successful.Lastly.from the financial effect of M & A,this merger has realized an overall success based on the financial index with the advantages in both operation and finance.The conclusion of the above research will play a role of enlightenment for the following mergers and reorganizations of central enterprises in China.