A Study On Target Management Of Diversification Strategies Based On EVA

means to increase the scale and the diversities of their products based on the principles of scale economy and scope economy, in the hope that they are able to extend the value chains to every possible field throughout the world. Thus pluralism of cross-borders, cross-regions and cross-industries is daily gaining popularity.China's entry into WTO helped open the domestic market more widely. All the corporations, regardless of the nature of the ownership, are taking efforts to increase the size of the company and the coverage of their products and services through merging and purchasing. Undoubtedly, when the internal transaction cost within the group is lower than the cost in the open market outside, collectivization benefits the company in cutting down the cost and increasing the profit as well as minimizing the risk of the uncertainty of the providing chain in the outside market. At the same time, the diversity in the coverage of the group's products and services is likely to reduce to chances of the market risks of a single operation and boost up the company's competitive edge. However, do the collectivization and pluralism exert positive influence on the company exclusively? An exploration of the experiences of the enterprises in China reveals that collectivization in most enterprises in China lead to nowhere but bankruptcy. Why is it that the conclusion runs contrary to the anticipation since pluralism has such a lot of theoretical advantages?At present, the theoretical studies of pluralism fall into two categories: one is the analysis of the advantages and disadvantages of collective pluralism while the other is the performance check. Neither of the two theories concerns the process of pluralism, for the analysis of pluralism focuses on the strategic feasibility while performance check lays emphasis on the results. If we want to follow pluralism, we have to pay due attention to everything before, amid and after diversification. It won't do for us to control diversification with irrelevant standards.EVA is based on economic profits, meaning that wealth and profit come to a company only after all the operation costs and capital costs are taken into consideration. When following EVA, a company can successfully integrate the three steps of management, namely before, amid and after the diversification and control the strategic objective of pluralism in a reasonably scientific way. What is more, EVA centers round the management of values and make some adjustments on the traditional accounting items. As a result, evaluation of the values created by a company following the strategic pluralism will be more persuasive and it will smooth the way for agent-control in case of balanced-power/ divided power.This paper starts with a review of the development of pluralism and then expounds on the concept and history of EVA. Supported by the"pertinence analysis of plural investment","pricing model of capital and assets"and the computing methods of EVA, the author of the paper offers an EVA model in terms of plural strategic objectives. Finally, with an example of a company's practice of an important strategic investment in 2004, the author advances an EVA management scheme of the company's strategic objective when following the strategy of pluralism. In addition, a solution to some potential difficulty on the way is presented in the paper for companies to refer to in practice.