Financial Strategy Based On The Corporate Life Cycle Choice

In modern society, marketing circumstance is changing all the time, and the enterprise itself is also changing and developing during its lifetime. The operation of enterprise faces challenges everywhere. We have known so many instances of financial crisis as results of improper financial arrangements including fund-raising structure and investment orientation, accompanied with the increasingly extended scale of enterprise and more violent competition. These instances indicate that the enterprise shall be doomed to fail eventually if it hasn't a strategic financial plan and normal long-term financial operations. Therefore, this article will start from the view point of enterprise management to introduce a strategic idea into the study on financial management and choose financial strategy on the base of business life cycle.There are seven chapters in this article. The first part is the introduction, including the meaning and purpose of this research, internal and external researching conditions, researching method and new arguments in this article.The second part is about financial strategy and business life cycle. Some related concepts of financial strategy are introduced firstly, including the meaning, the characteristics and the content of financial strategy; and then from the points of development of financial theories, objectives of financial management and sustainable development, argues the necessity of financial strategy based on business life cycle.The third to the sixth parts analyze financial characteristics, investing strategy, fund-raising strategy and profit-distributing strategy from initiating period to growing period then to mature period and to decaying period. During initiating period, the enterprise couldn't deal with external risk very well, and insufficient operational experience, lack of funds and non-formed competitive capacities are also serious problems. The point of financial strategy is how to raise fund to conduct concentrating investment, and none of profit-distributing is preferred. During growing period, fund-raising is the motive force of enterprise's growing. The enterprise comes into being quite a large-scaled one through expansion, but also with more risk. During this period, if hoping to grow and expand smoothly, the enterprise shall break through the restriction of funds for expansion, carry on integral-growing strategy to realize strategic expansion, and take surplus-dividend plan to distribute profit according to investing chances. During mature period, sufficient fund, core-capacities and large-scale have been formed, but some symptoms of bureaucrat and "big corporation" in management are also coming up. Low-credit capital structure and internal approaches to raise fund are suitable for mature period, and diversified investing strategy is proper to scatter risk and avoid excessive competition. Stable or stable-growing dividend policy can be carried out. After the enterprise enter the decaying period, business increase is stopping, sales and profit fall obviously. The point of financial strategy is sustaining sufficient cash flow and concentrating all the financial resources to renew strategy and open up another new prospect. During this period, less dividend is better and stock-withdrawal is a good choice. In this way cash could be return to stockholders, they can invest on other high-rewarded projects to achieve the maximum of stockholders' properties.The last part locates on something else about choice of financial strategy.From the above, this article, based on financial theory and corporation management, adopt knowledge of management to combine strategic ideas with financial management during the whole business life cycle, and attempt to build up a theoretical framework that will guide enterprises to choose a financial strategy for sustainable development.