Question 2: Classification of diversification There are many different forms of diversification, but they can be summarized as the following four types: (1) Concentric diversification strategy (Concentric diversification). Also known as centralized diversification strategy. It refers to the enterprise's utilization of the original production technology conditions to manufacture new products with different uses from the original products. For example, automobile manufacturers produce automobiles, but also produce tractors, diesel engines and so on. Concentric diversification is characterized by the basic use of the original product and the new product are different, but there is a strong technical correlation between them. (2) Horizontal diversification (Horizontal diversification), also known as horizontal diversification strategy. It means that the enterprise produces new products for sale to customers in the original market to meet their new needs. For example, a food machine company originally produced food machines and sold them to food processing plants, then produced harvesting machines and sold them to farmers, and later produced agrochemicals and still sold them to farmers. Horizontal diversification is characterized by the fact that the original product and the new product have different basic uses, but there is a close sales correlation between them. (3) Vertical diversification (Vertical diversification), also known as vertical diversification strategy. It is subdivided into forward integration business strategy (Forward diversification) and backward integration business strategy (Backward diversification). Forward diversification refers to the development of raw material industry to processing industry and the development of manufacturing industry to circulation area, such as iron and steel factories set up metal furniture factories and steel window factories. Backward integration polygonal operation refers to the expansion of the processing industry to the raw material industry or the parts and components industry, such as steel mills investing in the steel mining industry. Vertical diversification is characterized by the fact that the basic uses of the original product and the new product are different, but there is a close correlation between them in terms of the stage of product processing or the correlation between production and distribution. Generally speaking, backward integrated diversified operation can guarantee the supply of raw materials and spare parts with less risk; forward integrated diversified operation often encounters fierce competition in new markets, but the source of raw materials or commodities is guaranteed. (4) Overall diversification strategy, also known as mixed diversification strategy, refers to the expansion of an enterprise into business areas that have nothing to do with the original product, technology or market. For example, the United States International Telephone and Telegraph Company, whose main business was telecommunications, expanded into the hotel industry. Overall diversification requires sufficient capital and other resources, so it is adopted by large companies with great strength. For example, Guangzhou Baiyunshan Pharmaceutical Factory as the core of the development of Baiyunshan Group Company, in the production of the original drug at the same time, the implementation of a variety of types of combinations of diversified operations. The company set up under the pharmaceutical supply and marketing company and chemical raw materials branch, the implementation of forward, backward diversified operations; set up under the Chinese medicine branch, the implementation of horizontal diversified operations; set up under the veterinary medicine plant, the implementation of concentric diversified operations; also has a car repair service center, construction and decoration engineering companies, cultural and sports development companies, color printing factories, restaurants and so on the implementation of the overall cross-industry multi-angle operation. In addition to the above classification, western scholars R.R. Rumelt (R.R. Rumelt) used professional ratio, associated ratio, vertical unity ratio and other three quantitative standards and intensive - diffusion of this qualitative standards, diversified business strategy is divided into vertical, professional, industry-centered, related, unrelated type of five types. (1) Specialized strategy. Enterprise specialization ratio is very high (more than 95%), known as professional diversification strategy, which is the existing products or business areas to expand the strategy, such as super malls divided into self-service thrift stores, small retail stores, department stores and so on. (2) Vertical strategy. The production of a certain product, often only take from the production of raw materials to the final product sales of the entire system in a stage, and each stage has its own complete production system. Vertical strategy is either to the upstream development, or to the downstream penetration. Such as a rolling mill to produce a variety of steel. Vertical type diversification strategy, further upstream development, investment in the development of steelmaking, ironmaking, and even mining. (3) Industry-centered strategy. Enterprise specialization ratio of low diversification strategy (between 70% and 95%), known as the industry-centered strategy. This is a diversification strategy in which a company develops a new business that is closely related to its existing business, while still focusing on its existing business. (4) Related-type strategy. Enterprise specialization ratio is low (less than 70%), but the ratio of related to the larger polygonal strategy, in general, the core of the diversification strategy is the management of resources. The implementation of the related diversification strategy is to utilize the same management resources to develop new businesses that are closely related to the original business. (5) Non-related type war ...... >>
Question 3: The role of diversification Enterprises using diversification strategy can play the following important role: (1) diversify risks and improve operational security. The ups and downs of the business cycle, changes in market conditions, the evolution of the competitive situation, are directly affecting the survival and development of enterprises. For example, if an enterprise's production and operation activities are limited to a class of products or concentrated in a certain industry, the risk is high. Therefore, some enterprises have adopted diversification. For example, the production of consumer durables in the food processing industry to diversify risks and enhance the ability to adapt to the external environment. (2) It is conducive to the transfer of enterprises to emerging industries with good prospects. Due to the impact of the new technology revolution, a number of high-tech emerging industries have emerged one after another. Enterprises to implement diversification, in the original basis to the expansion of emerging industries, one can reduce the original market competition pressure, and secondly, can gradually from the slow growth, low rate of return of the industry to the transfer of high rate of return of the industry. For example, the U.S. Teckstrom, in the 1950s is a textile company, because the textile industry, low return on capital, and vulnerable to the impact of the recession, it turned to other industries to invest in, and gradually become a hybrid of large companies. 1967, the company reached from the original return on capital of 5 to 6% to 20% of the target. (3) Promote the development of the original business. Many industries have a mutually reinforcing effect. Diversification and expansion of services can often contribute to the development of the original business. The Dai Nippon Printing Company, which ranks first in Japan's printing industry, continues to operate the printing industry while expanding its business to include the preparation of international sports conferences, the hosting of national product exhibitions, market research on behalf of customers, and information services. These new businesses cannot be separated from printing. These new businesses, not only provide an annual incremental rate of 10 to 20% of the revenue, but also the company's original need to subsidize some of the printing department to turn a loss into a profit.
Question 4: What are the diversified business strategy mode From the current diversified business of Chinese and foreign enterprises in general, the diversified business strategy mode according to the relevance of its business content and hierarchical basically can be divided into two types: (1) Vertical extension mode. There is no money. That is, the enterprise elements of the business content of interdependence, progressive along the promotion, interlocking, close extension of a diversified business model. Characterized by the business elements are related to each other, interdependent, and easy to operate and manage, is currently a diversified business model commonly used by small and medium-sized enterprises, which involves the industry or similar, or cross, mostly in the service industries or directly facing the daily consumer market manufacturing industry. In terms of business content, it can be divided into two categories: service extension type and product extension type. Service extension is engaged in the service industry enterprises, according to the relevance of the service content of the diversified business, such as sea, land, air transport; public railway intermodal transportation; clothing, food, housing, transportation and other one-stop service. Product extension is engaged in product manufacturing enterprises, according to product consumption, the use of the relevance of the diversified business, such as production equipment and production of consumable materials to extend the supporting; production of consumer goods and the use of consumer goods to extend the supporting. There are two main ways to realize the vertical extension strategy mode: self-supporting or joint venture. Self-integrated matching requires a large amount of additional investment, but more stable and reliable in the operation; joint venture collaboration less investment, but poor stability, prone to interference from competitors. (2) Horizontal expansion mode.
Question 5: How to achieve corporate diversification development strategy In recent years, about specialization and diversification has been the focus of attention in the expansion process, and corporate diversification has become a typical business strategy for enterprise development. Diversification strategy put forward by the famous "product - market" strategy master Ansoff in the 1950s, is the highest level of the enterprise for the enterprise to develop a number of business portfolio strategy, is the enterprise to get involved in different industries in the environment of the business development plan, including what kind of field to enter, what kind of business to enter, what kind of business to enter, and how to realize the diversification strategy. Development planning, including what kind of field to enter, how to enter and so on.
It should be said that the diversification strategy is an important strategic choice for the development of large enterprise groups. Most enterprises in developed market economy countries, especially large multinational enterprises have almost all adopted this business strategy. From the present point of view, there are mainly two very different views; one believes that the use of existing resources, diversification, can avoid risk, realize the resource **** enjoyment, produce l 12 effect, is the road of modern enterprise development. For example, General Electric Company of the United States is considered to be a successful model of cross-industry diversification strategy. GE has become one of the world's largest and most successful enterprises by engaging in a wide range of industries, including electric power equipment, medical equipment, lighting and electrical appliances, broadcasting and media, and finance, etc. Another view is that diversification of enterprises will lead to the development of a more diversified business. Another view is that enterprise diversification will result in the dispersion of human, financial and material resources, increased management difficulty and decreased efficiency. Perhaps we all remember Shi Yuzhu, who was once a great power in the corporate world, and will not be too unfamiliar with the Giant Group, which makes computer software and produces the biological product "Brain Gold". Now, when the "giant" scenery has been silent. The collapse of the "Giant" image was directly related to the building under construction at that time. But this building is only a superficial reason, the important reason for its fall and then no strength is the blind diversification of the production and management of enterprises.
When business managers choose to diversify their business, they generally have certain reasons, and they are often very complex. Changes in the internal conditions of the enterprise and the external environment can be the reason for diversification. For an enterprise, the external environment refers to the market or ***, and the internal refers to the enterprise itself.
Causes of the external environment:
1. Demand for products tends to stagnate. The market capacity of any product or service has a certain limit. Adam bandit goo goblet? Harmony ∪ naphthalene ken argot evaluation cast? Stop aa＞ enjoin Mi Jiehuan axe hassa Dao this tandem? The following is a list of some of the most important things that you can do for your business. The most important thing to remember is that you can't afford to lose the money you've lost. The Mudi SAM Kui color timid Xing Xue Sic摹3?隽歡艘ǖ南薅龋?. The first thing you need to do is to get rid of the carpet. Kim, Ishin, Ishin, Ishin, Ishin, Ishin, Ishin, Ishin, Ishin, Ishin, Ishin, Ishin What's the matter with you? What's the reason for this? What's the matter with you? What's the matter with you? What's the reason for this? What's your favorite? What's the best way to get the most out of your life? Do you have a complete profile of the company? What are the details of the profile? What's the best way to do this? What is the best way to get the most out of your life? What's the best way to do this? The first time I saw the game, I was able to get a good look at the game. /p>
2. The degree of market concentration. In the higher degree of market concentration of enterprises, a few enterprises in the market, cost and other aspects of the advantage, the enterprise to achieve than the industrial growth rate is higher than the growth rate, the only way to enter the enterprise outside of the new market. If the growth of revenue does not offset the growth of inputs, the firm has a negative marginal benefit and is prone to fail in competition. High market concentration makes it more costly for a firm to increase its growth rate in its own industry, and so prompts the firm to diversify into other industries.
3. Uncertainty of demand. Newborn enterprises often do not have an advantage in terms of capital, technology, market, etc. On the contrary, the old enterprises related to the new demand market has more advantages. Uncertainty of market demand will increase the risk of enterprises relying on a single market, thus incentivizing enterprises to pursue the risk diversification effect.
Reasons for the internal environment:
1. Internal resource potential of the enterprise. The unutilized internal resources accumulated by an enterprise are the driving force for entering new markets. Other things being equal, the higher the ratio of research and development expenses to sales, and the higher the ratio of advertising expenses to sales, the easier it is for an enterprise to actively engage in diversification.
2. Failure to meet business objectives or poor returns in the original business area. Generally speaking, if the enterprise can achieve the established goals, the enterprise to develop new industrial areas, the implementation of diversification is not much incentive; on the contrary, the enterprise's existing business policy, the greater the gap between the scope and the desired goals, the greater the possibility of adopting diversified development strategy. Diversification is different from general business policy, involving the entry into new industries, belonging to the enterprise's program when the gap is very large, it is possible to consider changing the original program, the adoption of diversification 3. Imbalance in the development of vertical integration. Enterprises in the development of vertical integration will form a huge sales, manufacturing, procurement, raw material production, transportation and research and development ...... >>
Question 6: Integration, what are the advantages and disadvantages of diversification strategy Integration strategy
Integration strategy refers to the enterprise to make full use of their own advantages in products, technology, market, according to the direction of the logistics, so that the enterprise is constantly to the depth and breadth of the development of a strategy. Integration strategy is a very important growth strategy, it is conducive to deepen the professional division of labor, improve the depth of the use of resources and comprehensive utilization of efficiency. Including vertical integration strategy (Vertical integration strategy) and horizontal integration strategy (Horizontal integration strategy), and vertical integration strategy is divided into forward integration and backward integration, that is, the integration of the company's products and services.
Vertical integration strategy is divided into forward integration and backward integration, that is, the strategy to develop the business field to the depth.
Vertical integration, also known as vertical integration, refers to the strategic form in which an enterprise combines production and raw material supply, or production and product sales, and is a development strategy that expands the existing business in two possible directions, and is a strategic system that expands the company's business activities backward to the supply of raw materials or forward to the end of the sales.
Forward integration strategy is to do further processing of the company's products, or comprehensive utilization of resources, or the company to establish its own sales organization to sell the company's products or services.
Backward integration is when a company supplies all or part of the raw materials or semi-finished products needed to produce an existing product or service.
The strategic motivation for vertical integration is to strengthen the core firm's control over the entire process of raw material supply, product manufacturing, distribution and sales, so that the firm can take the initiative in market competition and thus increase profits at all stages of business activities.
Vertical integration is a strategic system often chosen by enterprises, but any strategy inevitably exists risks and shortcomings, the original intention of vertical integration is to establish a strong scale of production capacity to obtain higher returns, and through the sales-oriented terminal strategy to obtain direct feedback from a variety of information in the market, thus promoting continuous improvement of products and reduce costs, to achieve competitive advantage. A method.
But not all areas are suitable for vertical integration. Vertical integration must be based on the reality of the company and the competitive environment to determine whether it is appropriate for this strategy at this time and in this industry.
We can see that Yili Dairy has not established a store system across the country, which in itself indicates that this kind of dairy products based on a product is not suitable for establishing a store system, but more suitable for sales in supermarkets, then its forward integration (sales channels and terminals), and not be able to directly lay to the national territory.
The advantages of vertical integration are:
1. Realize economies of scope, reduce operating costs, improve productivity, reduce production steps and bring economy. After adopting this strategy, the enterprise will internalize the external market activities can obtain the economy of internal control and coordination; the economy of information, information flow faster, more accurate grasp of the market demand (information access is critical); the economy of saving transaction costs; the economy of stable relationships to improve the overall efficiency of the enterprise.
2, helps to develop technology. In some cases, vertical integration provides the opportunity to further familiarize themselves with upstream or downstream business-related technology. This kind of technical information is very important to the development of the basic business technology and development. For example, component manufacturers in many fields develop forward integration systems. It is possible to understand how the parts are assembled technical information.
3, to ensure supply and demand. Vertical integration can ensure that enterprises in the product supply shortage when the supply is adequate, or in the total demand is very low when there can be a smooth product output channels. In other words, vertical integration reduces the uncertainty of upstream and downstream firms discontinuing transactions at will. Of course, it is worth noting: in the process of trading, the internal transfer price must be aligned with the market.
4, weaken the price negotiation ability of suppliers or customers. If an enterprise in its suppliers or customers to do business, suppliers and customers have a strong price negotiation ability, and his return on investment exceeds the opportunity cost of capital (opportunity cost: in order to get something necessary to give up things), then, even if he will not bring other benefits, the enterprise is worth doing. Because integration weakens the price negotiating power of rivals, this will not only reduce the cost of procurement (backward integration), or increase prices (forward integration), but also improve efficiency by reducing the investment in negotiation.
5. Improve the firm's ability to differentiate. Vertical integration can be achieved through the management ...... >>
Question 7: Types of diversification strategy and its content Diversification strategy, also known as the polygonal strategy, refers to a development strategy in which an enterprise simultaneously operates more than two basic economic uses under the same product or service. Diversification strategy is relative to the enterprise specialization, its content includes: product diversification, market diversification, diversification of investment areas and capital diversification. The so-called product diversification refers to the enterprise's new production of products across a variety of industries that are not necessarily related to the production of a series of products; the so-called market diversification refers to the enterprise's products in a number of markets, including the domestic market and the international regional market, or even the global market; the so-called diversification of the investment region means that the enterprise's investment is not only concentrated in a region, but also dispersed in a number of regions and even the world; the so-called capital diversification, the so-called capital diversification, the so-called capital diversification. The so-called diversification of capital refers to the various forms of enterprise capital sources and composition, including tangible and intangible capital such as securities, stocks, intellectual property rights, trademarks and corporate reputation. Diversification in the general sense refers to the diversification of product production. Diversification and product differentiation are different concepts. Product differentiation refers to the segmentation of the same market, but in essence it is the same product. Diversification, on the other hand, is the entry of the same enterprise's products into a heterogeneous market, is to increase the variety of new products and enter a new market both occurring at the same time. Therefore, diversification belongs to the category of product-market strategy in business strategy, while product differences belong to the segmentation of the same product. At the same time, the definition of the diversification strategy of the enterprise must be that the heterogeneous leading products of the enterprise is less than 70% of the total sales of the enterprise's products. Mode of diversification strategy: 1, Horizontal diversification. Horizontal diversification is to take the existing product market as the center and expand the business field horizontally, also known as horizontal diversification or professional diversification. Horizontal specialization consists of three types: (1) Market development, i.e., developing new markets based on existing products. (2) Product development, i.e., developing products similar to existing products with the existing market as the main target; (3) Product and market development, i.e., developing new products with the newly developed market as the main target. This strategy is based on the original market, product change, and therefore strong product cohesion, development, production, sales technology correlation is large, management changes are not large, more suitable for the original product reputation is high, the market is wide and the potential for development of large-scale enterprises is also very large. Yintl (Eagle Consulting) "management listed" series of books "listed? Strategy" is a treasure trove of management tools for listed companies. 2, Multi-directional diversification. This refers to the diversification of business fields through the development of completely heterogeneous products and markets, even though they are somewhat related to existing products and markets. There are three types of multidirectional diversification: (1) Technological diversification. This refers to the development of heterogeneous products for heterogeneous markets based on research or production technologies in existing business fields. Because this type of diversification utilizes similarity in research and development capabilities, similarity in raw materials***, and similarity in equipment, it is possible to obtain a technological multiplier effect, which facilitates mass production and makes it competitive in terms of product quality and production costs. Moreover, the more different the uses between various products, the more obvious the effect of diversification becomes. However, in the case of technological diversification, the sales channels and promotion methods are generally different. This is not favorable for marketing competition. This type of diversification is generally suitable for large enterprises in industries with high technology intensity. (2) Diversification of marketing relationships. This is based on marketing activities in existing market areas to penetrate different product markets. Marketing diversification utilizes *** the same sales channels, *** the same customers, *** the same promotional methods, *** the same corporate image and visibility, and thus has the effect of sales multiplication. However, since there is no multiplier effect in terms of production technology, equipment and raw materials, it is not easy to adapt to changes in the enterprise or to cope with the risk of simultaneous aging of all products. This type of diversification is suitable for enterprises with low technological density and strong marketing ability. (3) Resource diversification This is to make full use of resources by entering heterogeneous products and markets on the basis of the material foundation of the existing business. (3) Complex diversification. This is a strategy of seeking growth opportunities from products and markets that have no obvious relationship with the existing business field, i.e., the new business developed by the enterprise has no relevance to the original products and markets, and the required technologies, management methods, and sales channels must be acquired anew. Complex diversification can be divided into the following four types: (1) Diversification of financial relationships. This refers to the general relationship between the funds of the unit with the financing or capital increase ...... >>
Question 8: How to evaluate the diversification strategy Double-edged sword that the advantages and disadvantages.
Diversification strategy, also known as polygonal strategy, refers to the enterprise simultaneously operating more than two basic economic purposes of different products or services of a development strategy. Diversification strategy is relative to the specialized management of enterprises, its content includes: product diversification, market diversification, investment in regional diversification and capital diversification.
Advantages and disadvantages of diversification strategy
(a) Diversification has a lot of benefits
1. Diversification can make full use of the internal advantages of the enterprise
Diversification of the enterprise and the specialized business enterprises, compared with the original combination of the original by a number of specialized business enterprises, the combination of business activities in a business, or will be more than one industry, products in a business or a business. Multiple industries and products in one enterprise or enterprise group, in which the enterprise can make full use of the enterprise's technological advantages, market advantages, management advantages and other resource advantages, rational allocation of resources, and improve the efficiency of resource utilization. As the diversified business enterprise creates an opportunity for the manager to coordinate and manage different business operations, its operation will be more efficient than that of the specialized business enterprise, and it can obtain higher investment returns.
The second internalization advantage that can be achieved by diversification is the creation of an internal capital market. Generally speaking, when a specialized enterprise cannot raise enough capital at a reasonable cost, it has to give up some profitable investment projects. Diversified enterprises have created a large internal capital market, and they can solve the problem of insufficient capital to a certain extent through the dispatch of funds within the enterprise, so that diversified enterprises can get more investment and profit opportunities than specialized enterprises.
Diversification can achieve a third internalization advantage is to turn the external non-determined *** transaction contract into an internal contract, that is, an internal contract instead of a series of external transaction contract, which can save external transaction costs. Especially for the associated diversified business enterprises in particular, such as horizontal integration of diversified business can reduce unnecessary competition in the same industry, but also to obtain economies of scale; such as vertical integration of diversified business is to make the external market supply and marketing into the internal supply and demand of raw materials, will greatly reduce the transaction costs of the enterprise (premise is to diversify the business to save the external transaction costs greater than the enterprise's internal organizational transaction costs).
2, diversification can effectively avoid business risks
Engaged in specialized operations, it is likely to be vulnerable to the macroeconomic downturn hit, resulting in the loss of the entire enterprise, or even collapse. The implementation of diversified management, the enterprise will be dispersed to different products or industry resources in the operation, that is, "will not put the eggs in the same blue," which can avoid the single scope of business caused by the enterprise is too dependent on a market prone to fluctuations in the weakness of the enterprise to make the enterprise suffered a setback in a particular product or business field, through the success of the operation of other products or industries to make up for the losses, so that the enterprise can avoid the risks of the business, the enterprise can avoid the risks of the business. This can avoid the weakness of over-dependence on a certain market which is prone to fluctuation caused by a single business scope, so that when an enterprise suffers a setback in a certain product or business field, it can make up for the loss through the success in other products or industries, thus improving the enterprise's risk-resistant ability and minimizing the risk loss. Such as Goodyear is a professional tire rubber company, but in the 80's it began to invest in oil pipelines, because the company found that the sales of oil pipelines and tire sales are exactly the reverse fluctuation relationship, so that the operation is like doing hedging in the financial markets, you can reduce the risk.
(b) Diversification strategy also has a lot of disadvantages
First of all, the excessive pursuit of diversification has financial risks. As we all know, the vast majority of China's current enterprise investment funds are borrowed funds, partly from banks, partly from non-financial institutions, partly from other channels. This is different from the situation abroad. In foreign countries, some enterprise groups do adopt diversified business strategy, but they do so when, on the one hand, there is a strong financial strength as the basis, the leading industry has been developed to a considerable scale, subject to the constraints of anti-monopoly policy, have to develop horizontally; on the other hand, the headquarters of the enterprise group in the positioning of the role of the investment and operation institutions only, not responsible for the operation. Therefore, instead of "diversified operation", it is more accurate to say "diversified investment". Some enterprises in China do not understand this, only see the phenomenon, ignoring the substance of its content, many projects not only investment and self-management. Some enterprises have a little material purchasing staff and experience on the trading company, a little liquidity on the financial company, a little real estate on the real estate company, a little advertising business on the advertising company, often the limited funds scattered in a number of business projects, the results of which a project can not reach the economies of scale, resulting in operating losses, it is difficult to repay the principal and interest. In fact, this excessive pursuit of diversification is not risk diversification, but self-expansion of risk. If there is a limited diversification, not only will reduce the pressure of financing and allocation of funds, but also ...... >>