Risk And Performance Analysis Of Diversified Management In China’s Household Appliances Industry

The rapid development of economy and the progress of science and technology affect the development direction of enterprises.In the increasingly fierce competition,it is undoubtedly the common pursuit of every enterprise to occupy a larger market and obtain a larger profit growth point.Diversified development is an important way for enterprises to expand their scale,grab more customer groups,and obtain sustainable high income sources.However,diversified operation is also a double-edged sword.It not only occupies the market but also disperses the resources of the original business,which may impact the core competitiveness of enterprises and cause greater losses.GREE ELECTRIC APPLIANCES has been committed to making the best of air conditioning products since its establishment for many years.It was not until the recent three years that the intention of diversification gradually became clear.It is worth exploring whether the sudden diversification of such a specialized enterprise can be valued by the market,whether it can effectively improve the performance of the enterprise,and what kind of financial and non-financial risks it brings to the enterprise.Through analysis,the reasons for success or failure are summarized,and relevant improvement measures are put forward,which can provide a reference for the long-term diversified development of the home appliance industry in the future.Based on the risk and performance,this paper will find out the risk of strategy implementation based on the goal of GREE electric appliances’ diversified operation,and evaluate the realization of GREE of its diversified goal through performance analysis.The composition of the article is as follows.After sorting out relevant research literature and theoretical basis,the background of diversified operation of China’s home appliance industry is firstly analyzed: Combined with the relevant institutional background,this paper selects the leading enterprises in China’s home appliance industry to sort out the diversified operation types and implementation methods of China’s home appliance industry.Secondly,take GREE electric appliances as a case to analyze its diversification status in detail,find out the reasons and risks for its diversification,and evaluate the de GREE of realization of its motivation through performance analysis.Through the previous research,it is found that GREE’s diversified operation aims to meet the objectives of responding to the national policy call,dispersing the risks of unitary operation,enhancing competitiveness,integrating and optimizing resource allocation.At present,GREE has been in the diversification for a short time and the de GREE of diversification is not high.From the perspective of risks,the lack of rationality of liability structure,the increase of non-current assets,the possibility of bad debts of accounts receivable and inventory overstocking increase GREE’s financial risks.If GREE fails to maintain its core competitiveness,pay no attention to technology research and development,talent recruitment or even neglect project management,it will increase non-financial risks in terms of strategy,technology and management.From the perspective of performance,GREE mainly uses scope economy to improve its financial performance,but it will not pay dividends in 2017,has excessive investment,and may have a large agency problem,which may have a negative impact on its financial performance in the future.In the short term,the market is not absolutely optimistic about GREE’s diversified business;Longitudinal comparison shows that with the acceleration of diversification,GREE’s financial situation is improving and its diversification is gradually recognized by the outside world.Horizontal comparison of haier,a diversified enterprise in the same industry,shows that it is positive that GREE’s diversified operation improves its operating capacity,improves the stability of GREE’s profitability and slightly improves its solvency,but its development capacity needs to be further improved.The main contributions of this paper are: starting from the industry as a whole,summarize the current industry situation,provide important reference for case analysis;It is of great reference value to study the typical cases of the transformation from specificity to diversification in the household appliance industry.Based on the "motivation-risk-performance" system,the diversified evaluation of GREE makes the research more comprehensive and scientific and the conclusions more convincing.In the performance evaluation,the ways of influencing the performance of GREE electric appliances by diversified operation were analyzed from the perspective of synergy effect and agency problem.Then,the performance of GREE electric appliances by diversified operation was quantified by the method of event study and the comparative analysis of horizontal and vertical financial indicators,and the short-term and long-term influences were obtained respectively.The multi-angle quantitative analysis increases the persuasiveness of the research conclusion.