Study On Strategic System Construction Of Jilin Netcom Financial Management

The present thesis is a study on the strategic system construction of the financial management of Jilin Netcom. Jilin Netcom, as the principal northern fixed-line operator, is the result of reorganization, restructuring and separation movement of Telecom and in 2005, through the overall acquisition conducted by China Netcom, its parent company, Jilin Netcom became a public company. Thereafter, the company operation has been faced with severe Market Substitution, strict supervision and management from the international capital markets and from the domestic relevant organizations, as well as good performance expectations. Under the existing circumstances, Jilin Netcom proposes to undertake a strategic transformation, converting the company from a traditional service provider to a broadband communications and multimedia information services provider. In order to adapt well to this transformation, enhancing the company's ability of service market support, improving its level of management efficiency, and reasonably constructing a market-oriented, value management based financial management strategic system become the urgent realistic issues to consider.Taking the construction of a market-oriented, value management based financial management system as the main thread, the present thesis synthesizes the SWOT analysis method, Value Management and Value Creation theory, and internal control risk prevention theory, analyzes the internal and external environment faced by Jilin Netcom, and positions financial management strategies and major functions of Jilin Netcom. Besides, in accordance with the overall requirements of financial management strategies, it brings forward the main contents of the strategic system construction and the overall thinking, concerning the strategic construction of the domestic financial management in communications industry.Above all, an in-depth analysis of the financial management under the current situation is the basis of the construction of financial management strategic system. In the recent 5 years since Jilin Netcom was listed in 2002, it has been actively pushed forward a series of major financial reforms, such as financial centralized management reform as well as comprehensive budget management reform, and has gained great achievements. However, in the meantime, there exist some big financial management deficiencies, therefore, constructing a suitable strategic system of financial management is badly needed so as to promote further development and face with fierce market competition and the strict supervision and management of the capital market and the domestic regulatory agenciesThe present thesis holds that in order to construct a guiding financial management strategic system, that is consistent with the actual situation of the enterprise, it is a must to clearly understand the main factors affecting this construction, the construction principles, the objectives and models of the strategic system so that the financial management strategies and the major functions of the management can be ultimately positioned1. Main Factors Affecting ConstructionThe characteristics of telecommunications industry and telecommunications enterprises and the characteristics of the traditional state-owned enterprises are the main factors affecting strategic system of financial management.2. Principles of Financial Management ReformFinancial management system should abide by the following principles: the combination principle of centralization and decentralization, the separation principle of accounting and financial management, and the combination principle of centralization and authorization, according to corporation-branch 7structure.3. Objectives and Model of Financial Management Strategic System ConstructionThe objectives of the strategic system construction of Jilin Netcom financial management are: maximizing enterprise value and establishing a financial management model, which is market-oriented, value management based, with well-defined power and responsibility, in line with the internal control, and adapted to enterprise objectives. This model should take comprehensive budget management as its primary means, be based on a shared service system of financial operations, make centralized management of fund as its core and consider the enhancement of decision-making support capacity and value management capacity as its major functions.4. Financial Management Strategies and Major Functions Positioning for Financial ManagementBased on the above analysis, the present thesis sets down the financial management strategies for Jilin Netcom as follows: constructing a financial management system which is under the guidance of the development strategies of Group, aiming to enhance value creation capacity of the corporation and deeply involved in it, value-management based, market-oriented, in line with the internal control, so as to maximize the corporation value. In accordance with this strategy, financial management strategies should be defined as value managers, value creation participants and value-maximization leader.According to the strategic positioning of financial management, the main functions of financial management are value management and creation, business response and support, decision-making support and guidance. The present thesis makes a study on the construction of strategic system of financial management from five perspectives1. Constructing a Shared-Finance Service Support SystemTo promote financial management restructuring, enhance financial management capacity, realize finance moving closer to business, shorten the chain of accounting, improve financing efficiency, standardize financial information, enhance transparency and timeliness of information, it is necessary to constructing a shared-finance service support system2. Establishment of Financing Billing SystemThe financial billing system mainly includes repositioning the responsibilities of relevant revenue departments, clarifying provincial and municipal authorities, optimizing the billing staff, carding and perfecting the billing system and processes and improving billing accessing system.3. Establishment of Value Management and Value Creation System(1) Above all, the present thesis clarifies the relationship between the value management and value creation. Value creation is the basis of value management and value management can not do without value creation. Value creation process includes the value chain within the enterprise and the whole process chain outside the enterprise. While value management, as a management tool for value creation, can be found everywhere during the entire process(2) This Thesis gives emphasis to the construction content of the value management and creation system.a. Under the guidance of market, by means of a comprehensive budget management system and the ERP, a sound and rational scientific resources allocation system, a dynamic control mechanism and a budget execution guarantee System should be established, so as to realize the maximal value and sustainable development of the enterprise.b. Establishing fund-management system. The core objective of fund-management is to realize the creation of incremental value of the enterprise (EVA>0) and thereby realize the maximization of enterprise value (EVA), by combining intensive model of fund-management with the centralized model.c. Establishing assets management system. Asset management should focus on improving the efficiency of the existing fixed assets. A unified organization under the guidance of the provincial company and specific operations by branches should be adopted and thereby the specific operations can be advanced.d. Establishing cost management system. To control the cost from the source, reasonably plan the utilization of resources, the enterprise should establish a new value-oriented cost management mode so as to improve profitability of the enterprise.e. Establishing the tax planning system. The objective of tax planning is to maximize the after-tax profit and to minimize the tax-related risks.4. Establishing Financial Reporting and Decision-making Support SystemThe emphasis of the establishment of such a system is to improve thequality of financing information, so as to guarantee the truth and transparency of information, and decision-making must have relevance, comparability. The disclosure of information should be careful and in time. We must standardize the systems and processes to establish financial information quality assurance system.5. Establishing the Financing Risk Control System Through the reasonable classification of the financial risk, we can determine the management objectives of the financial risk, so as to establish a series of risk control and prevention system, including the risk identification, assessment, early warning, monitoring analysis. Provincial financial department must guide risk management work at all levels of branches through the risk management framework.Finally, this present thesis also gives an introduction to the difficulties and the relevant countermeasures that may occur in the process of the implementation.1. The problems are mainly as follows: traditional management thinking needs time to change; the high cost of implementation of the financial management strategic System; unbalanced development of management creation and operation; inadequate support for the financial management strategic System; inadequate implementation force and the low quality of executive personnel.2. The countermeasures are as the following: strengthening publicity; gradual guidance; cultivating new thinking mode and management concept; being concerning about and enhancing the practicality of management innovation; enhancing the links between the management innovation and the operation development; reducing as far as possible the cost of management; intensifying information construction; strengthening the basic work and enhancing the support capabilities. All these should start from the provincial company and it should enhance the execution capacity so as to ensure the effective implementation of the financial management; at the same time staff training should be emphasized in order to improve the quality of personnel.