M & A Strategy Based On The Core Competitiveness Of Enterprises

TORCH AUTOMOBILE GROUP CO., LTD (HUNAN TORCH) is the largest company in Hunan mechanical industry. HUNAN TORCH is a public company, which aims to achieve an accomplishment in the automobile industry. After HUNAN TORCH was acquired by a famous private company-DELONG in 1997, it started to expand through mergers, unceasingly developed its own core competence, and has become a star enterprise which has an influence in domestic automobile industry. This article tries to combine core competence theory with merger and acquisition principle through analyzing content of core competence and using it as main thread, making promoting core competitive ability as the starting point and ending point of enterprise merging.First of all, this article generalizes theories of core competence and merger & acquisition, and discusses the interaction between the formation of core competence and mergers in the form of penetratingly analyzing merging strategies which is determined by the core technical competence, core marketing competence, and core managing competence of TORCH. Next, this article reviews the course of HUNAN TROCH's development, and analyzes the reasons of its rapid development with core competence theory simultaneously. The process of evolution of merging strategy of HUNAN TORCH is also the procedure of formation of its core competence. At the same time, this article assesses and analyzes merging cases of FAST, SHANXI HEAVY-DUTY TRUCK and YINGDE GAS.On the foundation of previous research, this article further expound inspirations and existing problems of merging strategy of HUNAN TORCH to make these considerations have theoretical and practical significance on enterprise's subsequent development. HUNAN TORCH's successful experience mainly is that it paid great attention to industry research to look for appropriate merger targets, focused on integration after merger, dramatically took advantage of capital market to finance its mergers, consolidated its competence in the industry, and boosted its final profit yield to form an industry integration model. Simultaneously, This article profoundly analyzes two main problems in the implementation of merging strategy based on core competence of HUNAN TORCH: One is how to construct reasonable corporate capital structure to match rapid development of enterprise, the other is an issue about the industry integration.The key factor to judge the effect of a merging case is whether the integration after merger is successful other than its core competitence. This article puts forward the approach to promote enterprise core competence in the fields of integration management, organizing ability and fostering of enterprise culture.