The Financial Strategies In Different Lifecycle Stages

The financial strategic concept is concerned by people both in the research area and practice area. Finance activity will have an important effect on production, management, capital source, risk and enterprise's value. In order to get long-term development, enterprise must consider the finance activity as an important strategy.Business life cycle theory means that enterprise is just like an organism, having a life cycle from birth to death. With the developing of the research, business life cycle theory is applied to enterprise's management. In the different life cycle stages, financial resource and financial ability of the enterprise are different. During a specified period of time, resource and capability that enterprises have are limited, and the financial environment faced is dynamic. In order to make an appropriate choice while making financial strategy, enterprises must consider both internal ability and environment condition at the life cycle stage the company lies.There is a question: if the enterprise lifespan factor have a great influence on enterprise's financing strategy like people thought? This paper plans to use empirical analysis method to exam does life cycle of enterprise and financing strategy of enterprise have relevance. The paper selected the listed companies in electronic information industry in Shanghai Stock Exchange as the sample of studying. The empirical study can reach the following conclusion: in China, at different stages of the life cycle, there is a significant difference about listed company's capital structure. Enterprises should making different financing strategies based on the internal and external environmental requirements at different stages.Generally at the initial period the source of funds are entrepreneur's personal savings, and venture capital. And at growing stage, enterprise mainly relies on external financial support, such as long-term loans, venture capital, business credit and short-term loans and government investments. Entering the mature stage, the financing environment has been greatly improved. At this time, enterprises can use residual dividend policy, giving priority to the greatest possible number of retained profits for technical innovation. Compared with stock issue, bank loans cost is lower. Enterprises can make use of financial leverage. In order to finance more funds, some large company also can issue stocks and bonds in the public. At recession stage enterprises will continue to maintain a relatively high debt-equity ratio. If making some correct and new strategy in this stage, enterprises will enter a new cycle of development period.Finally, this paper takes ZTE Corporation as an example to specify how to choose appropriate financing strategies in different stages of the life cycle.The main innovation of this paper is developing the traditional theory of financing structure. The combination of corporate life-cycle theory and corporate finance strategic theory make the traditional financing theory more realistic. As for the research methods, the paper use the empirical analysis method to prove that the capital structure of listed companies is notable different at different stages of the life cycle. So they have a certain theoretical and practical significance.Of course in this article, there are some limitations: Firstly, in the empirical analysis there may be a representative problem about the sample of the data, this may affect the accuracy of analysis results. Secondly, there may be exist demonstrated cycle in the empirical analysis. These limitations should be done in further discussion.