Research On Financial Risk And Economic Consequence Of Diversification Strategy Of Enterprise Group

The diversification strategy of the enterprise has always been a hot issue in the academic circle.As one of the effective ways to promote the development of enterprises,diversified development through mergers and acquisitions has become a common phenomenon for many enterprises to seek breakthroughs.Some enterprises expand their scale through diversification,resulting in profit growth and synergy.Instead of promoting competitive advantage,some enterprises bring financial difficulties instead of promoting diversification because of their diversification.Enterprises of different industries in different life cycle and diversified in different ways so may affect the success of diversification and expansion.It can be said that the diversification strategy is a double-edged sword for enterprise development.Letv Group was founded in 2004,started with video website business,and steadily expanded from video website to film and TV industry.Currently,it has been involved in many fields,such as movie industry,TV,sports,mobile phone,real estate,automobile,finance and so on.From the beginning of the Letv Sports,the group was ambitious to build an Letv ecology.From 2012 to 2016,enterprises' antennae extend to industries that are not related to video sites,from sports to the mobile phone to the car.The rapid expansion speed finally broke out the financial crisis at the end of 2016.As one of the representative enterprises in the capital market,experience and lessons of Letv in the diversification process deserve careful study.This article selects the Letv group as the research object of the enterprise diversification strategy.I mainly use normative research method and case study method.On the basis of literature research,this paper analyzes the financial situation of Letv by combing the diversified strategic layout of Letv,and then summarizes the financial crisis events of the Letv,and then finds out the reasons for the financial crisis of Letv through the analysis of the economic consequences brought by financial risk to the Letv.The study found that the lack of self profitability makes the Letv itself does not have a perfect expansion of diversification,and a series of diversified distribution further exacerbates the group's overall financial tension,the unmatched capital allocation finally led to the outbreak of financial crisis.The diversification of Letv does not eventually produce the desired synergy,which is related to many factors such as imperfect management structure,inadequate risk prevention andunclear profit model.After sorting out the reasons for the financial risk of Letv,we put forward a series of countermeasures and suggestions.At the end of this paper,the study of the case is summed up and further thought is put forward in order to provide reference for the diversification strategy layout of other enterprises.