Study On The Motivation And Performance Of The Unrelated Diversification Of Lu Yin Investment

Since the 1950, Diversification strategy is gradually popular among the large enterprise groups of developed countries that saw the diversification strategy as an important part of strategy for enterprise further development. The advantage of the diversification strategy is to help the enterprise r isk dispersedly, increase the net profit of the enterprise. However, diversification strategy also produces some negative influence. for example, resources scattered, difficult to achieve optimal allocation, and increase the difficulty of the operation management. If there is a help to the further development of the enterprise diversification strategy, the academia has not yet formed a unified conclusion.With the rapid development of national economy in our country, the domestic implementation of diversified development of enterprises is very common. In recent years, China's steel market downturn and the steel industry losses is seriousness. Many steel companies started to develop diversified economy to decentralized business risks, but due to the influence of various factors, the results of the diversified development is not same. It doesn't have a scientific basis that Implementation of diversified development, in particular, iron and steel enterprise whether can effectively promote the iron and steel enterprises to improve performance. So the research about the corporate diversification has a great deal of spaceThis article selects the LuYin investment that is a typical case of unrelated diversification in the steel industry to study, and according to the industry background and LuYin investment current situation of the diversification to analyze LuYin investment in 2008-2014 financial data. First of all, this article analyzed LuYin investment diversification of type selection and diversification strategy from the perspective of development strategy. And we combined with the enterprise internal and external environment to analyze the LuYin investment motives and reasons, as well as the advantages of the development of unrelated diversification. Then we according to LuYin investment financial indicators to analyze the three aspects about the profitability, solvency and enterprise value, and compared with industry data to study the unrelated diversification effects on business performance. Finally, we summarized conclusion of the study on the motivation and performance of the unrelated diversification of LuYin investment, and put forward constructive suggestions for the diversified development of the enterprise.