The Motivation And Financial Efficiency Analysis Of ShengNong's Vertical Integration Operation

With the continuous improvement of industrialization and modernization level of domestic broiler chicken breeding industry,the degree of industrial agglomeration also increases.At the same time,with the increasing attention of the public to food safety,the integrated management mode of the industrial chain of broiler chicken breeding enterprises will become the development trend of the broiler chicken industry,because only in this way can the whole-process supervision from the farm head to the table be truly realized.At present,most scholars take mature manufacturing enterprises and energy enterprises as research objects,but there is still a large space for the research of listed animal husbandry companies.This paper will take vertical integration and financial performance as the research topic,focus on the white feather chicken breeding industry,and conduct a case study on ShengNong Development on the basis of previous studies.ShengNong Development is the largest enterprise in the breeding and slaughtering of white-feather chicken industry in China and the only one that has completed the whole industrial chain.Through research,this paper summarizes the motivation of implementation of vertical integration in ShengNong Development as five aspects:realizing scale operation and reducing production cost;Effectively prevent the epidemic and improve the controllability;Extend the upstream industry and ensure the stable supply of raw materials;Control source quality and ensure food safety for consumers;Enter the field of consumer goods to ensure the profit space of enterprises.Based on the index system of performance analysis and EVA performance analysis,vertical integration does not make the enterprise from the effects of low industry,but it can improve the stability of the operation,but the layout of the industrial integration needs strong capital support,enterprise debt burden heavier and even affect the risk of profitability.Moreover,only when vertical integration is relatively mature and the industrial chain is relatively complete can it promote the financial performance of enterprises,which can explain that the financial performance of ShengNong Development in the backward integration stage is worse than that in the non-integration stage,and it gradually recovers in the full integration stage.This paper consists of five parts:the first part introduces the research background and significance,literature review,research ideas and methods,as well as the innovation and limitations of this research.The literature review reviews the motivation,path and financial performance of vertical integration.The second part describes the relevant concepts and theoretical basis,including the concept of vertical integration and motivation theory,as well as the introduction of financial indicators performance evaluation system.The third part briefly introduces ShengNong Development and its vertical integration process,which focuses on motivation analysis.The fourth part is the main body of this article,this paper collected the agricultural development of financial data from 2010 to 2018,using the two methods to analyze the financial performance:one is according to the enterprise performance evaluation standard published by SASAC to build financial index system in animal husbandry industry,from the state of profitability,asset quality,debt risk and business growth conditions four aspects do performance analysis,concrete is divided into vertical and horizontal analysis of comparative analysis;The second is to use the method of economic added value to do performance analysis and measure the comprehensive operating performance.The fifth part includes the research conclusion,experience summary and enlightenment.If the livestock industry wants to achieve vertical integration,there are four experiences that can be used for reference:timely introduction of high-quality foreign capital,extension of industrial chain to the field of food deep processing,hedging of raw materials and realization of standardized scale breeding.The implementation of integration should avoid the risk of capital flow tension,and forward integration can better improve the financial performance of enterprises than backward integration.There are two innovation points of this paper:the first,was in a financial performance longitudinal comparative analysis,this article will take extending the industry chain to the ancestral chicken breeding and acquiring ShengNong Food Ltd as a two year time node,the timeline is divided into three stages:no vertical integration stage,back towards integration stage and full integration phase,which is more general and more clearly reflects the vertical integration strategy before and after the implementation of the financial indicators of change and impact on financial performance;Secondly,in the horizontal comparative analysis of financial performance,the horizontal comparative analysis was conducted among the ShengNong Development and the industry average,as well as.the MINHE,so as to make the research conclusion more objective.Through the comprehensive analysis of the horizontal and vertical,the literature and theories about the performance change of listed companies will be more abundant.