Study On Core Competence-based Diversification Strategy Of Company Management

As a strategic way to avoid risks and enlarge scale to make grow rapidly, the strategy of diversification has been adopted by many companies home and abroad. But since `1980, many diversified companies have suffered great losses for over-diversification. A trend called refocusing appeared and accepted by these companies. They began to reduce their business units to be less diversified and try to focus on their main business. The management strategy of diversification has been the topic of many researches and is a hot one these years in our country. In this article, the development of the theory of diversification and the related classification,motivation,potential benefits and its performance are discussed. With the combination of the new development of core competence,diversification and management strategy in theory and practice, the core competence-based diversification strategy of enterprise management is presented here. This theory pays much attention to the construction and promotion of core competence as the foundation of a company to undergo diversification strategy successfully. A model to analyze the conditions and to decide whether to conduct the strategy of diversification is given here. Most of our companies which undergo diversification strategy do not reach their expectations. The reasons of their failure are analyzed and the counter backs are given, that is, to construct their own core competence first and command the core competence and other internal respects and the preferential external conditions then undergo related diversification step by step.