Chapter 77: Become Strong First, Then Become BigAfter returning to Jiuquan from the Bameng Farm Reclamation, Guo Yang asked someone to collect some recent journals and newspapers on the domestic dairy and seed industries. I looked at them one by one. In the seed industry, various seed companies are extremely busy due to the introduction of the Seed Law. But Guo Yang always felt that the seed industry had a lot of noise but slow action. "Government-run" seed group companies are busy going public, but these companies lack incentive mechanisms and it is difficult to avoid breeding corruption. Shazhou Seed Industry is one of the representatives. State-owned companies are busy with restructuring, but redundant employees who are difficult to lay off are still a heavy burden. For example, a county-level seed company has as many as 200-300 employees, but only seven or eight of them actually work and create profits. In addition, scientific research institutions are busy starting companies, private enterprises are busy competing, regional seed companies are busy banding together for warmth, and non-industry capital is busy with mergers and acquisitions. Seed companies across the country are fragmented and fragmented, and the vast majority of seed companies or breeding units have problems with unclear property rights and chaotic management. For Tianhe Seed Industry, it only needs to stick to the established seed industry strategic planning route. It does not seem to be a wise move to carry out large-scale mergers and acquisitions in the country at this time.
In the dairy industry, it was in the Warring States Period when many heroes emerged. Bright Dairy and Yili Group expanded rapidly in the industry, and a lot of capital from outside the industry also poured in. But the most eye-catching thing in the dairy industry in 2002 was the entry of New Hope. But when Guo Yang saw New Hope’s capital operation, he was stunned for a long time. In the second half of 2001, New Hope accidentally completed the acquisition and reorganization of Sichuan Yangping Dairy Company. But in the following year, the acquired Yangping Dairy showed good performance. Perhaps it was the huge profits of Yangping Dairy that caught the group leaders' attention. Since 2002, New Hope has spent more than RMB 4 million to acquire or participate in the shares of 12 local dairy companies that are ranked first or the best in the local market through acquisitions, mergers, reorganizations and cooperation. For example, Anhui Baidi Dairy, Chengdu Huaxi Dairy, Chongqing Tianyou Dairy, Yunnan Dengchuan Diequan Dairy, in addition, Jilin Province, Hangzhou City, Hebei Province, Shandong Province... In less than a year, New Hope Group has initially completed its layout in the national dairy market. New Hope Group's strong mergers and acquisitions in the feed industry that year achieved great success and also established the group's leading position in the feed industry. Now, if we want to use the same capital operation method to gain a leading position in the dairy market... Guo Yang stood up and walked to the window. At some point, the earth has been painted white, the buildings and trees are wearing snow hats, and the wood carvings have become particularly cute. The picturesque snowflakes are still falling from the sky, making this small city located in the northwestern frontier even more solemn, peaceful and beautiful. Guo Yang realized the limitations of the existing management of Alfalfa and Tianhe. The business is getting bigger and bigger, with more and more investment projects and employees. But it may be a problem brought back from farming in the previous life. The small peasant mentality is deeply rooted and the selfish psychological factors can never be erased. As a result, Guo Yang likes to do many things himself.
In my previous life, I was a farmer. Farming on a large scale is very risky. If I do well, I will have a good harvest, but if I do not, I will have no harvest at all. Therefore, it is more reliable to do it myself. Especially when it came to fertilizing and spraying pesticides, Guo Yang in his previous life basically never relied on others to do it. Even if drones are used for defense, he still has to do it himself in the end. When working in agriculture, don't think of yourself as a boss and rely too much on hiring people. The people you hire are equivalent to sharing your profits. Agriculture has low profits and high risks, and the slightest setback will get you deeper and deeper into trouble. There is a saying that goes: If you have a grudge against someone, ask him to do agriculture. He realized that he had brought the thinking and habits of his previous life into his current management. Obviously, as the scale expands, this set of rules becomes less applicable. But is New Hope’s capital operation model applicable? There is a very similar point in the strategic planning of Alfalfa and New Hope Group, both of which hope to open up the upstream and downstream industrial chains based on forage or feed, and form a relatively complete industrial system of planting industry (feed raw materials) - feed - breeding industry - food and dairy industry. The difference may be that New Hope's goal of operating the entire industry chain is to control costs... Thinking of this, the memory of Guo Yang's death began to rekindle. He recalled his experience looking for a job in his senior year, when he came into contact with New Hope. All I can say is that New Hope Group is indeed very advanced in cost management, especially in human cost control. Employee wages are generally low and expenses are strictly controlled. This is also the reason why New Hope has achieved great success in the feed industry where profits are slim. Guo Yang picked up a newspaper from the table. It also contained a fact that New Hope Group was proud of: the total salary expenditure of all employees of one of its subsidiaries was less than the monthly salary of the head of a subsidiary of its competitor, CP Group. New Hope Group eventually defeated CP Group by relying on low costs. In recent years, perhaps due to the emergence and rapid growth of Dikang Group, Brilliance Group and others. The former richest man in China felt lost and under tremendous pressure, so he developed a great interest in capital operations. Chairman Liu once said this about capital operation: "In the feed business, 2 to 2 people make 2 million yuan in profit a year; in real estate, to people make million yuan in profit a year; in capital operation, to people make million yuan in profit a year." This shows New Hope Group's love for capital operations. In terms of financial strength, Guo Yang asked himself that the funds he could mobilize now were not much worse than New Hope. The gaps are mainly in asset size, market share, marketing channels, production equipment, talent system, etc. So will Alfalfa Agriculture and Animal Husbandry learn from New Hope and join this mess? Perhaps if we continue to plan in this slow and measured way, the downstream market would have been divided up long ago. Guo Yang paced back and forth in the office thinking, sometimes sitting down, and sometimes standing in front of the window looking at the snow. At this moment he suddenly wanted to have a cigarette. I touched my pocket and remembered that this body didn't have the habit of smoking. I couldn't help but sigh: "As expected, Alfalfa Farm and Animal Husbandry are very similar to New Hope, with a strong patriarchal production style."
"The boss is responsible for everything, while the employees are responsible for everything." "I am the only one who makes the final decision on many important personnel arrangements and business decisions for Muhe." Even though Guo Yang has not studied management systematically, he knows that this management method has big problems. The company's organizational structure and corresponding functions are in name only, which not only dampens the enthusiasm of lower-level employees but also brings considerable decision-making risks. Thinking of this, Guo Yang gradually came up with an idea. If we look at it from the perspective of 20 years later, New Hope Group is still well-capitalized and has even entered into industries such as real estate, chemicals, finance, dairy, steel, and gas. Although there are many to see, there are few famous ones. Chemical industry is only slightly profitable, real estate has received mediocre response from the industry, the future of steel is uncertain, and the financial situation is slightly better without the participation of the group. In the dairy industry, it is still a second- or third-tier brand. After thinking for a long time, Guo Yang gradually made a decision. Strong and big are dialectical. If a company is strong but not big, it will sooner or later be in a relatively weak position and will eventually be swallowed up by the big ones. If a company is big but not strong, it will sooner or later be overtaken by the strong ones in development. Size does not equal competitiveness. More capital operations mean more dispersed resources, which also involves huge risks. Moreover, the biggest difficulty is the integration of enterprises after mergers and acquisitions. Alfalfa Agriculture and Animal Husbandry does not have the management capabilities, nor can it guarantee that it can grow bigger and then become stronger. Competition in the dairy industry will be fierce in the future. Instead, it is better to develop your own talent system, management team, marketing channels and corporate culture bit by bit. Become strong first, then grow bigger. But this does not mean sticking to the old ways; necessary mergers and acquisitions are also indispensable. Guo Yang called his assistant, who was a top student in business administration who was recently hired by the company. Xie Shijie, male, master's degree, tall, handsome, wearing a pair of black-framed glasses, looks gentle and refined. When I entered Guo Yang's office, his face was full of smiles and he looked full of energy. Seeing how motivated he was, Guo Yang also felt more motivated. The workers are so motivated, the bosses should take the lead! Roll it up! Guo Yang also raised his breath and ordered, "Shi Jie, notify the mid-level and above managers of the two companies to hold a meeting. Tianhe in the morning and Muhe in the afternoon." "Yes, boss!" Guo Yang shuddered for some unknown reason, "Don't shout so loudly next time. Go get busy." …… At the meeting, Guo Yang once again demonstrated his excellent patriarchal style and unilaterally announced the new decision. The two companies have selected one person each from the relevant fields of technology research and development, operations, finance, marketing, sales, human resources, and legal affairs to form an internal early-stage M&A team.
At the same time, we hire professional teams and personnel such as lawyers, accounting and tax experts, human resources consultants, and technical experts from outside. Subsequently, we started industry research and screening of M&A target companies in the surrounding areas. Problems arose only when the M&A team was being formed. (End of this chapter)