Strategic Choice And Its Impact On Firm Performance

During European Soccer championship in 2016,as the Chinese audience appreciated the wonderful game,they saw the Chinese enterprise's brand,Hisense,as the first Chinese brand that has appeared in the history of the European Cup,makes people proud.CCTV news network,two sets of economic news network that have reported the European Cup also covered Hisense,The slogan-“Hisense,CHINA'S NO.1 TV BRAND” spreads quickly abroad.As Hisense,along with Adidas,Coca-Cola,McDonald's and other nine world brands shown on the same stage,few people have thought of Sichuan Changhong which had been brilliant in the past.As household electrical appliance industries,there is a big difference in the long-term development of the two companies.Household appliances industry feature high technology intensity,fast product upgrading and industrial upgrading of improvement,etc.The main process of development can be divided into the following stages: First,the rise phase.Because of the factors of production,such as raw materials in China,low labour price and so on,the manufacturing process transfers to China.Our country has became the world's important household appliance manufacturing center,which provides many electrical appliances enterprise big opportunities.Second,the growth stage.With the development of economy,the domestic household appliance market demand and Household appliance industry entrants increasing,industry chain has been further extended.Third,struggle stage.With the larger scale of the household appliance industry and market demand slowing down,the competition between enterprises has became more fierce.The difference between each enterprise products was small,so the price had became the major means of competition.At the same time,some enterprises ran quickly into the foreign market,but suffered setbacks.The industry profit space was getting smaller,thus many enterprises was forced to withdraw from the market.Fourth,the restructuring phase.Most companies got rid of the impact of price wars,and then focus on quality,service competition,etc.In the development of household appliance industry,Sichuan Changhong gradually lost its competitive advantage,however,but Hisense has gradually became the industry well-known brands.Through the study of differences between the two enterprises,this paper explores the reasons behind it.As Sichuan Changhong and Hisense appliances made strategic choices,based on the principal-agent theory,strategic management theory and enterprise growth theory,five aspects--Strategic environment,diversification,market positioning,technology development and cost leadership were described.Then a number of indicators were chosen,such as net asset returns,analysis of the impact of differences in the five aspects of the two companies on the financial performance and market performance.Through the case study,the following conclusions are drawn: Strategic environment cause long-term indirect effects on firm performance;Diversification strategy has long-term negative effects on firm performance;Market positioning cause long-term direct impact on firm performance;Technology innovation cause long-term positive impact through cost leadership on firm performance.According to the case study,the author puts forward four enlightenments: First,To create a good environment for the implementation of strategic choice and lay a good foundation.Second,Reasonable to control the degree of diversification,to maintain the dominant position of the main business.Third,Timely repositioning to further expand market share.Fourth,Accurately forecast the technical development trend of the industry,and guide the enterprises to the correct development track.Finally,the article points out the Innovation and limitations.The innovation of this article: First,this paper discusses the long-term impact of corporate strategy on firm performance.Second,the research on market orientation,technology innovation and strategic choice is more comprehensive.Third,enrich the research on the enterprise performance of a variety of strategies.The limitations of this article: The double case study and are typical,but the two cases are in the same industry,whether the conclusion of the general applicability of other industries need to be further discussed.In addition,the information used in this article is the public information of the enterprise,and some unpublicized information may have an important impact on the results of the study.