The Refocusing Strategy And The Definition Of Enterprise Vertical Boundary

Based on the background that most domestic enterprises use the diversified strategy, it puts forward the refocusing strategy, which means according to the enterprise personal abilities, surrounding the core objective system of making values, redefining it's internal operation and business scale when it is under over-diversified situation, and use this theory to guide the enterprise vertical boundary definition. From the respect of value chain, define the vertical boundary of an enterprise means integrating the value chain vertically, which will make a great advantage to the enterprise and define the integration scale of the vertical value chain at the same time.According to the traditional theory of Williamson's vertical boundary, based on the transaction cost theory and the static model, re-probe into the enterprise's vertical boundary and analyze the dynamic factors which influence the change of vertical boundary, especially analyze technology's influence on the enterprise's boundary, constitute a new theoretical model which define the enterprise's boundary from the static to the dynamic aspect. In this model, it specifies the technology's influence on the enterprise's internal production cost, transaction cost and the external supplier's production and transaction cost, and it also embodies the main decisive factors that influence the enterprise's production and transaction cost which lead the enterprise boundary's effective change. So the value chain's integration through defining the enterprise vertical boundary could reach the purpose of refocusing.Through the constitution and analysis of the model, there is a conclusion which mainly embodies the technology's effect on the enterprise vertical chain, when the enterprise invest in the advanced technology, the previous internal production could be purchased from outside, so the vertical boundary reduces, and it could also change the previous way from which purchase outside to internal production so that the vertical boundary enlarges. To sum up, enterprise vertical boundary keeps in a flexible scale, and the practical result depends on the way that the technology influences the internal and external cost. According to the conclusion, it also gives the suggestion on enterprise vertical boundary's development model in the future.