Research On The Diversification Strategy Basing On The Core Competence

In recent years, more and more enterprises begin to diversify in China. The diversified development opens blue-ocean market for business and is proved to be a new revenue growth. The new profit model, meanwhile, is given by the diversification which can fundamentally improve the industrial competitiveness and cross-border business. However, struggles or even extinction of companies can also be produced by diversification. As the tactic, diversification itself is neither good nor bad. What should be concerned is that it is right or wrong in use. The essential difference above two is the common point which exists in all kinds of business between enterprises. In other words, it is the core competitiveness of the enterprise itself. The core competitiveness is the prerequisite and basic support of diversification strategy. The enterprise should develop based on the core competitiveness.This paper selects the Yunnan Baiyao Group as a case. Firstly it introduces the general situation of Chinese pharmaceutical industry and Yunnan Baiyao Group and the diversification process and status of Yunnan Baiyao Group. Then it combines relevant theoretical analysis of Yunnan Baiyao Group’s diversification. Meanwhile, to use financial analysis method evaluates the performance. For the current condition of diversified development, the paper takes full use of some theories like diversification and core competence development to analyse. Through analysis the paper finds that the main reason why the Yunnan Baiyao Group’s drugs and toothpaste get such a big success is that the Yunnan Baiyao Group’s diversified development is based on the core competitive competence. The current development of new products is not smooth and real estate fails. The most important reason is that it is out of the core competitiveness and lacks the competitive edge. So the paper puts forward relevant advises for the diversified development of Yunnan Baiyao Group.