Research On Problems Of Management Control In Enterprise Group With Branches

From1980s, with the rapid transformation of Economic System from the planned economy to the market economy, a batch of enterprise groups with certain international competitiveness are formed. The development and growth of these enterprise groups concerns the development of the entire national economy and plays the backbone role of mastering the national economic lifeline. In these enterprise groups, enterprise groups with branches occupy a large proportion. In enterprise group with branches, the parent company is an independent legal person, and the branch itself does not have the legal person status. The branch company actually is an organization engaged in production and business operation activities authorized by parent company. Through a series of management control methods (such as financial control, decision-making power and personnel control, cultural control and so on) the parent company realizes branch’s behaviors keeping up with the parent company’s. Branches in the same level are homogeneous, and functions of branches in different levels are of significant differences. Specifically speaking, due to the difference of decision-making power, branches in the first level compared with branches in the second or third level have relative perfect functions. That is to say, branches in the first level already having most functions of an independent enterprise, branches in the second or the third level having a single or part functions. For example, in real operation China Unicom endows provincial-level branches with perfect functions including decision-making power, production, and human resources management. But county-level branches only have marketing and part service functions, not having the personnel and financial functions, to say anything of independent decision-making function. An important feature of enterprise group with branches is that branch companies usually have billions of even tens of billions of assets and branches in the first level because of their large size and area mosaicism often show more "legal person" characteristics.However, an inconvenient truth is that most of enterprise groups as a result of long-term government intervention, serious lack of adaptive ability. Combining with problems such as complicated business units of branch companies, regional distribution decentralization, imperfect management control mode of parent company restrict value creation ability of branch companies. In some branches, there are phenomena of inflating profits, through "multiple industry" and "illegal small treasuries" misappropriating main business profits and obtaining personal or small group interests, which leads to large assets losing. With the constant enlargement of the scale of enterprise groups, how to implement effective management and control on branch companies, putting an end to the strange phenomenon that "if we let it be, there will be a mess; and if we handle it, the death will come right after", realizing normalized operation of branch companies, constantly enhancing business performance of branch companies are becoming important topics to be solved urgently in theoretical and practical circles. But, theoretical research on management control on branch companies is few, which doesn’t match the urgent need of practice. Most research focuses on parent-subsidiary companies, which leads to the construction of management control mechanism in enterprise groups with branches lacking of necessary theoretical guidance.Considering this, based on survey data of provincial branches of enterprise groups and the construction of management control evaluation index, combining with characteristics of enterprise group with branch, this dissertation observes the modes of management control and their effects, conducts deep research on the impacts of financial control, decision-making power, personnel control and cultural control matching with each mode on business performance of branch company, hoping to provide some policy guidance to practice and some help to theoretical research.Through research on problems of management control of enterprise group with branch, breaking through limitations of past research only focusing on parent-subsidiary companies, broadening the research scope of management control of enterprise groups. Through empirical analysis on the impacts of financial control, decision-making power, personnel control and cultural control on business performance of branch companies provides theoretical basis on enhancing the effectiveness of management control practice. So this dissertation has certain theoretical significance and practical value. The main contributions of this dissertation can be summarized as follows:(1) Broaden the research scope of management control of enterprise groupsIn view of past research only focusing on management control of parent-subsidiary companies, the construction of management control mechanism in enterprise groups with branches lacking of necessary theoretical guidance, this dissertation takes enterprise groups with branches as a start point, conducting research on financial control, decision-making power control, personnel control and cultural control.(2)Establish Four-dimensional comprehensive management control effect modelBenefiting from existing research results, based on the comprehensive and systematic perspective, from four dimensions of financial control, decision-making power control, personnel control and cultural control, this dissertation establishes Four-dimensional comprehensive management control effect model with branch company performance improvement as the target, incorporating financial control, decision-making power control, personnel control and cultural control. It is helpful to make up shortages of current study focusing on single viewpoint.(3) Establish financial control, decision-making power control, personnel control and cultural control evaluation indicatorsBased on combing current research on financial control, decision-making power control, personnel control and cultural control, considering characteristics of enterprise group with branches, combining interviews and discussions with middle managers and practical activities, it establishes financial control, decision-making power control, personnel control and cultural control evaluation indicators in enterprise group with branches. Using investigation data it conducts empirical analysis, which supplying an empirical study platform for research on management control of enterprise groups.(4) Explore and establish theoretical models of financial control, decision-making power control, personnel control, cultural control and comprehensive inner management control affecting performance of branch companiesBy analyzing characteristics of enterprise group with branches, combing Four-dimensional comprehensive management control effect model, it further explores and establishes affection models of financial control, decision-making power control, personnel control and cultural control affecting performance of branch companies in enterprise group with branches. Using AMOS7.0explore the causal relationship between management control methods and performance of branch companies. Based on research results, it analyzes specific management methods and their affections, which is in favor of finding out key factors affecting the improvement of branch company performance and putting forward some coping countermeasures. It provides policy guarantee to conduct comprehensive management and improve business performance of enterprise group with branches, and more effectively guides the business management and management control practice.(5) Discuss management control models and methods matching with different degrees of management control in enterprise groups with branchesUsing K-means cluster method in SPSS and based on four observed variables measuring management control degrees, it divides sample companies into three groups. It compares management control models and methods matching with different degrees of management control. Research results show that enterprise groups with weaker degree of management control which are in the third group usually take a relatively decentralized financial management control mode, and the main control method is financial control; enterprise groups with stronger degree of management control which are in the second usually take a relatively centralized comprehensive management control mode, and the main control methods are personnel control, financial control and cultural control; enterprise groups with moderate degree of management control which are in the second usually take strategic management control mode combing decentralized and centralized management, and equally use all kinds of control methods.