Research On New Hope Dairy Working Capital Management Based On The Value Chain

The market size of China’s dairy sector is expanding year by year,thanks to the upgrading of consumption and enrichment of dairy products,and the market’s focus is shifting from ambient milk to low-temperature milk.By leveraging the brand effect and user stickiness of the acquired dairy enterprises,New Hope Dairy has exploited this market gap and gained the lead in the low-temperature milk industry.New Hope Dairy has been involved in numerous mergers and acquisitions since its inception,and it is currently in its third cycle.New Hope Dairy’s requirement for capital is increasing as the company grows in size,making working capital management increasingly complex.Working capital management is a long-standing practice.New Hope Dairy’s working capital management demands are no longer met by the traditional working capital management methodology,which solely examines individual projects in isolation.The dairy industry’s value chain is extensive,with raw milk supply in the upstream and dairy product sales in the downstream serving as the primary profit generators.As a result,this paper uses the value chain as a strategic management tool to examine New Hope Dairy’s working capital management and examines the working capital management status of each value chain to optimize working capital management and increase the company’s competitive advantage.Based on financial data from New Hope Dairy from 2016 to 2020,this article uses the literature research approach,case study method,and financial analysis method to assess the working capital management of New Hope Dairy from the perspective of the value chain.Based on an overview of New Hope Dairy’s basic situation,the company’s current working capital management situation is analyzed,primarily from the scale of working capital and management strategies,and the company’s working capital management situation in the procurement,production and sales segments is analyzed in conjunction with the value chain perspective,and compared to Yili Co.,Ltd.and Bright Dairy from horizontal and vertical perspectives.The following issues with New Hope Dairy’s working capital management were discovered through these analyses: a high proportion of raw materials in the procurement process and the excessive use of suppliers’ funds;a large number of other payables in the production process;and the slow recovery of accounts receivable in the sales process and the single distribution channel.Specific optimization suggestions are given at the end of the article in response to the problems identified in the analysis: develop appropriate procurement strategies in the procurement segment,optimize raw material stock and establish a supplier cooperation mechanism,and make reasonable use of commercial credit;standardize the management of other payables in the production segment;optimize the channel structure in the sales segment.We hope that by analyzing this report,we will be able to assist New Hope Dairy in improving its working capital management capabilities,as well as providing references for other dairy companies.