The internal factors to cause the failure of the company: Take China Evergrande Group as an example
DOI:
https://doi.org/10.61173/c7hxb931Keywords:
China Evergrande Group, Internal Failure Factors, High-leverage Expansion, Healthy Enterprise DevelopmentAbstract
This thesis explores the internal factors contributing to the failure of large enterprises, taking China Evergrande Group as a case study. Founded in 1996 and once a leading comprehensive enterprise integrating real estate, finance, and other sectors with an annual sales scale exceeding 400 billion yuan, Evergrande collapsed dramatically, prompting an investigation into its failure beyond mere capital chain issues. The study identifies critical internal problems at Evergrande: severe financial fraud, chaotic internal management (redundant departments, low efficiency, and top management team deficiencies forming a “decline-deterioration” loop), and a massive debt crisis . Root causes include over-reliance on high-leverage expansion and failed diversification. Key factors for healthy enterprise development are proposed, such as clear strategic positioning and customer-centric product/service innovation. Corresponding suggestions for Evergrande include transparent information disclosure, business layout adjustment, and lean internal management. Limitations exist, including over-reliance on public data and limited generalizability beyond the case
References
resource utilization. In addition, strengthen supply chain 1. Douyin. Evergrande Real Estate Financial Fraud. 2023. Video, management to reduce procurement costs. Build an effi- https://m.douyin.com/share/video/7270356814661815612/?s cient and professional management team through talent cene_from=douyin_h5_flow&push_animated=1&webview_ introduction and training programs. This would improve progress_bar=1&show_loading=0. the efficiency of the business to reduce the cost of labour 2. Jiangsu Provincial Government. Government Notice on Real
force [7]. Estate Market Supervision. 27 May 2024, https://www.jiangsu. gov.cn/art/2024/5/27/art_33718_11253854.html. 6. Conclusion 3. Zhang, Shuo. Financial Fraud Performance and Supervision
Measures of Evergrande Real Estate. CNKI, 2025, vol. 2, no. 1. This thesis centers on exploring the factors behind large 4. Hambrick, Donald C., and Richard A. D‘Aveni. „Top Team companies’ failures, with China Evergrande Group as a Deterioration as Part of the Downward Spiral of Large Corporate
case study. It first introduces Evergrande’s business scope, Bankruptcies.“ Management Science, vol. 38, no. 10, 1992, pp. scale, and collapse background, then analyzes the firm’s 1445–1466. internal issues—including severe financial fraud, chaot- 5. Daily, Catherine M., and Dan R. Dalton. „Corporate ic internal management, and a massive debt crisis—and Governance and the Bankrupt Firm: An Empirical Assessment.“ identifies root causes like over-reliance on high-leverage
Strategic Management Journal, vol. 15, no. 8, 1994, pp. 643– expansion and failed diversification strategies. Addition- 654. ally, the thesis outlines key factors for healthy enterprise development and proposes solutions for Evergrande, such 6. Barney, Jay B., and M. Wayne Cunningham. „Venture as rebuilding market confidence and optimizing manage- Capitalist and CEO Dismissal.“ Entrepreneurship Theory and
ment. Practice, vol. 21, no. 4, 1997, pp. 107–120. However, the writing has limitations. It relies heavily on 7. Hambrick, Donald C., and Richard A. D‘Aveni. „Large public data (e.g., CSRC reports), lacking in-depth internal Corporate Failures as Downward Spirals.“ Administrative
operational data, which may limit the analysis of man- Science Quarterly, vol. 33, 1988, pp. 1–23. agement chaos. Also, this study only focus on Evergrande
Downloads
Published
Issue
Section
License
Copyright (c) 2025 by the authors.
This work is licensed under a Creative Commons Attribution 4.0 International License.
