Analysis of financial subsidies to bus companies under the financial management objectives

Paper Keywords financial subsidies to bus companies to maximize the social value of financial management objectives

Abstract of bus priority in response to national development strategy, governments at all levels of financial subsidies to public transport enterprises. Bus companies in the financial management of government financial subsidies to the target occurs after the lost, this paper analyzes the current major theories of financial management objectives, the company said social value maximization as the bus company management objectives, and pointed out the need to achieve this objective from the service quality and safety assessment, scientific scheduling, cost control, to strengthen internal control work.


I. Background
To build a harmonious society, problems of urban travel issues, strengthen the construction of people's livelihood, in 2004, the Ministry of Construction promulgated the "priority to the development of urban public transport on the views of" bus priority policy as a national development strategy, then, the Ministry of Construction, issued Reform Commission, Ministry of Finance, the Ministry of Labor and Social Security in 2005 enacted the "priority development of urban public transport on a number of Economic," and proposed a financial subsidy to bus priority policy as the main Economic instruments based on the majority of this country cities have implemented or are being implemented, the financial subsidies for bus companies to achieve the establishment of low-fare public transport system, while ensuring the healthy development of public transport enterprises.

In the government fill the bus for the financial, the company designated by the Government to implement a low fare policy goals into corporate strategy to provide the public with convenient, safe, high quality public transport bus service. With the change in corporate strategic goals, corporate strategic objectives to serve the financial management objectives must also need to change. This article focuses on analysis of the financial subsidy of public transport companies how to develop and implement the financial management objectives, in order to meet corporate strategic objectives requirements.

Second, the general objectives of financial management
Throughout the financial management objectives of theoretical Research and practical application of enterprise, at present there are four main objectives of financial management point of view.

The first point is to maximize their profits. In this view: the profit of the enterprise on behalf of the newly created wealth, corporate profits, the more you explain the increase in the wealth of the more close to the business goals.

The second view is that shareholder wealth maximization. In this view: the company owned by shareholders, managers and owners is a principal-agent relationship between the operator should be maximizing shareholder value.

The third point is to maximize enterprise value. Enterprise value maximization is through the rational management on corporate finance, the optimal financial policy, full consideration the time value of money and the relationship between risk and reward, in ensuring the long-term stable development based on the total value of the enterprise to maximize its basic idea is to long-term stable development in the first place, emphasizing the value of growth in the enterprise to meet the interests of all parties in the relationship.

The fourth point is to maximize social value. In this view: the company can not simply be seen as shareholders, as the main enterprise is diverse, and thus related to the social aspects of interest. To this end, business goals, not to examine only from the business itself, but also from the enterprises subordinate to the larger social system to regulate. Enterprises to survive the fierce competitive environment, we must achieve harmony with the surrounding environment, including relations with the government, and employee relations and relations with the community, businesses must bear certain social responsibilities, including addressing the social employment, and stress integrity, consumer protection, support for public welfare, environmental protection and improving community building, etc. is required to maximize the value of social enterprise in the pursuit of maximizing corporate value while achieving the desired development of stakeholder coordination, the formation of corporate social responsibility and virtuous circle between Economic relations.

The first three perspectives, including this article does not cite, such as earnings per share to maximize the kind of view, the difference is only in its corporate or shareholder value determination methods differ, but their common point of view is emphasized financial responsibility of financial management , in which most Economic responsibility as a corporate goal is not to find the focus of this paper this paper noted that the fourth goal of financial management, corporate social responsibility as the Economic responsibility of the counterpart, the corporate social responsibility to the economy responsibility for equal or slightly higher status.

Third, the bus company lost financial management objectives
China's reform and opening up, the bus market competition, a variety of economic agents to enter the bus industry. To Shenzhen, for example in the reform and opening up to the bus franchise in 2007 before the reform, the formation of 38 bus companies, whose main investors are the private economy body, so the bus franchise reform in financial subsidies of money, the bus company's financial management objectives, essentially the pursuit of corporate economic responsibility.

But in 2004, the introduction of public transport in major cities nationwide franchise reform, public transport buses in order to ensure public welfare purposes, under the guidance of the government give priority to the development of public transport, bus fares and strictly implemented, government subsidies for business losses, and to ensure a reasonable profit margin enterprise level to Shenzhen, for example, the government set up under the auspices of the Eastern Bus, Bus Group, the bus three buses in western franchise business, while the Shenzhen Municipal Bureau of Finance and the Department of Transportation issued a "financial Shenzhen bus program subsidies and the cost of regulation ", Financial Bureau and later developed a more details of the" 2008 Shenzhen bus operating cost regulatory program "(hereinafter referred to as the two documents," the cost of regulation, "the" cost of regulatory program "defined three franchise companies operating mechanism, and subsidies. "cost of regulatory program," the focus is on a 6% franchise companies to implement security at the end of the subsidy cost profit model, as long as the cost of franchise business in the place of the standards established by the government Next, you can get 6% of the cost of margins.

Reveal all the details in the profit margin that the government subsidy model, the development of public transport enterprises in the past, such as profit maximization or the corporate goals of maximizing shareholder value, becoming not much sense, the company's financial management objectives suddenly lost.

Fourth, government subsidies to guide the financial management objectives
Financial management objectives in the bus lost, we turn to look at the government's subsidy policy, which we see, in fact, in the formulation of government subsidies, it has been on the bus company provided a clear guide. By the Government's financial subsidies policy, public transport services and businesses are often targets directly linked with safety. to Shenzhen, for example, in the "cost of regulatory program" provides that "the total amount of financial subsidies = individual bus subsidy adjustment + + return on investment quality of service regulation", the subsidy policy in a very important item is the "quality of service regulation". "quality of service regulation" provides enterprises "regulation 30 percent of subsidies linked to service quality and public Transportation, only public Transportation service quality indicators to the assessment of the competent authorities in order to get the whole full regulate the amount of subsidies, otherwise, the corresponding reduction of subsidies. "cost of regulation in the first year of implementation, Shenzhen City three franchise bus companies have reduced the two companies is the quality of service assessment of the full subsidy.

Assessment of quality of service here in practice, mainly two methods to determine, first, the rate of complaints, is the people satisfaction survey. People take the bus, the main complaint is the face of bad service, often for individual events; The satisfaction survey was used to assess the public bus service within a period of time the overall feeling. both accurately reflect the evaluation of the basic bus companies to complete their social responsibility good or bad.

Clearly the government hopes its financial subsidies to bus companies, bus companies to implement a low fare at the same time, provide a safe, convenient, high-quality bus service. Hope to use this as a business enterprise management objectives, to take on more social responsibility.

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Fifth, financial management objectives of public Transportation options
Government managers of society, of course, want companies to take more social responsibility, the better, but the bus company as a profit institutions, must have its financial responsibility requirements, and that the bus company to choose?
From the above analysis, we can see a simple logic, is the largest business to create shareholder value or enterprise value, we must first provide quality public Transportation services, and create the greatest social value will it be possible to obtain, so the bus companies in the choice of financial management objectives should take into account corporate social responsibility objectives and goals of economic responsibility, social enterprise to create the greatest value and maximum value for shareholders as a combination of corporate financial management objectives, is the best choice for a bus company. Bus companies will maximize the social value as a financial management objectives, does not mean that corporate social responsibility in order to maximize the complete, simply can not consider the economic benefits. companies do so only if the short-term, companies will not be long-term trend continues, difficult to imagine a business can not survive it but also to create social value.

So here is to maximize the value of social enterprise for social services and the growth of their own social value are summarized as increased balance between the two companies should be so common with each other to promote growth.

Sixth, the bus implementation of financial management objectives
When determining the social value of public transport enterprises to maximize the management objectives, how to better organize it? I believe that the particularity of bus-based, enterprises should strengthen the following six aspects of financial management.

(An enhanced quality of service assessment and training

Quality of service is the social value of public transport enterprises to create an important manifestation of the quality of service goals, we must rely on the scientific quality of service evaluation system. A bus company is still a labor-intensive enterprise, its practitioners flight attendants, drivers often Culture level is not high, only through the form of training before they can be of service to learn the scientific method and good service attitude and the quality of service indicators in their assessment of pay, prompting them to provide quality services to achieve the enterprise's financial management goals.

(II enhanced security assessment and training, to provide a safe traveling environment
To provide quality public transport services, security is the foundation, is the lifeline, so the need to establish safe training system so that drivers always tight security string. From a financial management point of safety indicators should be included in salary assessment, economic means to reduce security incidents.

(C to strengthen scientific control, a reasonable balance between social responsibility and economic responsibility
Private bus companies in the era of enterprise scheduling main concern is passenger flow, the grid during peak hours and more, low-peak hours or even start a small start, this business is to obtain economic benefits but social responsibility is ignored, resulting in lower peak public No car can take the time in financial subsidies, the business mileage as running costs of regulation is an important indicator of the level of enterprise is not concerned about the peak, but concerned about the completion of the total mileage indicator, so while ensuring low-peak public travel demand, but there are people traveling the peak is often difficult problem, the problem is not satisfied with the main problems of public complaints, so companies need to do the scheduling of science, do statistical analysis of passenger flow, a reasonable allocation of line capacity, a smart scientific control of the vehicle scheduling system, to allow the public to easily ride, enterprise while improving economic efficiency.

(D and cost control
After the introduction of government subsidies, many companies have a misconception that the only bus company to improve service quality, cost control is no longer a key fact in the system of the city's financial subsidy policies and requirements are to encourage enterprises to strengthen cost control . to Shenzhen, for example, a breakdown of its bus subsidy policy is the "cost of regulatory subsidy program," the center of the program is the cost of standard business need government regulation of standards under development, can enjoy the profits of 6% of the cost rate beyond the regulatory standard for the cost of non-subsidized, the cost savings for the corresponding reward. It is clear that to achieve better business for the economic value, must strive to reduce the cost of fees, to prevent over regulation costs.

(Five full implementation of information technology, and effective integration of resources
Shenzhen City bus franchise reform, most companies just a few lines, the line is the line the owner of the general manager, management is relatively simple and direct public transport, the implementation of franchising, the company significantly expanded the size, not then past the small and complete business model, which also caused the increase of financial management more difficult, so to achieve management objectives of maximizing the social value, to be fully implemented in the public transport enterprise information, making the business line management to grasp the primary real-time data, so management decisions can be in place.

(Six full implementation of internal control
Franchise bus companies mentioned above-scale enterprises to significantly increase after the reform, so many layers of management change, management more difficult. Only to establish a sound internal control system in order to ensure that all management objectives can be implemented.


References:
[1] Zhang Yifan. Efficiency of urban public transport subsidies, Beijing Jiaotong University, .2009.

[2] Liu Xiaoxia. On public financial management. Productivity Research, 2008 (17).

[3] Li Qi. Corporate financial management objectives and social responsibility. Economic Research Tribune .2011 (15).

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