Diversification: Analysis And Control

Combining with management theory and practice, the paper inquires into effects of diversification pro and con, supported by .qualitative and quantitative analysis tool such as chat, formula, model etc. There is an operation process designed and expounded. It is hoped that the discussion could offer warning and reference to corporations.The first part, recognizing diversification comprehensively. Firstly, tells the definition of diversification at the base of the ones of precursors. It can be summarized that, the state or process that the operations of a corporation go beyond two or more industries up to the fourth layer subtitle standard of ISIC. Secondly, expounds that there is no clear-out boundary among the types of diversification, either between diversification and specialization. Thirdly, inquires into the direct and indirect incentives, positive and negative effects.The second part, the process diagram of diversification. First, summarizes subjective and objective demands for diversification from the analysis of corporate lifecircles, growing targets, total resources, market opportunities etc. Secondly, culls corporate opportunities successively by entering capacity and profitable capacity. The former is based on surveys and analysis of entering ramparts, corporate strategy resources etc. The latter is mainly based on analysis of market attraction, entering ramparts, quiting ramparts and competition cost. Next, introduces 0-1 ILP method and Net Present Value Index method to fix portfolio (business combination). Business selecting involves 'core competence' and 'related diversification', so the relations between the two are discussed. If the direction is right, corporation should adopt related diversification prior which is based on core competence when other conditions are alike. Finally, quotes revised GE (General Electric) model to discuss the assessment and adjustment of business units.The third part, adaptability analysis of domestic corporations. Shows limits and opportunities of domestic corporations' diversification through analysing macroscopic and microscopic environment.