A Case Study On The Failure Of The Business Diversification Of Yunnan Baiyao Group

In the current economic situation,if the enterprise wants to survive and develop in the fierce competition,it is not suitable for them to provide only one product management model.Throughout the history of modern enterprise development,diversification is a common mode of enterprise's growth.And it is important in the growth of a large enterprise.The development of the world economy shows that when the development of enterprises get to a certain stage,it is necessary to face the choice of diversification.The enterprise of Yunnan Baiyao's business covers the pharmaceutical,cosmetic,real estate category and so on.However,due to its blind expansion,its profitability have begun to decline.That make Yunnan Baiyao failed.Therefore,the study on the case of Yunnan Baiyao group can be used as a reference for other enterprises in China.Based on the above consideration,this paper uses the method of normative research and case analysis to discuss the problems of Yunnan Baiyao group.By reading a large number of documents,this paper introduces the concept,influencing factors,theoretical basis,the relationship between the type of management and the performance of enterprises.This paper combines with the financial indicators of the Yunnan Baiyao group after the diversification of the performance.According to the relevant analysis,we find out the problems and causes of the diversification's failure.And we get the specific recomendations.The thesis adopts Yunnan Baiyao group's diversification for analysis which is developed in five parts.The first chapter is the introduction,mainly introduces the background and the significance of this paper,literature review,research ideas,methods and the overall framework of this article.The second chapter summarizes the concept,the variety of diversified business,the business risk,the positive effect of synergistic,the effect of management,the negative effect of decentralized resources and the related theoretical basis.It includes market forces theory,principal-agent theory,standardize economic theory,and the risk diversification theory.The third chapter introduces the motivations,the background of the group,the investment strategy of diversified operation,the impact on the financial performance.It includes the analysis of the profitability,the growth ability and the solvency of the Yunnan Baiyao Group.In the fourth chapter,It includes three problems.Yunnan Baiyao Group's existence of resources is too scattered,and its main products lose the public trust and profitability.Yunnan Baiyao Group's blind expansion led to funding chain risk of fracture.Then it analyses the cause of these problems.The fifth chapter is the suggestions based on the previous analysis of the countermeasures.There are three major aspects.It need to optimize their own resource allocation,Then It must use its own core competitiveness to diversification.It should pay attention to the financial management of enterprises.Therefore,it is important to assess your own strength and decide whether to conduct diversified management or not.First of all,it is necessary to choose the right time.Second,it should be careful to determine the diversified portfolio type.Third,it need to optimize its own resource allocation and strengthen financial management.It is best to carry out related diversification based on core competitiveness.