Corporate Diversification: Theory Of Competency-based Research

Diversification is the issue that is generally paid close attention to when the firms have developed to the certain stage, and it led to the vast researches and the deep discussion by the theoreticians and the entrepreneurs. But it comes to the conclusions that seem to be inconsistent within the vast researches. The tide of the corporate diversification emerged in 1990's in China. But most of the corporation has not obtained the expected effect, and some of them overreached themselves on the contrary during the process of diversification. What is its crucial point? How to explore the reasonable behavior of the corporate diversification in the transitional economy of China? How to carry out thediversification effectively and moderately? ...... These series of theissues of the corporate diversification should be re-scanned from the new point of view, that is the competence theory of the firm.The researches on the relationship between the corporate diversification and the competence of the firm have the important theoretic significance and practical worth. This dissertation attempted to ascertain the necessity relationship between them, offer a new point of view to understand accurately the strategy of diversification and establish corresponding theoretical principle, and offer an operational real way to select the strategy of diversification.In the detail, the dissertation research the corporate strategy of diversification based on the competence theory of the firm, appraising comprehensively the diversification strategy. As a long-term strategy of development, on the one hand, it matches the competence of the firm with the business engaged by entering the new industries, reorganizing the existing resources and using fully the excess competence; on the other hand, it prompts the upgrade of the competence of the firm and the improvement of the competence system to adapt the change of the outside by the pattern of resources-deepened or resources-expanded, matching dynamically the competence of the firm with the business engaged during the process of the change to keep the long-term competitive advantage ofthe firm.In the dissertation, it is carried out the economic analysis on the diversification, which is viewed as the important strategic way of improving the efficiency of the usage of the competence and upgrading the existing competence of the firm. Firstly, it is interpreted the causes of the diversification with the competence theory; secondly, it is researched the optimum degree, mode, choice of the industries and the way of the diversification depended on the existing level, the characteristics and the matching efficiency of the competence, and the relationship between the competence. Thirdly, it is probed into the impact of the diversification on the change of the competence of the firm and the competitive advantage, appraising the effectives of the strategy of diversification. At last, it is accounted for how to ensure the success conduct of diversification by the effective management of the competence.Based on the theoretic analysis, the dissertation is brought forward further that the first thing is to analyze its competence and corresponding system when the strategy of diversification is made decision. Then combining the outside circumstance, to decide the issues with the practical meanings according to the matching principle, such as if the corporation need diversifying, did it have the relative competence, how to decide the degree of diversification and which style is suit to the firm. Especially, it is attempted to offer the helpful enlightenment for the corporate diversification in the transitional economy of China from the positive analysis on the kinds of the experiences of the corporate diversification inside and outside. The purpose for the firms is to hold the suitable condition and the opportunity to enjoy sufficiently its active effect, but to avoid the relative problems when they attempt to develop themselves by diversification.