Empirical Analysis Of The Performance Of The Diversification

Since the1960s, one global enterprise pursuing growth strategy, called diversified businesshas gradually become known by the world. Meanwhile, both of business diversification strategyand performance have also been one of the important topics of strategic management study.This article aims to take the Shanghai A manufacturing industry enterprises as the sample,added the designed multiplication and achievement targets, to do empirical research by usingsome analysis methods such as multivariate linear regression model, grouping comparative etc.According to the former references both from the domestic and foreign related researches,this article puts forward the following supposition: If the listed companies run properly underthe diversified business model, it will be very useful for the growth of the corporate profitabilityand the reduction of the business risk, as well as the promotion of its asset growth and operatingincome.Through the former empirical analysis, the paper draws the following conclusion:Horizontally, it is failed to find clear correlation between the degree of diversification and theperformance of listed manufacturing companies, that is to say that a wider range of lines theenterprise involved in can't ensure much more improvements of the performance.Longitudinally, it is clear that a higher degree of diversification always companied with a lowerrisk fluctuation regardless of the low assets and profits growth rate. In addition, there is apositive correlation between the asset size and profitability performance. Meanwhile, noobvious positive or negative relationship can be seen between the operating life andperformance.Combined with the former findings, this article finally points out the following views: Asto some enterprises under the diversified business model, the first step is to establish its corecompetitiveness to develop the specialized production scale and its competitive advantage.Secondly, it is necessary to fully take the new business into account, especially thecompatibility and the adjustment between the organizational structure and the existing company.In order to undertake the diversified business moderately, we need to adjust the structure of thecompany as early as possible. Overall, the core competitiveness is the foundation and thepremise of the enterprise in multiplication management. As for some Chinese manufacturingindustry enterprises who are still standing in the competition initial period, it is wise to select the correct multiplication strategies companied with its core competitiveness on the basis of thedevelopment of specialized production scale.