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A Research On The Diversification And Firm Performance

Posted on:2017-03-01Degree:MasterType:Thesis
Country:ChinaCandidate:Y JinFull Text:PDF
GTID:2309330485453854Subject:Business Administration
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Choose a right business strategy for enterprises to survive and grow is crucial. Admittedly, when an enterprise develops to a certain stage, because the original product life cycle goes into maturity or decline stage, the original business has poor performance and other factors, the enterprise must choose another path, so now a lot of enterprises have embarked on a diversification path. But many companies have not yet truly understand their own situation and really understand the inner mechanism of diversification strategy and then blindly carry out diversification, not only fail to find another brilliant business avenue, but to make themselves facing crises. So for enterprises, knowing diversification’s double edged sword is very necessary.In recent years, there have been well-known international big enterprises frequently declared bankruptcy, and even though this whole economic meltdown related, but also there are enterprises continued to flourish as well as some companies continue to rise in emerging companies. This tell us about the fundamental always looking at their own.The relationship of diversification and performance is an important issue in both academic circle and business practice, but the academic community has not formed the unanimous conclusion. This paper chooses American and Japanese IT enterprises as samples to do research given that IT industry develops rapidly and American IT enterprises’current situation is better than Japanese IT enterprises’, hoping to explain this phenomenon from the point of view of diversification. This paper adopt the research method composed of regulate research for existing research and theories have been formed and empirical analysis that bases on regulate research. Firstly, the paper studied the domestic and international research literature on diversification and the performance of enterprises, and give the summary and analysis. In empirical part, this paper chooses 40 American and Japanese representative IT enterprises as samples. At the same time in order to show the conclusion of the study to Chinese companies, the paper also selected 20 Chiniese top-ranking IT companies as a comparative analysis of samples. All data in this paper comes from sample enterprises’operating data in the past ten years from 2004-2013. To better understand the relationship between diversification and performance, this paper firstly research overall sample enterprises to know the relationship between the ample of diversification and firm performance, then according to the type of diversification criteria for the classification, divide the samples into three parts of different types of business to research the relationship between the type of diversification and firm performance. The conclusion is drawn as following:(1) Both linear and nonlinear relationship between the degree of diversification and firm performance is significant, but linear relationship is more significant. The relationship between the degree of general diversification and unrelated diversification and sales growth rate is significantly nagetive. The relationship between the degree of related diversification and performance is significantly positive.(2) There are significant differences in performance among enterprises with different business type. Unrelated diversification type has significant negative correlation with enterprises’sales growth rate, net interest margin, return on total assets rate and return on equity. Related diversification type has a significant positive correlation with performance indicators.(3) The results of analysis of samples of Chinese enterprises consistent with the results obtained by analysis of samples of American and Japanese enterprises.This study innovatively introduced Raghunathan model to more accurately measure the degree of diversification. And this paper do the best to make research results more fit the actual, in the hope that the conclusions of this study are significant for enterprises in practice.
Keywords/Search Tags:IT enterprises, diversification, firm performance, Raghunathan model, regression analysis
PDF Full Text Request
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