Research On Financial Risk Control Of Sichuan Changhong Under Diversified Business Strategy

At present,diversified development is a strategic transformation method for most enterprises to break the bottleneck and seek new opportunities.China’s home appliance industry has been developing rapidly.Since the implementation of the "13th Five-Year Plan" and the "Made in China 2025" strategy,competition has become increasingly fierce.At the same time,with the improvement of the Internet,the development of emerging home appliances has begun to break the operation mode of traditional home appliances,and the home appliance industry has launched a fierce competition in seizing the market,expanding channels,and upgrading products.Based on this,diversified development has gradually become the mainstream of the development of home appliance companies.From Haier’s smart home to Gree’s new energy vehicles,industry leaders have joined the diversified ranks.Some companies such as Haier and Midea have achieved success,and some companies such as As a result,Sichuan Changhong was caught in a dilemma,hobbled forward in a diversified transformation,and plunged into financial difficulties due to its own business problems.Therefore,corporate diversification needs to be built on good financial risk control capabilities.Sichuan Changhong,as a former home appliance leader,has experienced continuous decline or even loss since the implementation of the diversification strategy.On the one hand,due to the fierce market competition,the main business has been greatly impacted.The company is facing greater financial pressure and financial risks.Therefore,this article takes Sichuan Changhong as the research object,first expounds the research background and significance,and puts forward its own research methods and ideas based on the summary analysis of domestic and foreign literature.After clarifying the relevant concepts and theories of diversification and financial risk,this article combines Sichuan Changhong’s diversified operation status and financial index analysis results to first identify the financial riskse xisting in Sichuan Changhong’s diversified operations,and then uses the entropy method Determine the weight of the indicators,use the efficiency coefficient method to quantify the financial risks of Sichuan Changhong’s diversified operations,determine the financial risk of Sichuan Changhong based on the results of industry risk classification standards,and finally analyze the basis of Sichuan Changhong’s original financial risk control measures It found its defects andproposed targeted optimization measures.This article summarizes and analyzes the current status of Sichuan Changhong’s diversification through a case study method.It is concluded that Sichuan Changhong implements a comprehensive and diversified management strategy in which related diversification and non-relevant diversification are concurrently implemented,and Sichuan Changhong implements a diversified management strategy.The implementation is not scientific.Excessive investment in non-relevant diversification that is not highly profitable has led to the company’s main business becoming weaker since the implementation of the diversification strategy,and the diversified business has become more costly.The failure of the diversified business strategy put Sichuan Changhong into financial difficulties and faced financial risks in thefiercely competitive home appliance market.Using the combination of entropy and efficacy coefficient methods,Sichuan Changhong was assessed to be at a moderate risk.Based on the literature research method and Sichuan Changhong’s specific situation,this article putsforward four suggestions for Sichuan Changhong’s risk investment,fundraising,and identification of its specific risks combined with itsrisk control situation.It is hoped that through the analysis of thisarticle,it can provide a little reference for companies implementingdive rsified business strategies.