Research On Motivation And Financial Performance Of Diversification Strategy Of Company A

As the market competition becomes more and more fierce,the survival of enterprises is facing great pressure and challenges.In order to achieve efficient development,diversification strategy seems to be the way to break the ice,but can diversification certainly bring the improvement of enterprise performance? From the results of the implementation of diversification strategy,some enterprises significantly improve the value creation ability of enterprises after the implementation of diversification strategy,bring considerable economic benefits to enterprises,and realize leapfrog development;However,some enterprises have unsatisfactory implementation results.In the process of diversification,financial risks may be caused by the tight capital chain,excessive dispersion of resources and other reasons,leading to deterioration of business conditions and gradual decline and decline.At present,scholars at home and abroad have been debating whether enterprises should implement diversification strategy.It is of certain practical significance to select specific cases to explore the effect of diversification implementation.After the melamine accident,the concentration of China’s dairy industry continues to increase,and the tail enterprises have difficulties in breaking through.The specialized operation mode can no longer meet the needs of sustainable development of enterprises,and the diversified layout has become the new development direction of some dairy enterprises.This paper chooses Company A as the research object,and mainly uses case study method to explore the impact of its diversification strategy implementation on its financial performance.First of all,this paper sorts out the literature related to the relationship between the connotation of diversification,the motivation of diversification,diversification strategy and financial performance,and expounds the concept and theoretical basis of this research.Secondly,in order to deeply understand the development of A company’s diversification strategy,the diversification process of A company is sorted out,and the motivation and path of A company’s implementation of diversification strategy are analyzed.Thirdly,starting from the four capabilities,and using the entropy method as A supplement to analyze the financial performance changes caused by the implementation of the diversification strategy of Company A,in addition,the implementation effect of the diversification strategy is evaluated by economic added value,and the financial performance of the diversification operation of Company A is comprehensively evaluated from various aspects.Finally,the paper summarizes the transformation path of Company A,explores the mistakes in the diversification process of Company A and puts forward specific suggestions according to the evaluation results,in order to provide reference for the subsequent development of Company A and other enterprises that carry out diversification strategy.Through the research,the following conclusions are drawn:(1)The motivation for Company A to implement diversified operation transformation mainly includes diversifying operation risks,seeking new profit space and obtaining synergies.(2)On the whole,the diversification strategy does not have A positive impact on the financial performance of Company A.On the contrary,the development of its main business is unbalanced and it falls into business crisis.The implementation effect of the diversification strategy is not good.(3)According to the diversification experience of Company A,it concludes that in the process of implementing diversification,enterprises should rely on their core competitiveness to carry out diversification,cautiously expand to non-related industries,and focus on the integration work after diversification transformation.