Study On The Motivation And Economic Consequences Of Diversified Operation Of Longfor Group

With the implementation of the "three red lines" and other regulatory policies,the urbanization process has gradually slowed down,and the era of brutal production in the real estate development industry has completely ended.Real estate development enterprises have opened the road of diversified transformation,diversifying risks and seeking new profit growth points.However,the actual effect of diversification on enterprises is unknown.There are many cases of crisis caused by blind diversification in the market.It is worth investigating how enterprises should implement diversification strategies to enhance enterprise value.Longfor Group,the research object of this paper,is a large real estate development enterprise.In recent years,it has accelerated the development and expansion of other businesses in addition to the main business of real estate development,forming a business pattern of "double engines" for development business and business operation,with real estate development,commercial operation,housing lease,intelligent service,housing lease,and housing decoration go hand in hand.At the same time,the overall performance of Longfor Group is among the top in the industry,and it has survived the turbulence of 2021,which is typical.This paper adopts the research method of combining literature research with case study.In the aspect of literature research,it summarizes the previous research conclusions in the three directions of the concept and classification of diversification,diversification motivation and the impact of diversification on performance,and combs out the mature theories on diversification.In the case study,first of all,it introduces the basic situation of Longfor Group’s industry and company,combs the diversified layout of Longfor Group,and calculates the degree of its diversification.Secondly,it analyzes the motivation of Longfor Group’s diversification transformation from the external and internal aspects,and analyzes the impact path of diversification on its performance.Then,it evaluates the economic consequences of diversification to Longhu Group from three aspects: short-term market reaction,financial performance and enterprise risk,and analyzes the advantages and problems of the diversified development of Longhu Group.Through comprehensive and indepth analysis,it provides some suggestions for other real estate development enterprises to develop in a diversified way.First,choose non relevant diversification cautiously;Second,diversification cannot ignore the development of the main business;Third,the pace of diversified expansion should not be too fast;Fourth,diversified businesses should focus on integration;Fifth,diversification should focus on the overall risk control of enterprises.