Research On Enterprise Diversification Strategy Basing On The Core Competence

Since the strategy of diversification was put forward by Ansoff, the father of strategic management, the strategy of diversification has gradually developed into a typical approach for enterprises to grow. And it has been playing a critical role in the development of enterprises. However, many enterprises blindly followed the trend, which resulted in a complete failure. This made people realize that the strategy of diversification could not be a panacea for all enterprises as they thought. And then some of them aborted their plans for diversification. What has caused this phenomenon? Is the strategy of diversification really recommendable? And how can we successfully implement it? All these problems have been unavoidable significant issues for enterprises and theorists. Just as what Drucker (the world-famous American business management master) once said, diversification is only a strategy which is not intrinsically good or bad itself, but might be exercised correctly or not. The fundamental difference between these two situations lies in the fact that there should be a common joint among all the businesses of the successful enterprise. That is its core competitive power. The enterprise's core competitive power is the prerequisite and basic support for the strategy of diversification, and the enterprise can achieve its success only if it develops the strategy of diversification based on this power.The main aim of the paper is to explore how an enterprise should implement diversification based on its core competitive power, so as to enable enterprises to grasp the starting point as well as the standpoint of the implementation of the strategy of diversification, to recognize its core competitive power and advantages, and to develop diversification on the basis of its core competitive power while avoiding blind diversification.The structure of this research is as follows:First, the introduction part mainly elaborates the background and the significance of this research, as well as the main ideas and the structure of the paper. Research methods and the innovations of this research are also mentioned in this part.Following the introduction part, the basic theories of core competitive power and the strategy of diversification are introduced, including the current research status about core competitive power and diversification at home and abroad. This part also talks about the connotation, features and essence of core competitive power, the motive for diversification, the crisis analysis, and the analysis of the connections between core competitive power and the strategy of diversification.Third, based on preceding research, the present paper constructs a model for the strategy of diversification based on core competitive power. That is to nurture, recognize and assess enterprises' core competitive power. Then this paper elaborates how to analyze both internal and external conditions, how to set strategic goals, and how to choose proper enter modes. Based on these analyses, this paper advances a four-dimensional diversified strategy based on core competitive power. And as a conclusion, this part also explores the reform of organizational structure of enterprises, reasonable integration of products businesses, the avoiding of the dispersing or weakening of the core competitive power, and the exertion of the advantages of resource integration.Fourth, through an analysis of successful cases of implementing diversification like Canon and Haier Group, this research comes to a conclusion that an enterprise cannot successfully implement the strategy of diversification unless it promotes its core competitive power.The last part consists of the conclusion and an outlook of this research.The innovations of this paper include the proposal of a model for the strategy of diversification based on core competitive power, as well as a four-dimensional diversified strategy based on core competitive power. Through analyzing Haier Group, this paper arrives at the conclusion that an enterprise can successfully implement the strategy of diversification only by basing itself on its core competitive power. Those enterprises that do not know its core competitive power well and blindly implement the strategy of diversification would undoubtedly result in failure.