Strategy And Core Competence Of The Diversified Enterprise Group

Corporate diversification has been a highly controversial topic. The idea that "do not put all your eggs in one basket" is sweeping the globe with the cyclone of diversification. A lot of companies have embarked on the development of diversified business. As a new form of organization, Enterprise Group is the product of corporate diversification. It reflects the competitive power of a country in today’s world economic pattern. Diversification of China’s enterprises started from the beginning of reform and opening-up. So far, almost all of the outstanding enterprises have advanced to diversification on a certain stage for expansion and growth. But when we review the course of the development of our enterprises, it is not difficult to find that crises hide behind the diversification. Many companies paid a heavy price on the road of diversified development. In fact, as a development strategy, there is no right or wrong in diversification itself. The point is whether the enterprise bases its diversification on the core competence, and correctly handles the relationship between those two.The article starts from the diversified business strategy and basic theory of the core competence. It also analyzes the relationship between those two. On the one hand, the core competence is the basis and guarantee of the diversification strategy. It supports and determines the diversified development, and is fundamental to the competitive advantage of the diversified enterprise. On the other hand, diversification can also affect the development of the core competence. Diversification contributes to the identification, application, consolidation and promotion of the core competence of the enterprise. It enhances the development of the core competence. Meanwhile, the wrong diversified decision-making can weaken the company’s core competence, leading to a stagnation or even failure. Therefore, diversification and core competence of the enterprise are complementary and mutually conditioned. Only by developing and adjusting the diversified business strategy based on the core competence, and by cultivating, consolidating and enhancing the core competence in the expansion process, can the enterprise take full advantage of the diversification strategy, and achieve stable and sustainable development.The article selects the case-Founder Group, which is developed in the context of the rapid development of enterprise groups in China and the diversified expansion. It is a banner of school-run industries with a typical significance. Since1999, Founder Group has implemented its diversification strategy step by step. It has built a diversified investment group with five major parallel industries from a single technology company. However, after a series of unrelated diversification of cross-industry mergers and acquisitions, the corporate image of Founder Group is becoming blurred. The way of resolving the loss crisis of Founder Group by "industry transfusion" does not solve the issue of "blood missing". Diversified development has weakened the core competence of the enterprise and put it in danger. The article reviews the diversification process of Founder Group, analyzes the relationship between diversification and core competence of Founder Group, and puts forward suggestions to build its core competence.