Research On FS Group Management Control

Judged from the history of business operations and development, the formation of a great majority of China’s corporate groups is not based on natural selection or growth of the market. As these giant corporate groups continue to grow and expand its business involving various industries, proper coordination and management of these industries becomes imminent. However, property right ambiguity between parent company and subsidiaries, corporate governance structure unavailability and incomplete management mechanism currently existing bring congenital disadvantages that subsidiaries and business clusters within the same corporate group are usually gathered but without sufficient and proper organization. How to properly understand and handle the parent company-subsidiary relationship, build effective management&control systems, reasonably centralize and de-centralize for maximum value creation by the corporate group becomes a major theme calling for an urgent solution. This article describes and analyzes current status of management&control mechanism of FS Group and gives a proposal on re-design of management&control pattern and strategies of the corporate group over its subsidiaries, based on overall strategy formation and analysis of the corporate group and its strategic value decomposition as well as on business positioning, current development status and existing problems of its subsidiaries. A strategic value decomposition-based selection of group management&control pattern and establishment of responsibility&power system are recommended in this article after study of corporate theory, management&control theory, contingency theory, distribution of ownership&control right and analysis of the corporate management status and existing problems. A proposal for combination of centralization and de-centralization, based on the corporate strategies and each subsidiary management status, is made in this article for building a platform of sharing resources and parent company-subsidiary synergy to ultimately maximize value creation, instead of the traditional management&control practice.The practical sense of this article lies in:Adopting the principle of management&control over each specific industrial segment. This means to select a management&control pattern that matches the right control demand and development status of a particular business unit after overall analysis of FS Group’s business background and industrial composition based on current external environment and internal status and exact strategic positioning. Maximization of value creation and ultimate strategy realization by: Reasonably building a balanced pattern of centralization and decentralization in FS corporate organization design, dynamic designing the organization structure to satisfy new strategic needs and development status; Integrating value and functions closely related to the corporate competitiveness; Coordinating the corporate resources that cover research&development, supply chain, talents and finance; And enabling subsidiaries to achieve synergetic effect. Rearranging key strategic elements Vs key value factors, based on FS Group’s5-year strategic planning and putting these elements into work of each functional department to push forward annually. Through strategic value decomposition, the corporate macro strategic elements are effectively related to specific work tasks and measures to be taken. This way, the key value of each functional department and work responsibilities to be taken for realization of the key value are defined, laying a solid foundation for landing of the corporate strategies and showing the right direction and key points for specific work of each functional department.