The Empirical Research Of Business Scope’s Changing Trend And Business Performance

Business scope which is concerned by management discipline and economic discipline is a basic question, which is also an important structural cost driver of competitive advantage. There are a lot of points about business scope and a variety of business strategies in reality. Is there a correlation between business scope and business performance? Different people give different ideas. Diseconomies of vertical scale gives a clear research idea about this question, because business scope is business vertical scale on academic point. According to this view, business scope’s changing trend and business performance should be a negative relationship.This paper attempts an empirical to verify that negative correlation between business scope’s changing trend and business performance. In this paper, I select the sample of Shanghai Stock Exchange’s wholesale and retail industry of China’s listed companies, and measure the business scope and it’s changing trend by Herfindahl coefficient and it’s changing rate, and measure the business performance and it’s changing trend by return on total assets and it’s changing rate, then set up the trend analysis model and correlation analysis model, at last I conclude that the negative correlation exists between business scope’s changing trend and business performance.In addition, this paper give a theoretical explanation of the negative correlation from budget management, knowledge’s creation and usage, modular, strategic management and so on. Not only we make some indications of existence of this trend about enterprise strategic management, enterprise cost management and government department management. But also we make some relevant recommendations about enterprise actual management.