The Case Study On The Failure Of The Business Diversification Of Dun'an Group

If a enterprise wants to obtain opportunities for survival and development in the fierce competition,persisting in the business model of specialized operation is not the only way anymore.Nowadays,diversification strategy has gradually become a new choice for modern enterprises to expand their scale and complete strategic transformation.As a large integrated enterprise,the Dun'an Group had once been infinitely glorious,of which business covers many major sectors including equipment manufacturing,copper trading,civil explosives chemical industry,real estate and so on.However,due to the blind expansion,the unreasonable allocation of resources and failure of internal control,the company's operating performance fell sharply and the then debt crisis broke out,which has strong practical significance.Therefore,this article takes the case of Dun'an Group's diversified business as a research sample,and explores the problems arise in the process of diversified business.First,the thesis reviews the previous scholars' research on diversification,and gives a brief overview of the relevant concepts,motivations,economic consequences,and basic theories of diversification.On this basis,the article introduces the basic situation of Dun'an Group and the process of diversification.Dun'an Group is a typical family-owned private enterprise.The chairman of the group has absolute control over the enterprise.The group formulates a strategic composition structure and the subsidiaries operate independently.This was the reason for the rapid development of the enterprise in the early stage of diversification,and it also directly led to problems in the later development of the group.Secondly,the thesis focuses on the analysis of the financial performance of Dun'an Group after diversification and the problems arising in the diversification process.The early benign development of Dun'an Group has accumulated rich tangible and intangible resources.With the support of the previous resources,Dun'an Group's diversification strategy has been effectively promoted,but the group's scale has expanded excessively,the business sector continues to increase,and the financing environment has suddenly deteriorated,which led to the debt crisis of Dun'an Group.In order to study Dun'an Group's diversification strategy in depth,this article looks for the problems in its diversified development process from various aspects,and then analyzes and summarizes the main reasons for the failure of Dun'an Group's diversification.Finally,after combing and analyzing the problems and causes in the diversification strategy of Dun'an Group,the article believes that companies should fully consider the changes in the external environment and the company's own comprehensive strength,control the rhythm of diversification,and pay attention to the company Internal control and asset-liability structure,and also pay close attention to national policies,so that companies can achieve the purpose of expansion and achieve corporate growth.