Research On Adjustment Of Diversification Growth Strategies In HC Group

As China has undergone the economic growth at a continuously fast speed and the rapid advance in the process of global economic integration,Chinese enterprises are now facing an increasingly fierce competition in markets.In order to disperse operational risks,to foster new economic growth points and to maintain enterprise progress,an increasing number of domestic enterprises are attempting to carry out the reform in the direction of diversification growth which is regarded as a final life-saving straw.Most enterprises has succeeded through practices of diversification and expanded in a fast manner with some even growing into large international well-known enterprises.However,many more enterprises suffered failures on the road towards diversified development,with no exception of large state-owned enterprises.HC Group,a large-size state-owned enterprise for roughly 40 years,takes equipment manufacturing as their leading factor and has covered up to now such a wild range of industry as equipment manufacturing,architecture,agriculture,textiles,pesticide chemical and service industry.Although HC Group owes the growth which is characterized by the fast expansion in industry structure and a significant gain in competitiveness to the implementation of diversification growth strategies,the Group,due to the deficiency in scientific planning and guidance,is still in the face of many problems characteristic of weak growth in the old industries,fewer contributions from emerging industries,confusion of overall management,and low efficiency in execution in the process of diversification implementation.These problems have exerted a severe influence on HC’s whole development.On the basis of both strategic management theory and research findings arrived at by scholars inside and outside China,this study views HC Group as the subject of research and adopts the analytical tools like PEST,SWOT and Michael Porters’ Five Forces Model with the finding that it is pressingly urgent for HC Group to adjust the ongoing strategy of diversification.Based on this research,the author puts forward a strategic goal and some effective strategies and measures.HC Group should keep in mind the beliefs,namely,“survival of the fittest” and “seeking improvement while maintaining stability”,fully integrate HC’s internal resources with key industries as the core of the Group,and make efforts in building a more competitive industry cluster with features highlighted by core industries and a full industry chain so as to accomplish the objective of strategic adjustment for a better and faster development in all the HC’s industries.With adherence to the basic principles of market-orientation,enterprise survival,value maintenance and value appreciation,the adjustment strategies are to be carried out in a phased manner.Firstly,retrenchment strategy should be given priority with the removal of weak sectors such as textiles and pesticide chemical industry.Secondly,stability strategy should be implemented for the stable growth in agriculture industry.Lastly,expansion strategy should be taken to make vigorous development in key industries such as equipment manufacturing,architecture and service sector.Safeguard measures for HC Group are as follows: to promote the level of financial management and the performance of capital operating in HC Group,to invest more in backbone industries,to implement talent development strategies(TDS)and technological innovation,to accelerate transformation and upgrading,to foster new advantages and new growth drivers essential to industrial development,and to improve HC’s core competitiveness in a comprehensive way.These measures mentioned in this thesis are to ensure the smooth execution of strategic adjustment in the process of diversification growth and the achievement in a sustained and sound development in HC Group.This research not only provides with HC Group a guidance for adjustment and implementation of diversification strategies,but also a reference for other equipment manufacturing enterprises in their selection,implementation and adjustment of diversification growth strategies.