Discussion On Financial Flexibility Policy Of Enterprise

Since it has gone to the 21 st century,economic globalization has become a trend.With domestic economic system constantly reforming and upgrading,the business environment has changed.Before 1980 s,because the economic boundaries are still clear,multinational companies have not yet formed today's scale,so the business environment is basically stable and predictable.However,with the development of the science and technology,the international economic business environment has become more and more intense.The financial crisis of 2008 is one of the examples.The financial crisis has hit the world's real economy,which caused the successes of superior enterprises and the failures of inferior.Through the statistics analysis of the enterprises in the financial crisis,we find that the shortage of financial flexibility leads to capital chain rupture,which is the main cause of failures of most enterprises in the crisis.On the contrary,enterprises that implement good financial flexible policies can not only survive in the crisis,but also fully grasp the "shuffle" opportunity to expand and take merger and acquisition of bankrupt enterprises.Therefore,those companies can improve their overall strength and industry status.After the year 2013,China has stepped into the new normal economic development.Economic growth,quality-oriented and differentiated market competition makes business environment increasingly complex.Enterprises that want to maintain market competitiveness must increase investment and innovation ability.But the capital demand of investment and innovation is huge,which makes a higher request to the enterprise financial flexibility policy.TCL Group Co,Ltd,a listed company in Shenzhen,is a global intelligent product manufacturing and Internet Application Services group.After more than 30 years of development,it has become a leader in China's electronic information industry.In 2014,TCL Group adjusted the original "5+5" industrial structure to the new "7+3+1” structure,hoping to speed up Smart plus internet transition strategy,establish Products plus Services new business model,construct and display different value of business sectors and motive industry synergy effect.The TCL Group is one of a group of typical household appliance manufacturing enterprises that has experienced a difficult beginning,and high-speed development to the decline in competitiveness.It faced fierce market competition and survived under multiple pressures.And that is main background of discussion on the group's financial flexibility policy.In view of this,combined with the theory of corporate financial flexibility policy and TCL Group's own operating characteristics,industry characteristics,financial management measures,this paper makes a deep research in its strategic motivations,management strategy and implementation effect of financial flexibility policy.This article also describes a series of measures taken by the TCL Group to implement a financial flexibility policy.Through a discussion of the overall financial flexibility policy of the TCL group,including an introduction,analysis and summaries,the author hopes to put forward suggestions for the financial policy of Chinese enterprises.And at the same time,it can provide a new effective way and governance mode for the financial entities of our country to effectively deal with the financial environment and the uncertainty of the system itself,so as to improve the allocation efficiency of financial resources.This article is divided into five parts: the first part is the introduction.It introduced the research background and significance,as well as related literature on financial flexibility and financial flexibility policy by domestic and foreign scholars.And it put forward research ideas and methods.The second part discusses the implication of financial flexibility policy,the implementation framework of financial flexibility policy,the economic consequences of financial flexibility policy,and summarizes the theoretical basis of financial flexibility policy,which makes theoretical groundwork for case analysis.The third part is the case introduction.It describes the basic situation of TCL Group,such as the corporate governance structure.And it briefly describes the financial flexibility policies of the TCL Group and its institutional background,which is the background information for case analysis.The forth part is the case analysis.First of all,the paper expounds the strategic motives of the financial flexible policies of the TCL group from the internal and external aspects of the TCL group.The main reasons of the group's financial flexibility policy are to meet product innovation,cope with group strategic transformation,and weaken overcapacity and enhance investment.It then describes the objectives,influencing factors and implementation of the financial flexibility policy of the TCL group.The company adopted concrete measures to reserve and release financial flexibility,such as selling assets,using business reorganization,early redeeming of convertible bonds,and build green cycle industry chain in response to "Cloud computing" challenge.Finally,the financial flexibility of the TCL Group and the effect of implementing financial flexibility policy are discussed in depth with the combination of qualitative analysis and quantitative analysis.In the quantitative analysis part,the method of measuring financial flexibility is used,and the cash flexibility level is considered.= Enterprise Cash ratio-industry average cash ratio;liabilities flexibility =max {0,industry average debt ratio-Corporate debt ratio};Combined financial flexibility level = cash Flexibility level + debt Flexibility level + equity flexibility level.This paper does not include the measurement of the flexible level of the rights and interests because of difficulties but only include qualitative analysis.In evaluating the financial flexibility policies of the TCL group,this paper considers that the cash flexibility management reduces the adverse impact before and after the financial crisis,and the flexible management of liabilities increases TCL product innovation ability,and the equity flexible management supports the strategic transformation as well as the industrial layout.At the same time,the combination of flexible management strengthens its investment ability,enhances the investment efficiency,and maximizes the enterprise value.Finally,through the analysis of the overall financial flexibility of the TCL,the author concludes that the enterprise should pay attention to the financial flexibility policy,optimize the resource allocation with the internal and external environment,reserve and release the financial flexibility in time,and maximize the enterprise's value.