The Double Cases Study On The Impact Of Strategic Change By Two Household Appliance Manufacturers On Their Business Performance

Under the pressure of serious excess capacity of household appliance industry and online economy,traditional household appliance manufacturers are actively trying strategic change.They urgently need to find out in what direction their change should go,h ow to do and what impact it will have on their business performance.This study sheds a light on household appliance manufacturers’ choices of strategic change in order to improve their business performance.Based on the strategic change theory and resource-based theory,this study starts from the analysis of strategic change to resource allocation to business performance.By means of literature review,case analysis,event study and other methods,this paper summarizes the connotation of strategy,strategic change,measure model and resource--based theory and comes to a definition of business performance;then,it sorts out the development strategies of Midea Group and Gree Electric Appliances to measure their strategic change and analyze corresponding resource allocation;Again,by respectively collecting 2007-2016 financial data and market performance of Midea Group and Gree Electric Appliances,it reveals the impact of strategic change by these two household appliance manufacturers on their business performance in terms of both financial performance as well as market performance;Finally,it draws the following conclusions:The strategic change will inevitably involve pain in the short term,accompanied by temporary decline of business performance,but in the long run the indicators of both manufacturers show growth in varying degree.Specifically,as for financial performance,strategic change has an adverse effect on the first lagged financial performance but it will improve the second and following lagged financial performances.Remarkably,the strategic change impacts on assets operating efficiency of the two manufactures(turnover ratio for total assets).Since strategic change is often accompanied by adjusting product mix and sharply cutting down products with low gross profit,production and sales accordingly change to exert an obvious influence on the two manufactures’ assets operating efficiency;as for business performance,since short-term response of the market involves many influence factors,there may be no recognition from market for strategic change in the short term,but in the long term,both manufactures’ strategic change have won due market recognition.The strategic change of both Midea Group and Gree Electric Appliances is developing in a more diversified direction.Midea Group’s adjusting is earlier,more intense and diversified than that of Gree Electric Appliances.Because the strategic change will lead to a short-term decline of business performance,Midea Group’s business performance is less stable than that of Gree Electric Appliances,but the former’s numerical results and increase of business performance is better than that of latter.