Research On The Effectiveness Of Korean Conglomerates’Diversification Strategy

In the middle of1950s American strategist H.L. Ansoff put forward the concept ofdiversification strategy, which then had been the attention of many scholars. For differentmotives and objectives, large enterprise groups in the major developed countries considerdiversification strategy as an important part of their operation and expansion strategy.However, the diversification strategy can be very different due to different periods andareas. Although it can meet disperse the operational risks of enterprises and increase theremuneration of managers, what cannot be neglected is that this strategy could disperseenterprise resources, increased its operating expenses and make it more difficult tomanage well. There exists no agreed conclusion in academia whether diversificationstrategy will cause positive or negative impact on business performance, since we caneasily get different conclusions by different viewing angle, statistics and researchmethods.In this paper, the diversification strategy of large enterprise groups in South Korea ismainly used for study, and it focuses on the diversification of the Samsung Group as thestudy case and tries to explore the relationship between the diversification strategy andbusiness performance. This paper is divided into five parts: The first part is theintroduction, which mainly elaborates the background and significance of the topic, theresearch objectives and methods used in this paper. At the same time this part alsoelaborates the general theory and the research results of diversification strategy, andreveals some main innovations and shortcomings that appear in the paper. Chapter Onecomprehensively exposes the background and motivation of the implementation ofdiversification strategy of large enterprise groups in South Korea, and then analyzes thesize and mode of diversification strategy, and finally, makes comments on the positiveimpact and drawbacks that might be brought by diversification strategy. Chapter Twofirstly explains the reason of using Samsung Group as the case for study mainly from twoaspects: the position of Samsung Group in the Korean economy and the changes ofindustry distribution, then introduces the sectors where Samsung Group have companiesand the history of Samsung’s diversification. Chapter Three firstly puts forward researchhypothesis in the section of empirical research design, makes clear the selection of samples and data sources, preliminarily counts and calculates on several research-relatedvariables, and then makes use of a software named Stata to examine the correlationbetween diversification degree and corporate profitability and growth indicators makesanalysis of the examination results. The last part is the conclusion, which sums up thechapters above, especially the results of the analysis of Chapter Three and proposes apreliminary conclusion for the research topic.