Analysis Of The Motivation And Financial Performance Of China Resources Group’s Diversification

With the acceleration of the world economic integration process,the market competition is becoming increasingly fierce.In order to cope with the severe market environment,enterprises have to seek new strategic paths for development.Since the 1950 s,enterprises in Europe and the United States and other developed countries have achieved certain results by implementing diversification strategies,and the concept of diversification strategy has started to become popular worldwide.In order to achieve scale growth and maximize corporate value,domestic enterprises have also started to actively explore the path of diversification,but there are not many successful cases.Therefore,the rationality and effectiveness of implementing diversification strategy can be effectively evaluated by its impact on the financial performance of enterprises,whether diversification can be used as a choice of corporate development strategy.In this paper,China Resources Group is selected as the research object.Firstly,the background and significance of this study are presented,and the existing theoretical foundations and literature review are summarized,summarized,and sorted out to provide a sufficient theoretical basis for the following analysis of CRG’s diversification motivation and financial performance.Secondly,through the basic situation and development history of China Resources Group,the types of its diversified industrial layout and the motives of diversified operation are comprehensively analyzed.Again,with the help of data analysis method and comparative analysis method,we conduct top-down comparative statistical analysis of CRH Group’s main financial indicators and financial capability indicators,and adopt qualitative and quantitative research methods to analyze and evaluate its diversified financial performance by using EVA economic value added model.After the analysis and comparison,we found that CRG’s diversification approach has to a certain extent contributed to the improvement of corporate performance,but has not yet achieved the expected results.To this end,this paper makes the following recommendations in light of the actual situation: steadily promoting the process of corporate diversification,establishing a diversified industrial synergy mechanism,and launching diversification and R&D innovation around core competencies to empower diversification.The research and analysis in this paper help to reduce the risks that CRG is currently subject to in its strategic layout of diversification,and prepare it for a new level in the future.At the same time,it is also hoped that the analysis results of this paper can provide some reference basis for other companies that are implementing or planning to implement diversification,so that their operations can be more stable and contribute to the future development of China.