Author: ZHU Muyang |
It’s really my honor to be here today and give this speech. First of all, I would like to say congratulations to our institute. Happy 70th birthday. And also I would like to say thank you to every collegue for how much effort you have put into your work. Without you, we wouldn’t have achievement so much or standing where we are.
What is Group Corporation?
I come from CHANGGUANG Group, since our department is quite different from other research and function departments, so I would like to share some information about what we really do and why it’s so important.
To start today’s topic, let’s first talk about what group corporation is. By definition, a group corporation refers to a group of companies with capital as the main connection (capital can be in the form of cash funding, intangible assets, or other resources). It is organized to act together for a certain purpose usually made by the parent company. The parent and subsidiary companies follow the “Group Charter” as their common Code of Conduct. So in general, a group corporation refers to a large company operates on large-scale of assets, governs numerous production and business units, and has its own interests in the field of other enterprises.
The definition of "Group Corporation" has not been mentioned by law, and the organizational forms of group corporations, just like all other companies, are limited to limited liability companies and Co., Ltd. for listed company. In practice, the term “group” refers to an enterprise alliance formed by multiple companies that are closely linked in business, circulation, production, etc. In addition, some companies carry out a diversification strategy and set up corresponding subsidiaries in many fields, so that the parent and subsidiary companies will also form an enterprise group because of this strategic layout relationship.
What is CHANGGUANG Group?
CHANGGUANG Group is a wholly-owned subsidiary company of CIOMP formed in 2016, specializing in the management of operational assets. Based on the
Types of Group Corporation
There are three types of Group Corporation, “financial management and control”, “strategic management and control” and “operational management and control”, these classifications are made mainly based on the degree of centralization of power within the group.
“Financial management and control model” has the group headquarters serve as the investment decision-making center, with the goal set to maximize the capital value, and the management method is mainly based on the assessment and control of financial indicators. In a group that implements this model, the business correlation of each subsidiary may be quite low. This model can be described as "having a head, but act with no hands or feet" for the headquarter. The “Morgan Financial Group”, “Rockefeller Financial Group”, “Everbright Group” are examples of group corporation adapting this model.
The “Strategic management and control model” has its headquarters serves as the center of strategic decision-making and investment decision-making, with the goal of pursuing the overall strategic control of the group and the cultivation of synergistic effects. This management method is determined through the strategic planning and business planning system. It is used by mixed enterprise groups, such as Japan's Mitsubishi, Tokyo Financial Group, and State Grid Corporation of China and so on.
The “Operational management and control” model has the headquarters manages almost everything from strategic planning to implementation. The management of various functions of the group is deeply involved with the affiliated companies in order to ensure the implementation of the strategy and the achievement of the goals. For example, human resources management is not only responsible for the formulation of the HR system and policies, but also responsible for the selection, appointment and dismissal of certain member and key business leaders of each affiliated company. In a group that implements this management and control model, the business correlation of each subsidiary is very high. Example of Group Corporation adapting this model would be IBM.
We, the CHANGGUANG Group kind of fits with the Strategic management and control model. The management and control model must be adapted to match with the proper role set by the group corporation. Which model to choose is one of the key issues to be solved by the team. Once the model is established, the functional positioning and roles of the headquarters and its subordinate business units will be clearer on how to pursue future goals. The headquarters will help realize the overall value creation of the group by taking on key functions, and the subordinate members will also obtain reasonable authorization and carry out independent development and business activities according to the authorization.
Why are we so important?
So I think we have talked so much about what we do, but a lot of you may still not be clear on why are we so important. In 2015, The State Council officially introduced the
We aim to provide professional, standardized, and scaled service in order to assist our affiliated companies to improve their long term development. CIOMP has made it through a long journey and Changguang is still at our early age. But I’m glad we’ve had a good start so far, and look forward for our future. Happy 70th birthday to CIOMP, I think I made the right decision to join this community. Thank you very much.