Research On Selection Of Target Industry Based On Core Competence In Diversification

In 1950s , American expert Ansoff in strategic management firstly put forward diversification strategy. And it became enterprise growth strategy that was popular in in 1960s and promoted a great deal of multinational company entry in diversification. But at the beginning of 90's, enterprises that embarked on diversification encountered serious problems, so they retreated from non-leading business and strengthened core business by various means and returned to the main business . At the beginning of 1990,enterprises in our country also suffered from serious frustration in the process of diversification . It becomes a prime problem in diversification to investigate interior and exterior condition and what a enterprise have to carry out diversification administration and follow the certain development path .This thesis firstly defines diversification and discusses current demarcation method and classification to ascertain concrete research scope for diversification administration. Analyzes latent risk in management and inside and outside reasons which are forcing enterprise to implement diversification strategy. From research on relation of diversification strategy and performance of enterprise management, we draw conclusion that compared with unrelated diversification, related diversification more effectively disperses operating venture and enhances management performance of enterprise.Moreover, related diversification based on core competence can lower entry barriers and bring persistent competitive advantage. Therefore diversification strategy based on core competence is a valid approach to seeking to keep growth for enterprises.Secondly, core competence of enterprise can be identified primarily from internal factors as value chain analysis, technical ability analysis and the property analysis and outer factors as analysis for contribution to customer value and competence difference in core competence. Then strength of core competence can be evaluated according to three basic character, that is , making a significant contribution to customer benefits from end product; providing potential access to a wide variety of markets and difficulty for competitor to imitate. On account of difficulty in distinctly ascertaining content of core competence, three basic character of core competence and evaluated result from being more fluctuant by subjective reasons. So strength of core competence is appraised by fuzzy comprehensive evaluation and weight of each index can be confirmed by AHP.Assess the attraction of the target industry from competitive structure in industry, life cycle of industry and concentration ratio of industry and get the key success factors of target industry. Compartmentalize five business types according to matching between parenting character and parenting opportunity and matching between parenting character and key success factors in business. Put forward dealing tactic for five kinds of business. Finally choose final target industry according to the relativity—attraction rule. Select appropriate entry mode according to condition of industry and each trait in internal start-up, acquisition and strategic alliance.