Business Model,Financial Strategy And Coporate Value

As the twenty-first century got into the era of internet economy, the business model innovation, in the internet situation, caused subversive transformation to the traditional industries. According to the basic logic that the business determines the finance and the finance reacts back to the business, business model as an abstract construct of business should and will certainly have a profound and lasting impact on financial management. This article mainly study two basic issues on the basis of focusing on the relationship between the business model and financial strategy: how the business model determines the choice of financial strategy, how the choice of financial strategy decides the value of the enterprise. In the light of these two issues, this article built a transfer chain of “ business model → financial strategy → enterprise value” and established the “MSV” research paradigm of business, finance and value.As this article is an exploratory research in this field, and what’s more, the problem of how to scientifically measure the business model and financial strategy is still an question, which seriously restricts the use of the empirical test method base on the data analysis of large sample. Based on the review of the literature by the literature analysis method, this article uses the method of theoretical deduction and induction to summarize and deduces the relationship between business model, financial strategy and enterprise value. Then this article chooses China’s top two e-business giant enterprises- JD and Alibaba Corporation as the samples, and constructs theory by comparative analysis of two cases study.The issues of this article focus on the following four parts:Firstly, we disscused the resarching dimensions of the business model in financial perspective. There are four basic problems should be paid attention to the design of business model in financial perspective: Who- positioning who are the target customers; Why- why should we design the business model; How- how to maintain the target customers to gain profit, and how to carry on the value creation and then realize the financial goal; What –what is value creation by virtue of. According to the 3W1 H content of the business model, the business model in financial perspective should be studied in three dimensions: profit driving, resource allocation and value creation. Profit driving is the means to value, resources allocation is the foundation to value and the value creation is the goal to value. The research of profit driving dimension can be divided into income driving model and profit driving model; The research of resource allocation dimension can be divided into asset allocation model, capital allocation model and the virtual-real matching model; the research of value creation dimensions can be divided into growth driven type,return driving type and growth-return driving type.Secondly, we discussed the relationship between business model and financial strategy. It can be divided into two levels: one is the relationship between business model and investment strategy, and another is the relationship between investment strategy and financing strategy. Based on the three dimensions of profit driving, resource allocation and value creation, this article deduced three dimensions of investment strategy research in the business model perspective: investment period, investment scope and investment assets, investment objective which is matched with profit driving is investment period, which matched with asset allocation is investment scope and investment assets, and which matched with value creation is goal of finance. Furthermore, these three dimensions correspond with profit driving, resource allocation and value creation in turn. Therefore, the decisive role of the business model on the financial strategy is mainly reflected in three aspects: the investment period, investment scope and investment objective. The mechanism of decisive action of investment strategy on financing strategy is mainly reflected in three matching principles, namely, period matching principle, amount matching principle and risk matching principle. Among these principles, the period matching principle refers to that the financing period should be consistent with the investment period which performs the working capital financing policy in the financial management; risk matching is refers to the negative correlation principle of operating risk and financing risk, according to the risk-neutral principle, stable matching polices are higher operating risk matches with lower financial risk, or lower operating risk matches with higher financial risk. The investment period determines the source period of the capital, the choice of the investment scope and assets determines the capital structure through the risk matching principle.Thirdly, we expounded the relationship between financial strategy and enterprise value. According to the Gordon model, the determining factors of enterprise value include company’s free cash flow, weighted average capital cost and growth rate. Company financial strategy through affecting even decided the three factors further determines the enterprise value, and then forming three logical path from the financial strategy to the enterprise value: financial strategy – company’s free cash flow-enterprise value; financial strategy- weighted average cost of capital- enterprise value; financial strategy- growth- enterprise value.Fourthly, we focus on case study. By analyzing two cases about business model, financial strategy and enterprise value of the two giant e-commerce enterprises – JD and Alibaba Corporation,we can find that the business model of JD is self-operation model, and it corresponds to the long-term investment strategy with professionalization and asset-heavy. According to the risk matching principle, the financing strategy of JD is high debt financing model with the characteristic of upstream similar financial mode, because its investment strategy has higher operating risk, and its value driving force mainly comes from the high growth of sales. The business model of Alibaba Corporation is platform model, and it corresponds to the long-term investment strategy with diversification and asset-light. According to the risk matching principle, the financing strategy of Alibaba Corporation is high debt financing model which are mainly by financing liabilities because its investment strategy has lower operating risk,. And its value driving force is the kind of growth-return driven.Through theoretical induction and case analysis,it can be found that, there are climactic causality among business model, financial strategy and enterprise value, namely business model determines the financial strategy, financial strategy determines the enterprise value, so the path of creating value are designing business model and matching financial strategy.The theoretical contribution of this article was constucted "438" framework for research of business model in financial perspective, and founded a path of the research in this field; According to the three dimensions which contain profit driven, resource allocation and value creation, this article deduced a logic progressive relationship between business model, investment strategy, financing strategy and enterprise value; constructed the MSV paradigm about the research on the business model in the financial perspective; reinterpreted the relationship between business and finance, namely the business determines the finance and the finance reacts back to the business.