Strategic Thinking On Shortage Of Funds In Wu Gu Dao Chang

Recently, Wang Zhongwang, chairman of Zhong Wang Group, explained to the media why he was trapped in the crisis of capital chain. "We have invested huge amounts in our initial capacity and brand, and this has resulted in inflexible capital turnover."

President Wang acknowledged that the capital chain crisis is serious. "In the past 8 years, although the capital chain has not been loosened, it has never been so sad."

He thought that "the most scarce thing now is money."

How to solve the problem of lack of money?

He said that the most important task in the near future is to communicate with banks, suppliers, distributors and other links, and are working hard to raise funds.

Since the chairman of the board said that "the most scarce part of money now is money", we will focus on analyzing the problem of lack of money.

How much money is there?

According to Chairman Wang's introduction in early 2006, the investment amount of 8 non fried instant noodle production lines in the first phase of the Fangshan District River glass production base in Beijing is 160 million yuan.

This year, he said that the "non fried instant noodle production line" will be increased from 8 to 32, and will increase to 48 next year.

From this, we can figure out that the expansion of the non fried instant noodle production line in the next 800 million years will take about an additional investment of about $800 million. If advertising, R & D and liquidity are invested, it will break through the mark of $1 billion.

This is not a small number!

What does it mean to increase the production line to 48 production lines?

We can know from Chairman Wang's introduction that the monthly sales volume of the 8 production lines is about 250 million yuan, so we can figure out that the annual sales volume is about 3 billion yuan, and the annual sales of 48 production lines are about 18 billion yuan.

Statistics show that in 2006, China's instant noodle industry sales volume was nearly 30 billion yuan.

Divided by 18 billion yuan to 30 billion yuan equals 0.6.

That is to say, the 48 production lines of the five Valley Dao yard have been completed and put into production. The annual sales amount is about 60% of the total sales in 2006.

We thought that the long-term goal of the five Valley Road field is 60% of the national instant noodle market. Through calculation, we know that the company is ready to reach this level in the short term. It is really ambitious.

There are two problems: first, is there any possibility that the market demand of non fried instant noodles will be close to 60% of the market demand in the short term?

Second, even if the market demand of non fried instant noodles in China is close to 60% of the market demand in the short term, is it possible for the five Gorges Dao farm to monopolize the national non fried instant noodle market?

I do not think these two possibilities exist.

Why can't it be?

First, because industry experts have clearly pointed out that the instant noodles in the birthplace of Japan, non fried instant noodles, although nearly 30 years of development, but the share of the market in the instant noodles is only about 20%, and it is not possible to develop too fast in our country.

Two, even if the market demand of non fried instant noodles in China is close to 60% of the market demand in the short term, competitors will not hesitate to fight against this market and never allow them to monopolize the market.

Regretfully, we do not know what scientific basis for the five Valley Dao yard to target 60%.

I hope that the five Valley Dao Chang has scientific basis for this aspect. If there is a scientific basis in this area, it is best to disclose some information properly, because this is very close to whether it can obtain huge investment returns, and whether it can win the trust of banks, suppliers, distributors and the vast majority of employees, and whether or not it can benefit from financing.

If the target is 60%, if it is unrealistic, it will be difficult to recover many of its investments, so it will be difficult for banks, suppliers, distributors and staff to trust, wait and support. It is difficult to make substantial progress in financing.

I think the most important thing is not money.

What is the most lacking?

The goal is to lock the target to 60%. If it is unrealistic, then the most important thing is to make scientific decisions. If it is practical, the most missing is internal and external communication.

My personal view is that the goal of the valley is 60%. If it is unrealistic, then no matter whether internal communication or external communication is very effective.

Oxford management review [oxford.icxo.com] news: since the founding of the people's Republic of China, there have been many instances of aggressive progress in the economic field of China, resulting in heavy losses.

China's enterprises, especially private enterprises, have suffered numerous failures because of their rash advance. We still have some vivid memories of some of them.

Many enterprises want to develop faster or faster. This mood is completely understandable. But in pursuit of high speed, there must be no shortage of Scientific Outlook on Development.

Chairman Wang said, "only when we accelerate to a certain scale can we see the scenery on the road."

This sentence is very romantic.

Although entrepreneurs need romantic spirit, they should combine romantic spirit with realistic spirit.

I wonder if the chairman of the board has ever thought about whether the size of the "size" is too large. If you are tired of running blindly and run fast, are you interested in seeing the scenery on the road?

Chairman Wang said: "we are medium-sized enterprises in the big business."

This is not accurate enough.

You are not doing things of large enterprises, but doing things of super large enterprises. Knowing that investing billions of dollars at any time is not the action of general large enterprises.

Chairman Wang said: "our initial capacity, brand and other huge investment, resulting in capital turnover is not flexible."

This sentence may not be appropriate, because your investment is not as big as "huge". Huge investment is nothing wrong, but investing too much is making mistakes.

In conclusion, I think the five Valley Dao Chang due to the high demand for the domestic non fried instant noodles market, and because of its ability to estimate growth too fast, and because of the possibility of a competitor's counter attack is too small, so we have drawn up and implemented a bold investment decision; it is precisely because this investment decision is aggressive, that is the serious crisis of the capital chain.

I believe that the main task of the five Gorges Dao farm in the face of this serious capital chain crisis should not be financing, but rather to adjust its investment decisions.

If war is to advance, then retreat and retreat, competition must go in and retreat.

The key is to emancipate our minds and seek truth from facts. As long as we emancipate our minds and seek truth from facts, the concrete method of returning is easy to find.

These methods are nothing more than abandoning the projects planned for investment in the whole country. We should slow down. We should suspend the suspension and sell the products.

Chairman Wang said: "non fried instant noodles must be carried on. Looking back on the past, we can only say that we have done it, we have not done it well, but we have not done anything wrong".

As a matter of fact, none of the people who put forward good intentions criticism on the five Valley Dao did not say that the fried noodles should not be allowed to go on. Instead, they said they should not set the goal so high and not set the investment speed so fast.

Like many people, I agree with the function orientation and advertising planning of Wu Gu Dao, like many people, admire the enterprising spirit of Wu Gu Dao Chang, and are very optimistic about the development prospect of the five Valley Dao yard.

Steady development has many advantages. It can not only get out of the crisis of capital chain as soon as possible, but also do other work in a leisurely way.

It is observed that there is too much work to be done in the five Valley Dao Chang, and we hope that the development of the valley will be good and fast.