A Case Study On The Failure Of Diversification Management Of Chu Ying AGRO-Pastoral Group

With the rapid development of the world economy,the whole external environment is constantly changing,and the competition among various enterprises is increasingly fierce.In order to maintain their own market competitiveness,diversify the risks of operation,and pursue higher profits,many Chinese enterprises have chosen to diversify their operations.However,every enterprise has its own unique features,and will have different motivations,management methods and effects when implementing diversified operations.Successful diversification strategy can reduce the external transaction cost of enterprises,make full use of enterprise resources,disperse the risk of single operation,and improve the performance of the enterprise,etc.;On the contrary,the failed diversification strategy may disperse the resources of the enterprise,lose the competitive advantage and cause the decline of the overall performance,and so on.Therefore,enterprises tend to pay more attention to how to carry out diversified business strategies to produce a premium effect.By combing the relevant domestic and foreign literature on the motivations of diversification,the connection between diversification and the performance of enterprise,this paper finds that the motivation of diversification is consistent at home and abroad,but scholars have not yet reached a consensus conclusion on the relationship between diversification and corporate performance,which is divided into three types: diversified discount view,diversified premium view,and diversified compromise view.This article adopts the case analysis method and selects the breeding enterprise Chu Ying AGRO-Pastoral Group as the case of the failure of diversified management.Chu Ying AGRO-Pastoral Group went public in 2010 and has the title of " China's first pig raising ".The once-glorious breeding enterprise was continuously exposed to overdue debts and suffered huge losses in 2018,and finally was forced delisting.Chu Ying AGRO-Pastoral Group has continuously carried out diversified expansion since its listing,and the degree of diversification has gradually deepened.Its business can be roughly divided into four major areas: pig breeding + deep processing,food trade,Internet,and financial industry.This article first analyzes the motives of the diversified management of Chu Ying AGRO-Pastoral Group,mainly including the following four points: integrating and optimizing the allocation of resources,spreading management risks,achieving synergy,and expanding market power.Then,based on the motivation,this paper analyzes the degree of diversified management of Chu Ying AGRO-Pastoral Group achieves the goal,so as to to prove that its diversified management is a failure.Through analysis,it can be found that the economic effects of Chu Ying AGRO-Pastoral Group on poultry products and vegetables business are not ideal,and the investment in these businesses not only did not optimize and integrate resources,but occupied a lot of resources;The diversified management of Chu Ying AGRO-Pastoral Group did not reduce its risk,but increased the risk of the enterprise to a certain extent;The diversified management of Chu Ying AGRO-Pastoral Group did not produce synergies.Its position in the pig breeding industry continues to decline.This shows that the diversified management of Chu Ying AGRO-Pastoral Group has failed.By analyzing the diversified operation strategy of Chu Ying AGRO-Pastoral Group,this article attributes its failure to the following three reasons: neglecting the development of core business,blindly expanding related diversification,and unrelated diversification occupying a lot of funds.Finally,by analyzing the case of the failure of Chu Ying AGRO-Pastoral Group's diversified management,this paper gives some enlightenment to Chinese breeding enterprises on the road of diversified development: When formulating a diversified development strategy,it is necessary to be cautiously diversified,maintain the core competitiveness of the main business,and seize the opportunity for diversification;From strengthening the ability of resource integration,learning ability,technological innovation to enhance the dynamic ability of enterprises,better carry out diversified operations;Strengthen risk identification and control to improve the risk management system.