Be Cautious To The Diversification For Chinese Enterprises

In this article, the author analyses the operation of Chinese and foreign enterprise after studying strategy theory and diversification theory. This article demonstrates whether diverse operation can help Chinese enterprises have a more umbrella organization and become more powerful. In the author's opinion, the entrepreneurs will operate diversely under two situations in the current economic circumstances.First situation—passiveness(two possibilities)1. "Historical reasons" : The enterprises that have being operated from the beginning until now often choose diversification passively.2. The enterprises have to search new way of operating due to the declining industry and fierce competition. Therefore, they would transfer industries or adopt other ways to save their enterprises.Second situation—activeness (three possibilities)1. The enterprises which have enough strength such as resource and person with ability, even that can highly control other industries besides its own will be operated diversely out of activeness.2. The operators who consider strategy and competition generally select the industries which would make up for their primary industries' imperfection mutually.3. New industries bring new opportunities.Then, the author could draw conclusions as will be stated next. Diversification couldn't help enterprises have more changes on its size and become more powerful, even that will work oppositely. It is not the only way to develop for enterprises. Instead, they should consider no other than specialization, the enterprises can have better development.In this article, the author wants to confirm the operators agreeing diversification in the idea of specification by enumerating the advantages of specialization. In fact, many enterprises are facing the problem whether to operate diversely. The author tries to give some advice to do right decision and help the operator adopt right methods when they face the two situations discussed above.Finally, the author will advise Chinese enterprises to be cautious to diversification.