Hongda Group, Parent-subsidiary Management Control

Hongda Group, as a corporate group with multifarious operations, owns some 30 subsidiaries and sub-subsidiaries and makes investment amounting to billions of yuan annually. For the steady development of the group, raise its capability to make profit and open up horizon for further development, it's an important topic for the top management of the group how to use the financial capability of the group to make investment in a healthy manner, lower the investment cost, and exercise the control of capital over the subsidiaries.This article, on the basis of giving introduction to the background of the group and analysis of the competition environment, makes a study of the bottleneck problems that restrict the survival and development of a company, such as shortage of working capital due to external investment, channel of financing, and capital management. Then, according to the theory of capital structure, it discusses how a company should use the self-owned capital accumulation effectively to make external investment analysis that affects the operations of a company, trying to find out the cause of the bottleneck problems. And then it makes a study of the financial management mode, discusses how to ensure the continuation of the capital chain, and solve the bottleneck problem with the help of financial management and control.Furthermore, under the financial management mode that has already been built up, it makes a study on how to effectively control the human resources, the information resources, the financial management and control, as well as operations activities needed by the group, and summarizes the experiences of the group in investment and financing by taking the actual cases into consideration, so as to design improvements in the group's program for investment and financing. Finally, under the financial management and control mode already created, it makes a study of the procedures in the operational and profit margin of the investment and financing projects, the extending function to the profit-making capability from the projects, and puts forward that the way to improve the group's operational and profit-making mode to the subsidiaries is not always constant. With the development of the group in multifarious operations, it's imperative to make changes to the subsidiaries in terms of management and control method. As it's a company's soul to be practical and creative, in future development, the group can make successes only by keeping to the practical, creative work style.