The Analysis, Based On The Industry Coupled Theory Of Corporate Diversification Advantage

Diversification is a common strategy for large enterprises grown into industrial leader around the world. Diversification results in both strengths and troubles for en-terprises while helping them develop into transnational enterprises with diversified competences. Owing that many enterprises show poor performance after their expan-sion into new business, it comes wide controversy among scholars about the effect of diversification. Many renowned professionals have published their thesis and views on diversification of enterprises from different perspectives.In this thesis, we tried to analysis the pros and cons of diversification from the perspective of industry. The author defined the new concept of industry coupling and established the theory of industry coupling system. The coupling concept described the dynamics of interacting and co-operating between industries in the process of in-dustry development. Under the framework of industry coupling system, the author discussed the advantage of conglomerates in industry coupling progress, thus ex-plained the motivation of enterprises to follow diversification strategies. By the theo-retical model and practical test, it was demonstrated that conglomerates running di-versified businesses were more sensitive to industry coupling and more flexible for reactive adjustment, thus enjoyed the advantage of being consist with industry dy-namics.In Chapter Two we defined the content of industry coupling and discriminated it from other terms in industrial economics.On the basis of concept definition we estab-lished the complete system of industry coupling theory.Chapter Three discussed the advantage of multi-business enterprises under the background of industry coupling. Besides, we analyzed the mutual positive effect between multi-business conglomerates and coupling industry system.Chapter Four demonstrated the reaction of multi-business enterprises in the changes caused by industry coupling by a simplified model.Through this model we got a clear idea about their internal resource reallocation consistent with industry dy-namics along with the flexibility and sensibility of multi-business enterprises in in-dustry coupling.In Chapter Five, the author collected the data of 50 Japanese electrical appliances from their annual report, together with officially released data from the national cen- sus of Japan. By comparing the performance of departments in multi-business enter-prises and ordinary companies, the practical test showed the advantage of diversifica-tion in the changes caused by industry coupling.In the last chapter, the author tried to give some suggests for conglomerates in deciding whether to adopt diversification strategy and which business to enter.In conclusion, the thesis showed the reaction and behavior advantage of conglo-merates following diversification strategy. Diversification extends the antenna of en-terprises which endows them sensitivity for industry coupling.Meanwhile, the inter-nalization of resource exchange and reallocation facilitate their adjustment in response to external industry coupling dynamics.In the view of this thesis, diversification can help conglomerates to exist in com-plex and changing industry environment with relatively low'experiment cost'.In this way the multi-business enterprises have competitive advantage over their counterparts in the coming era dominated by new leading industry.