Research On The Diversification Motivation And Financial Performance Of Xiaomi Group

In the management of modern enterprises,diversified management strategy is more and more widely used.Because diversified operation can rapidly expand the scale of development of enterprises,so as to enhance their competitiveness.But the diversification strategy can not make all enterprises can achieve good development,many enterprises in the implementation of the diversification strategy after the development of the hindered,even backward development and bankruptcy situation.By studying the motivation of enterprises to implement multi-distance management and analyzing the influence path and effect of diversification on enterprise performance,we can grasp the advantages and characteristics of diversified management more comprehensively and accurately,so as to correctly implement and promote enterprises in the process of enterprise development.Firstly,this paper uses the literature research method to collect,sort out and summarize the relevant literature of diversified business strategy.Based on this,case study method is developed and Xiaomi Group is taken as a case study.By combing and analyzing the diversified operation process of Xiaomi Group,we get its diversified operation mode,characteristics and motivation.Then it analyzes the impact path of Xiaomi’s diversified operation on enterprise performance and its impact on financial performance.Xiaomi is an Internet company established only a decade ago.Its main business includes three types of smartphone business,IOT and consumer goods business,and Internet service business.The diversified operation of Xiaomi Group is centered on smart phones and gradually radiates to surrounding industries.It initially sold smart phones,and then began to sell mobile phone peripherals,smart hardware,and household consumables.While developing hardware products,Xiaomi also continued to expand its Internet services-related business.The motivation for Xiaomi to carry out diversified business includes four aspects:conforming to the development cycle of the enterprise,carrying out expansion strategy to promote the growth of the enterprise;Disperse financial risk and improve enterprise security;Bring synergistic effect into play and make full use of enterprise resources;Develop into new industries and seize opportunities.The first three are the reasons most companies diversify,but Xiaomi’s diversification is unique in that it often chooses to develop into new industries.The establishment of Xiaomi Group is just at the beginning of the global smartphone industry.Later,Xiaomi was one of the earliest companies to enter the IOT industry.Now Xiaomi also has to vigorously develop emerging businesses such as 5G,new energy vehicles and intelligent robots.Therefore,Xiaomi has adopted a "blue ocean strategy" to diversify its business,so that it can seek opportunities in emerging markets.Diversified operation enables Xiaomi Group to expand revenue sources and seize market share;Realize resource sharing and enhance competitive advantage;Accumulate user traffic and realize service;At the same time,disperse financial risks and improve corporate security.From the perspective of its impact on financial performance,Xiaomi’s diversified operation improves its profitability,short-term solvency and growth ability,and also has a positive effect on the improvement of Xiaomi’s EVA index.However,Xiaomi’s diversified operation increases the operating pressure of the enterprise,thus reducing its operating capacity.Based on the analysis of Millet’s diversified operation,the following Revelations can be drawn: First,the diversified operation of enterprises should be based on their core competitiveness and diversified around related businesses.Secondly,the implementation of multi-remote management is an expansionary strategy,which can be carried out through investment incubation,so as to reduce the financial pressure.Finally,you need to take advantage of market changes and try to grow your business into new industries.