Research On Sustainable Growth Problem Of Li-Ning Co. Ltd. From A Financial View

With the new era of the21st century coming, enterprises from different industries all around the world are facing a series of politic or economic issues, such as the financial crisis, the European debt crisis, political unrest and so on.《No.2of the Application Guidelines for Enterprise Internal Control-Development Strategy)) summarizes the main development-relative risks that one enterprise would suffer in three categories:blundering away opportunities because of insufficient development; leading to business failure because of unrealistic over-expansion and radical development; the survival and sustainable development of the enterprise may be endangered by frequently changing the development strategic, which always causes a huge waste of resources.Under such delicate circumstances, it is a seasonal and practice-required issue to analyze the way how an enterprise develops by using sustainable growth model and accounting data based on sustainable financial growth.Traditional studies on sustainable growth are mostly concentrated in modifying or testing the applicability of several sustainable growth models, large sample empirical test on whether one industry realized the sustainable growth, while studies focused on the development of one enterprise are rare. The second wave of development throughout the sporting goods industry was set off in the year of Olympic Games2008when LI-NING Co. achieved explosive growth as the representative enterprise of this industry. Today, however, this former leader is encircled by plenty of bottlenecks including a great deficit, a huge backlog of inventories and so on. Therefore, choosing LI-NING Co. as a case to explore the sustainable growth management issues and suggestions, it not only can compensate for the lack of sustainable growth management research, but also has important practice significance for the development of the sporting goods industry which is suffering development barriers.In this paper, after combing sustainable growth theory and research achievements, I calculated the sustainable growth rate of LI-NING Co. based on Higgins’model and compared it with real growth rate. It came to a conclusion that LI-NING Co. experienced roller-coaster type of growth, which was excessive or insufficient around 2008the Olympic year. In addition, the paper analyzed the growth bias and discovered the problems over the company’s management and financial policies-extensive management; inventory backlog and bad debts causing low assets-running efficiency; weak control of distribution channels and challenges of reform; financing policy instability, risk of extreme distribution; unreasonable dividend policy; financial leverage being adjusted against the market trend; etc. Finally, the paper put forward several operational proposals to provide a reference for the whole industry which was experiencing industry downturn to achieve a sustainable and healthy development.At last, this article lists several practical suggestions according to the problems discovered in former chapters:implementing the Products Delicacy Management; accelerating asset turnover by promotion through effectively combining physical stores with channels online and improved accounts receivable management; adapting the dividend policy and financing strategy to the company’s development stage; etc.. These rough suggestions are expected to provide a reference for the sporting goods industry which is experiencing low ebb on how to achieve sustainable and healthy development.