Strategy ZKX Business Diversification

After thirty years of endeavor, private enterprises have been shifted from struggling for survival to seeking greater development in China. Implementation of diversified operation strategy has already been the choice of lots of private enterprises, which have gotten their entrepreneurial success. By implementing diversified operation, many enterprises have delivered the dream of making the themselves bigger and stronger; however there are also a lot of enterprises trapped in the pitfall of rashly-advancing strategy.Based on the enterprise strategic management theory, integrated a large number of research results, this paper has systematically introduced the basic theories and analysis tools of diversified operation strategy, by which the specific cases of ZKX enterprise implementing the diversification strategy have also been analyzed.ZKX enterprise, after a successful early start, began implementing unrelated diversification strategy from1999. Its new industries cover hydroelectric station, healthcare, education, tourism, transportation and real estate etc., distributing in Zhejiang, Shanghai, Jiangsu, Jiangxi, Shanxi and many other provinces and cities, with a total investment of nearly3.4billion Yuan. In2006, with the main project have built, the capital chain of the enterprise ruptured, the founder of the enterprise escaping, putting the whole enterprise in jeopardy.The key reasons of failure of ZKX enterprise carrying out the diversified operation strategy can be concluded as follow:firstly, the entrepreneurs’desire to make themselves business bigger, and preempt resources is extremely intense, far beyond its own ability, which makes the enterprise development lost from the right direction; secondly, the enterprise chose a aggressive strategy development pattern, which led to the transformation of main business, and implementation of unrelated diversification strategy in many industries and areas without forming core competence; Lastly, the enterprise has not formed a effective strategic assessment and control mechanism in the process of implementing that failed to rectify many fatal strategic error, by which the enterprise suffered a great failure.This paper argued that effective way to deploy enterprise strategic management should be the prerequisite of private enterprises successfully implementing diversified operation strategy, and also should mainly pay a attention to the following several aspects:The first, entrepreneurs should stay clear-minded sticking to the bottom line of law and moral; The second,right direction of development should be kept in mind that the ultimate pursuit of the enterprise is value maximization; The third, the choice of strategy should balance between the market opportunity and the enterprise capability; The fourth, strategic support system should be compatible to the strategic needs of diversification; The fifth, enterprises should emphasize the strategic assessment and control mechanism in the process of implementing diversification strategy.