| Summary: | 碩士 === 國立成功大學 === 高階管理碩士在職專班(EMBA) === 104 === The process of transforming business needs long-standing development and observation. When entrepreneur transforming business into private brand, a greatly modulation will happen to its business model or financial planning, especially to an OEM company when decides to have its own brand, such a business might face higher operational risks due to its changing of business model. Additionally, a small business needs to face its sources of funds to properly support the product marketing, sales channel arrangement and brand reputation enlargement. In this changing and competing environment, a business will have opportunity for its long-term strategy if it has sufficient and flexible funds. In order to provide a direction about fundraising strategy to the mentioned transforming enterprises, the purpose of this research aims to the risk analyses of OBM enterprises transformation from the perspectives of financing-fundraising strategies and optimal capital structure.
This case study analyzes the risks during the course of branding transformation and raising funds from the different aspects; finds out the rational precautionary measures to make the risks of the enterprise's fund-raising lowest and the benefit highest.
INTRODUCTION
For recent years, due to the international financial crisis influence and changes in the general environment to make shallow dish markets Taiwan enterprises exist face prodigious challenge.Taiwan’s economic recovery slowly, business transformation or upgrade innovation become Taiwan’s business life hot issue. Rresearchers found out the global market of usage on cosmetics had been more life-oriented, especially new developing countries are raising the popularity of cosmetics, force the industrial value of cosmetics in Taiwan and China had grow rapidly Companies want to achieve transformation need to put limited resources on core business. And In the upgrade process, will face to the change of business risk actually enterprises business performance and risk will inflect to financial information, so financial planning is an important economic management of business transformation. The research aimed to probe the connection of business transition strategy and finance management of minor enterprises. Through the experience of a Taiwan cosmetic firm developing private brand, could explore the investment and financing strategy and give assistance business would decrease the overall risk, and support business transform into private brand successfully. hence being a reference for other entrepreneur willing to develop private brand in further period.
MATERIALS AND METHODS
In this research, a cosmetics company is chosen as an actual case of brand transition strategy, within its development we find out how this twenty-year case company once started up its OEM business now transforms into an OBM business, especially on how to map out its plans of capital requirements, operations, investments, and financing, in order to respond to the market changes.
This research is “The Funding Strategy of Enterprises Transformation: The Brand Development of An Example Small-and-Medium-Enterprise”, so as to explore the case company‘s “Why - why transformed to OBM business ? ” and “How - how they did it ? ” by using the Case Study Method to find out the Phenomenon, Story, Insight, and Implication thereat. By applying the Qualitative Research Method can properly meet the purpose to this research, that is through a single case study by collecting and analyzing its files and data, interpreting one or more decisions upon its phenomena and why/how the decision(s) could be adopted and what circumstances were occurred by the decision(s), and exploring the key causes that affected its development via various theories.
RESULTS AND DISCUSSION
This research bases on the brand transformation is the enterprise’ strategy to its sustainable operation and growth, this paper provides in-depth interpretation and discussion to the case study respectively on the current cosmetics market development, future industrial development trends, risk analysis, fundraising and financing strategies, and the optimal capital structure. The purposes of research, research questions, research results and conclusions are summarized as below.(1).The necessity and challenge of brand transformation.(2).Brand transformation did increase operational and financial risks to the case company.(3).The case company’s capital structure was not the optimal capital structure.(4).The currencies of borrowing and rates did affect the case company’s financial approach and decision making.
This research of this study had found that the SME in Taiwan affect by nationalism and home world concept, entrepreneur used to operate business by its own or family funds, do not pay attention on finance management at the beginning of starting business or prepare a long term plan. Then start to attach importance to the issue when having problems with funds through developing business and expand operations. Therefore, most of the entrepreneur deal with the funding requirements by bank financing at the first time, but ignore the risk and meaning toward the capital structure and the cost of funds. Once the loan increase and enlarge the financial leverage index, the cost of capital and financial risk would raise as well. When the environment changes or business environment is not as expected, will cause the relation with banking being tension and affect the development of the company at the late stage. therefore, the management of the funds should select the equity capital which is less repayment pressure. It can finished company intrinsic quality checkup and development towards capital market. Then will have enough capital funds could develop the brand, on the other hand, when being a listed company at over-the-counter market, it will be much easier to accumulation brand reputation. More and more investment channel existing in capital market could help company development, which will not be limited by the debt funds with banking. Research suggest the entrepreneur of the management team that willing to transform business into private brand, should review the finance quality first and then propose a complete financial planning, build up its own competitive advantage and stable business environment, then will hold the key lead to company sustainability.
CONCLUSION
This research aims to find out what operational risks and changes the case company has faced due to its brand transformation, by analyzing its financial risks and solutions in its fundraising process, we hope to help the enterprises to reach the minimum transformation and fundraising risks, and to achieve the maximum benefits. According to its business activities Industrial and restructuring needs to analysis business risk and establish basic of financial management, in addition to contribute learn funding needs financial and planning, also help enterprise rethink how to choose financing tools and application of risk management and control. This study is as follows:
1. Due to the profit depression of OEM and the future cosmetics industrial trend analysis, we have found that by building its unique brand image and brand meaning are the key competitive advantages in this industry. Furthermore, with the government’s greatly support to The Bioscience Technology Industry and The Cultural and Creative Industry, it also boosts the case company‘s necessity to transform its business from OEM to a private brand company.
2. Debt financing is like a double-edged-sword, it may increase the profitability if a company adopts this approach properly, but over-indebtedness will lead a company into severer risks. If the case company could amend its capital structure and financing approaches in order to improve its finance quality, it will be very helpful to its future brand development.
3. The Optimal Capital Structure Theory can be perfectly applied to the small and medium enterprises’ (SMEs) financial risk evaluation. By using various financial measurement benchmarks to examine the case company‘s operating risks and to calculate its real cost of funds, and by Interest Protection Multiples to find out the case company‘s optimal capital structure and its weighted average cost of capital, these will allow room for the case company‘s future financing in favor to its business adaptability and long term operation.
4. Consider the currencies, exchange rates and fluctuations in cash flow before working out the financing approach, this could reduce a company‘s insolvency risk and will also maximize the enterprise value.
|
|---|
