A Diagnosis Report For LH Road Construction Company’s Operation Deficit

LH road construction engineering company is a professional road and bridge construction unit, which is a subsidiary company of LH. In the oilfield’s exploration and development period, the company’s operating conditions is well. After1992, in the condition of the oilfield’s workload shrinking, the company enters into the social market, But because of the complexity of the social project’s construction environment, low profits, the rising enterprise’s fixed and half fixed costs and the influence and restriction of some contradictions, such as the inadaptation of the state-owned enterprise system mechanism and social market,despite years of hard work of all the company,it has been at a loss difficulties. Every year a quarter of fixed costs of the company needed the subsidies of the oilfield company and the operating conditions were very difficult. This study led to the discussion about the LH company’s loss through the review of the LH road engineering company’s current situation.The first of the article is the introduction and review of theory.The introduction mainly states the research background, significance, main content and the idea. Theoretical part provides a brief introduction to the theory of corporate competitiveness, and the theory of cost management. Then, in the understanding of the internal and external environment of the enterprise, on the basis of three aspects of the competitiveness of enterprises, the cost status and break-even analysis to find out the real reason for the losses of the enterprise. Finally, this paper elaborates the specific plan about how to make the company change it’s loss situation.Through the analysis of the operating status of the LH road company, we found the less competitive of market and high cost are the main reason that lead to the loss. Among three markets, road projects and the internal market have more strong competitiveness than roadbed projects; LH road construction company’s labor costs, materials costs and machinery costs are three highest proportion of the cost. In order to turn around, LH road must enhance the market competitiveness and reduce costs, which is the only way to enable their company continue to develop.