LG Financial Support For The Real Estate Company Under The Background Of Strategic Transformation

With the further development of Chinese socialist market economy,the operation of enterprises is increasingly influenced by outstanding factors such as market and policies.The rapid change of external environment affects the choice of enterprise development strategy and the formulation and implementation of long-term planning.It is because the internal and external environment of the enterprise has an impact on its operation,the strategic transformation and extension is the only way for enterprises to guarantee long-term stable development.Influenced by the market's regulation from government and the changes of the supply and demand of commercial housing,the Chinese real estate market is gradually cooling down.Regulation of housing prices and scarcity of land resources in our country lead to a rising of land price and reduce the profit space of real estate enterprise.Some small-or-medium-sized real estate companies fail to recover its investment funds and collapse.Facing the depressed housing market,many real estate companies chose strategic transformation.LG also chose to make a strategic transition in the urgent need based on steady development of the original real estate and hotel business.The company has made its plan to enter the three market sectors of education,medical care and culture tourism.As a medium sized real estate enterprise listed in Hong Kong,LG has a small capital which restrict its transformation strategy.Similar to most real estate enterprises in China,LG mainly operates in the way of creditor's rights financing,and is more dependent on bank loans.Enterprise in the process of strategic transformation,puts forward higher requirements to money and capital structure.So the single debt financing way and bad capital structure will bring enterprise greater business risk and financial risk.In this situation,financial support policy is the key for enterprise strategic transformation.This paper expounds the related definitions of development strategy,strategic transformation,and financial strategies at first.Meanwhile,it clarifies the support role of financial strategies in strategic transformation and points out the financial risk lead by the implementation of financial support policies.With the theoretical basis,this paper introduces LG's original real estate and hotel strategy and analyzes the strategic transforming necessities based on its existing internal operation and market competition environment by using PEST and SWOT.Besides,it introduces the education strategy,medical retirement strategy and cultural tourism strategy of LG,and further analyzes the advantages and feasibility of these new strategic plans.This paper proposes a financial support strategy based on broadening financing channels and optimizing financial structure.To broaden the financing channel,this paper puts forward several new financing methods based on the financial support strategy implemented by LG.And for the optimizing financial structure,it focuses on the optimization management and timely adjustment of capital structure.And then this paper analyzes the risk of implementing financial support strategies and put forward the corresponding countermeasures.This paper proposes financial support strategy for real estate enterprises in strategic transformation through the combination of quantitative and qualitative case study method.