Research On Diversification Strategy And Enterprise Performance Of Household Appliance Enterprises

With the deepening trade friction between China and the United States,the new crown epidemic and other factors,China’s GDP growth has slowed in recent years,the global industrial chain and the domestic consumer market uncertainty has increased significantly,at the same time,as China’s society enters a deep aging,the marriage rate and the birth rate continues to decline,the incremental volume of the home appliance market has hit the ceiling.For how to get out of the predicament,the construction of the second growth curve of home appliance companies,is the overall home appliance industry is facing a difficult problem.In this regard,some home appliance companies aim at intelligent home and other high-quality,high-end development model;while some home appliance companies choose the road of diversification,intends to diversify strategy to diversify business risks,to achieve stable and sustainable performance growth.In theory,the relationship between diversification strategy and corporate performance is still inconclusive.In practice,some home appliance companies have achieved sustainable growth through diversification strategy,while some others have gone down the road of diversification.Therefore,how diversification strategy will affect the performance of home appliance companies in China becomes a real need to study.This paper takes GREE,a leading company in China’s home appliance industry,as an example,and uses the balanced scorecard as a tool to analyze its diversification in four dimensions: financial,internal operation,customer,learning and growth,based on GREE’s publicly disclosed financial and accounting reports,risk continuous assessment reports,and announcements of foreign investment and related transactions from 2015 to 2021.The analysis of its performance before and after diversification was conducted.The conclusion shows that after entering into full diversification,in the financial dimension,although the total assets,net assets and net profit have grown significantly,the efficiency of inventory and accounts receivable management has decreased significantly,the profitability has been reduced,and the solvency is worrying,especially the short-term solvency is seriously insufficient;in the internal operation dimension,the management expense ratio and sales expense ratio have been reduced significantly,and the operational efficiency has been improved significantly;in the customer dimension,the brand value has been steadily improved,the customer concentration has been significantly reduced,and the reliance on large customers has been significantly weakened;in the learning and growth dimension,its R&D capability has been continuously enhanced,but its R&D investment has been weakened relative to the overall scale of the company,and at the same time,more attention has been paid to the introduction of technical talents with high education,and structural changes have been made in the quality of employees.In response to the results of GREE’s performance analysis,the author analyzes the causes from two aspects.The positive aspects are mainly its strong R&D capability,good brand effect,superior product quality and stable sales channels,while the negative aspects are mainly due to poor industrial synergy of diversified businesses,single core business,weak competitive ability of diversified businesses and over-reliance on managerial marketing.In view of this,business suggestions are made to strengthen industrial synergy,build multi-polar core business,implement differentiation strategy and weaken human-enterprise bundling.This paper takes the actual case as the research object and conducts the research from the perspective of event history,which provides a new perspective for the theory on this issue and helps to promote the deepening of the theory on this issue.At the same time,by studying the impact of GREE’s diversification strategy on corporate performance,the causes are analyzed from both positive and negative aspects,which provides a realistic reference for the diversification path of Chinese home appliance companies and has strong practical significance.