Research On The Profit Model Under The Extension Strategy Of Industrial Chain

With the deepening of industrial ties between enterprises,integrating the industrial chain using their own advantages is the only way for enterprises to develop.The purpose of industrial chain extension is to achieve synergies and thereby achieve higher profits.Profit models are the methods and measures taken by enterprises to achieve profits.The extension of the industrial chain will lead to corresponding changes in the profit model of enterprises,and ultimately the profit level of enterprises is determined by the profit model.However,in recent years,the phenomenon of high earnings and low earnings exists in many enterprises with extended industrial chains.Although they have conducted industrial chain extension,their profit level is not high,which deviates from the strategic objectives of the enterprise.In response to this issue,this article selects Huaxi Biological Company,which is a typical company that implements industrial chain extension,as the research object,and studies its profit model against the background of industrial chain extension.Firstly,from the perspective of the motivation and results of the extension,the ultimate purpose of Huaxi Biological’s industrial chain extension is to obtain greater profit space,and the extension result will bring changes in the elements of the profit model;Secondly,from the perspective of the effectiveness of the profit model under the extension of the industrial chain,this article sets up an evaluation index system based on synergy effects.First,the entropy method is used to conduct a longitudinal evaluation of the effectiveness of the profit model,and then the factor analysis method is used to conduct a horizontal evaluation of the effectiveness of the profit model.The evaluation results show that the scores of its horizontal and vertical dimensions have decreased,profit growth is slow,financial risks increase,and asset management level is poor;Thirdly,based on the evaluation of the effectiveness of the profit model,we analyzed the factors of the profit model and found that there were problems in the profit point,profit barrier,profit leverage,and profit source of Huaxi Biological,which led to poor evaluation of the overall effectiveness of the profit model.The reasons for the problems were: the strategic design did not follow the principle of moderation and rationality,and the profit model design did not have durability,Failure to align with long-term strategic development goals during the implementation of the profit model;Finally,based on the analysis above,and based on the smile curve theory,corresponding optimization suggestions are given around the elements of the profit model,which can be extended to other enterprises of the same type.It is suggested that other enterprises should not only adhere to the principle of moderation and rationality in strategic design,but also comply with the company’s long-term strategic development goals in the design and implementation of the profit model.I hope that the research in this article can provide some ideas for Huaxi Biological Company in optimizing its profit model,and also hope to play a reference role in the design of profit models for other pharmaceutical manufacturing enterprises that are extending the industrial chain.