The Analysis On Diversification Strategy And Corporate Performance In China

Strategy is the key of the sustaining development for any firm and it plays a guiding role in the growth of firms. As a result strategy management is paid more and more attention to by theory researchers and firm managers. Diversification is an important growth strategy. Any firm will meet the choice whether to perform diversification strategy or not in some stage during their development. The appearance of diversification strategy theory provides the theory basis for corporate development and diversification practice. So since posed diversification strategy has always been the hot study object and the lover of firms. There has ever an upsurge of practice of diversification strategy in both abroad countries and our county.Diversification can help firms avoid the risk of singleness operation. Diversification can have the retaining resources and abilities used more effectively and bring firms the effect of scope, scale and so on. It also can save the deal expense. So it can improve firms'core competence. Nevertheless, diversification disperses the firm resources, enlarges the hardness of firm management and improves the cost of inner coordination and communication. It maybe brings firms other risks for example financial risk. The results of the diversification operation practice of firms in and out of China suggest that on one hand, diversification can promote the development of firms, make them grow rapidly and make better performance; on the other hand, there are many firms that are tripped and on the edge of closing down, even disappear. Then the diversification strategy model is widespread questioned. Researchers abroad and home have done a great deal of research on the corporate performance of diversification. There are many different opinions.Based on the analysis on the diversification practice case of firms in our country this thesis thinks that the characteristics of blindness, over-early, over-quick, over-dose and so on during the practice lead to the worse performance. This thesis chooses 60 listed firms randomly, uses data in their annual reports to calculate traditional financial index, add up and analysis the results, and then sum up the relationship regularity between diversification factors such as degree, industry, scale and type and the corporate performance. At last this thesis proposes concrete and operational suggestions to improve diversification performance aimed to those questions and according to the relationship.