Research On The Risk In The Diversification Strategy Of Yurun Group From Financial Perspective

In the context of economic globalization nowadays,in order to prevent business risks and make continuous growth and development in the market competition,many enterprises choose the diversification strategy and expand their business in multiple areas through mergers,acquisitions,establishments and other methods,expecting to seek new potential for more interest growth.However,the implementation of such diversification strategy is not always favorable for all the companies,which can result in a lot of risks while the benefits are not guaranteed.Therefore,enterprises should be cautious when using this double-edged sword.Yurun Group is a well-known private enterprise in China to manufacture meat products.Since its establishment,Yurun Group has experienced a rapid development and gradually become a leading enterprise in the meat food industry.However,it has encountered an unprecedented financial crisis in the process of diversified expansion in recent years,which attracts attention from all walks of life.Therefore,it is of great practical significance and reference value to study the risk of the diversification strategy of the group from the perspective of finance.Yurun Group is taken as the research object in the paper.The strategies of related diversification and unrelated diversification it has implemented since established are mainly analyzed.It is aimed to explore the specific performance and root cause of the outbreak of the financial risk of the group in the process of diversified expansion.First of all,the theory and core idea about the diversification strategy and the financial risk are summarized.The issues to be discussed in the paper are put forward through literature review.Secondly,the diversified expansion of the group as well as a series of financial risk events since 2002 is introduced and its financial crisis performance is summarized.Thirdly,according to the relevant financial indicators of two branches of the group(China Yurun Food and Nanjing International Plaza),the financial analysis of branches involved in key business in the process of diversified expansion is carried out and the internal and external factors related to the financial risk of the group are analyzed deeply.Finally,on this basis,some risk control measures are put forward,including stopping loss in time,being based on the key business,maintaining or creating the core competitiveness,optimizing the financial management system and establishing the financial risk early warning mechanism.It is aimed to alleviate the current financial crisis so as to ultimately achieve the strategic objective of the group.