Research On Diversification Strategy Of Auto Components Company A

With the development of the automotive industry in China,auto components have experienced a rapid growth as well.Meanwhile,nation’s huge market potential and low-cost labor force have also attracted many multinational automotive parts groups.Multinational auto parts enterprises rely on their own transnational business experience and technical strength to develop and expand.There are more than five thousand auto parts enterprises in China.The growth of automobile industry has slowed down since 2017.The competition in the auto parts industry is becoming increasingly fierce.The COVID-19 in 2020 made the recovery of the automobile industry worse and accelerated the global automobile industry chain to enter the integration period.Driven by the development of environmental protection and technology,the automobile industry is undergoing a subversive development in the direction of electrification,automatic driving,intelligent Internet connection and automobile sharing.The auto industry has entered the mature period.With the growth rate declining,the competition is becoming more and more fierce,and the technology is advancing rapidly.As an auto parts company,how to focus on its own core competitiveness,make a sustainable development strategy to cope with the changes of internal and external environment,grasp the opportunities in the future,break through the bottleneck of current development,and realize the company’s vision and strategic objectives are important issues that auto parts enterprises must face and think about.On the one hand,this thesis analyzes the macro environment and automotive industry environment,and uses Porter’s Five Forces Model and competitive situation matrix to analyze the competitive environment of company A.On the other hand,it analyzes the resources and core competence of company A.In conclusion,the EFE evaluation matrix and IFE evaluation matrix are used to identify the opportunities,threats,strengths and weaknesses of the company.Combined with the company’s vision of becoming the leader of safe,healthy and comfortable sitting experience,the current thesis analyzes the development strategy of company A by using the SWOT matrix,and finally formulates the diversified development strategies of company A: increase the research and development of core function parts,build core function parts capability,expand core function parts business and break through the ceiling of existing seat customers through independent innovation,merger and acquisition,joint venture and cooperation,crossover breakthrough,build new markets,focus on core competencies,and develop crossover business to office chairs and polyurethane materials.Based on its accumulated core technology,company A should continue to provide consumers with healthy,comfortable,safe,intelligent and connected high-end office chairs and service experience.Focusing on the formulation and technology of polyurethane materials,taking light investment as the principle,and making full use of the company’s existing resources,company A is gradually expanding and extending to automobile interior parts field and other application scenarios.The strategy implementation methods usually encompass M&A,innovation and alliance.More specifically,cross-border office chair business can make up for the lacking of well-known brands and mature marketing channels through mergers and acquisitions.Innovation can be achieved from the aspects of technology,product,business model and management.The alliance mode is more flexible,including joint venture,R&D agreement,franchise,and mutual shareholding,hence,innovation alliance can be flexibly used in various schemes of diversification strategy.Strategy control is the guarantee of strategy implementation.the author maintains that Company A should effectively controls the process of strategy implementation through regular strategy review,performance management and correction.Finally,the thesis puts forward the strategic safeguard measures to guarantee the implementation of the strategy from the aspects of organization,talent,technology,culture and informatization.The findings can provide reference for company A’s development formulation strategy as well as other companies’ s.