Research Of Tong Ren Tang's Financing Strategy

Under the market environment of survival of fittest,some enterprises are growing prosperously and some are short-lived celebrities,which likes a sign.In this process,companies inevitably pursue the goals of “growth”,such as sales growth,profit growth,which consume the limited financial resources of the company.At the same time,the continuous growth of sales requires the company's funds to be added in time.What should companies do for obtaining reasonable raise and effectively create value on line with avoiding growth traps and achieving smooth and steady growth? Rational executives of companies should adopt the two-dimensional goal of value creation/sustainable growth as the guiding ideology for formulating financing policies,combining the values created by the two-dimensional matrix of value creation/sustainable growth,and make reasonable financing decisions to avoid corporate financial risk and value impairment which are caused by blind pursuit of the rapid growth.Therefore,this thesis adopts Tong Ren Tang,a company,as the investigative case from the perspective of two-dimensional matrix application based on the value creation/sustainable growth.By researching the financing policy choice of the famous old Chinese medicine brand that has experienced more than 300 years of wind and rain,this thesis compares and analyzes the actual implementation of the financing policy of Tong Ren Tang as well as the advice of the two-dimensional matrix of value creation/sustainable growth.This thesis evaluates the rationality and the diversity of the Tong Ren Tang financing political choice,hoping to sum up the excellent experience and inadequacies of the Tong Ren Tang financing political choice,indicating the direction to formulate appropriate financing for other pharmaceutical companies and promote the sustainable growth of value creation.This paper adopts a method of the combination of normative research and case studies,in which it expounds basic theories such as value creation and sustainable growth through deductive reasoning,and builds a two-dimensional matrix based on value creation and sustainable growth.The difference between the return on investment capital(ROIC)and the cost of capital(WACC)is the vertical axis variable,which measures the ability of the company to create value.The difference between the sustainable growth rate(SGR)and the sales growth rate(Gsale)is the horizontal axis variable,which measures the company's cash deficiency and balance.The ordinates are divided into four quadrants: the first one is the quadrant of value creation/cash shortage,the second one is the quadrant of value creation/cash surplus,the third one is the quadrant of value decreasing /cash surplus,and the last one is the quadrant of value decreasing /cash shortage.According this two-dimensional matrix,a reference plan for choosing financing policies under different quadrants is proposed.Then,using the case study method,this thesis takes Tong Ren Tang as an example and analyzes the two-dimensional matrix of value creation/sustainable growth of the company's financing policy choices over the past 17 years from 2000 to 2016,and verifies the feasibility of the two-dimensional matrix.This thesis is composed by five parts.In the first part,after briefly introducing the research background and implication,this part reviews the current domestic and foreign researches on the enterprise financing policy,explaining the research ideas,methods and the basic framework of the thesis.In the second part,the relevant theories on the selection of financing policies based on the two-dimensional matrix of value creation/sustainable growth are outlined.In the third part,the measurement indicators of sustainable growth and value creation based on the idea of the Boston Matrix construction,and constructs value creation/ Continue to grow the two-dimensional matrix model,and propose reference schemes for choosing financing policies under different quadrants have been identified.The fourth part is the application of the sustainable growth/value creation two-dimensional matrix in the enterprise.Taking Beijing Tong Ren Tang Co.,Ltd.as an example,and determining the position of value creation and capital gains/losses in the matrix of Tong Ren Tang for the past 17 years from 2000 to 2016 according to the index calculations.Investigate its actual implementation of financing policies in different quadrants.The fifth part is the summary of the case,Tong Ren Tang's financing policy selection,and then it makes a realistic assessment of the application of the sustainable growth/value creation two-dimensional matrix in corporate financing policy selection.