Power Generation Group Strategic M & A Decision Model And Its Empirical Research

Power Group develops progressively following three strategy pathways, include horizontal scale economies, vertical integration and diversified operation. We studied three aspects of them in this paper, including horizontal integration strategy, vertical integration strategy and diversification strategy, focusing on the theory of relational decision-making methods and the empirical analysis of performance evaluation.Basing on the analysis of strategic motivations of horizontal integration in Power Group, this paper elaborates the mechanism of economies of scale in terms of cost and production. Through analysis and comparison, we selected DEA models to evaluate the decision-makings of economies of scale, analyzed the overall efficiency, pure technical efficiency and scale efficiency respectively, and set forth suggestions for index improvement to DEA non-effective companies on how to achieve the best economies of scale. We selected sample data of horizontal mergers, established a factor analysis model based on financial data and made a relevant empirical research of horizontal integration in Power Group. Results show that horizontal mergers can enhance corporate performance significantly.In this paper, we constructed a two-stage game model of economic decision-making to analyze the best mode of cooperation and the most favorable moment in the integration of electricity and coal. To further address selection problem of the target coal enterprises in the integration, we established an Analytic Hierarchy Process (AHP) model based on transaction cost. In this model, the qualitative comparison of factors has been transformed into a comprehensive level of quantitative comparison. We selected a performance evaluation method combining finance index method and economic value added (EVA) method, and constructed a performance evaluation system based on synergy and EVA index of the integration. From the results, we can conclude that the integration of electricity and coal had a significant management synergy, operating synergy and financial synergy, and enhanced the corporate value.We established a model of industry combination selection in diversified investment based on the decision-making object of maximizing the growth rate with the risk factor taken into account. We also used DEA model to evaluate the diversification performance of Power Group. The power companies with DT≥0.04 were chosen as samples to verify that the diversification has improved the scale efficiency and overall efficiency of a company. A multi-factor linear regression model including DT has been established in this paper. And we verified the mechanism of diversity performance by making a lot of empirical researches on the diversification performance of Power Group.The decision-making method and empirical research in this paper are In this paper, we constructed a two-stage game model of economic decision-making to analyze the best mode of cooperation and the most favorable moment in the integration of electricity and coal. To further address the target selection of coal enterprises in the integration, we established an Analytic Hierarchy Process (AHP) model based on transaction cost. In this model, the qualitative comparison of factors has been transformed into a comprehensive level of quantitative comparison. We selected a performance evaluation method combined finance index method and economic value added (EVA) method, and constructed a performance evaluation system base on synergy and EVA index of the integration. From the case results, we can conclude that the integration of electricity and coal had a significant management synergy, operating synergy and financial synergy, and enhanced the corporate value.The decision-making method and empirical research in this paper are practical and directive for Power Generation Group to implement capital management strategies.