The Research On The Financial Strategy Of The HC Company Under The Specialization Strategy

The vehicle manufacturing industry in China has been booming in recent years,which provides a huge market space for the auto parts manufacturing industry.However,there are still many problems in the development of auto parts industry in China,such as the market share being occupied by foreign capital,lack of innovation and low value-added products.These problems can not be solved without a steady and reasonable allocation of large amounts of funds.It is important and necessary for the manufacturers to put forward effective financial strategies that meet the needs of corporate strategy.Considering that most of the auto parts manufacturers in China are small and medium-sized enterprises,most of them just make their own strategic development goals without a clear financial strategy and are in lack of elaborative management.Therefore,the research on financial strategies of small and medium-sized auto parts manufacturing companies in China is very important and urgent.This article adopts a combination of literature research and case analysis methods.Based on the review of domestic and foreign related literature,through field research and gathering relevant data,we study the financial strategy of the HC company,a medium-sized auto parts manufacturing company under the specialization strategy.First of all,this article summarizes the concepts of specialized strategy and related theories of financial strategy.Then,it elaborates the present situation of auto parts manufacturing industry,the problems and the characteristics of its financial strategy.Combined with the overall strategy and actual situation of the HC company,the SWOT analysis of the HC company is applied to help the analysis of the current financial strategy of the HC company.On account of major investment made by the HC company in 2011 to establish a new factory,this article focused on the analysis of the financial status the HC company from 2011 to 2016 from the perspectives of growth,solvency,operating capacity and profitability.Thus pointing out and analyze many problems that the company exists,such as the financial problems caused by the unreasonable financial strategy,poor working capital management,unstable profitability and poor cost and expense management.In view of the above financial issues,this article conducts a more detailed analysis of the current investment strategy,financing strategy and operation strategy of the HC company,and analyzes the three aspects of the management of accounts receivable,inventory management and cost management.Then the paper constructs the financial strategy matrix of the HC company,using the financial data of HC company for nearly six years to calculate and analyze,thus evaluating the effect of the financial strategy implementation of the HC company,drawing conclusions and putting forward related optimization suggestions for financial strategy of the HC company.This study finds that the HC company has had cash surpluses for the past six years under the specialization strategy.The remaining four years have detracted from the value except for 2011 and 2013,i.e.,the HC company has generally reduced the value of losses and the overall financial strategy has failed to obtain significant implementation effect.Because the income distribution strategy of the HC company is in line with the characteristics of private enterprises with high equity concentration,it adopts a profit distribution strategy that minimizes the distribution of after-tax profits and more retained profits,so the income distribution strategy has a better effect;its direction of the strategy is basically correct,but the implementation effect is not significant;the financing strategy is relatively reasonable,but the implementation effect is not significant;the operational strategy fails to achieve a good implementation effect.In the future,the HC company should continue to take the path of specialization and continue to adopt the current revenue distribution strategy.In terms of investment strategies,we should appropriately increase the capital investment in information,low-carbonization and intelligent new products;in terms of financing strategies,it is necessary to further improve the capital structure of the company and reduce the weighted average cost of capital.As for the operational strategies,it is imperative to fine-tune control over accounts receivable,prevent overstocking of inventory,reduce costs and expenses reasonably and improve the company’s asset utilization efficiency and net operating rate.In this way,the ability to create value of the HC company will be improved thoroughly.Through the case study of the HC company,we can see that only by timely formulating and implementing a proper financial strategy based on its overall strategy can the company continuously improve the degree of product innovation,create new profit growth points for the company and achieve sustainable development.The conclusion and analysis is of certain reference significance for small auto parts manufacturing companies.