Huayi Group's Diversification Strategy Adjustment Discussed

As the development of Chinese free-market and the establishment of Chinese modern enterprises systems, strategy management has been becoming an important issue in the enterprises' operation management. And strategy is also a weak link in the managerial practice. For reasons, especially for the historical reason, Chinese enterprises have great deal of problems in carrying out their diversity strategy. That is why we need modern strategy management theory to find out how to improving the enterprises' core competition.Huayi Group is a large scale enterprise group with petrochemical as its leading industry. Diversity strategy has been adopted since the company was established. At present, Huayi Group sets foot in 5 industries including petrochemical, pharmaceutical, textile etc and has 9 subsidiaries including Shandong Libin Petrochemical Plant Co., Ltd., Shandong Hualong Pharmaceutical Co., Ltd., Sanyang Textile Co., Ltd. etc. Diversity strategy made Huayi improve rapidly in the holistic scale. In 2005, the company gained 5 billion in revenue and became the number one in the local enterprises. However, diversity strategy also brought great deal of hidden trouble to huayi Group, for example, the development of leading industry being impaired, pharmaceutical becoming burden of the group, indicators such as ratio of sales and profitability ratios per capital rapidly decreasing and so on. Adjustment of the company's diversity strategy is imperative under the situation.Based on absorbing the success and failure experience of Huayi Group, the author does great deal of research work on diversity strategy of the company with advanced managerial theory and methods. After analyzing the external circumstance and inner condition of the Group, the author presents corresponding strategy scheme, i.e. adjusts the products structure for optimizing resource configuration to establish competition superiority. The theory and methods which be based on are also adapted to enterprises that have the similar circumstance with Huayi Group.