An Empirical Study On Listed Companies' Performance And Diversified Management In The Household Electrial Appliance Industry Of China

Since 1990s, China's household electrical appliance industry has been the star industry, having a lot of star-entrepreneurs, and enhancing the development of service industry. Along with the continuous deepening of reform and opening up, the success of the WTO created a good market environment and opportunities for the development of China's household electrical appliance enterprises, however the operation performance of China's household electrical appliance enterprises had not improved, on the contrary, a large number of household appliances enterprises, which have ever been praised by public, experienced the losses, such as: Sichuan Changhong, Konka and Qingdao Hisense. Among such reasons, the large-scale single-range model implemented by many China's household electrical appliance enterprises is the most important reason, apart from the inadequate corporate governance structure and other objective factors. So that China's household electrical appliance enterprises have introduced a diversified strategy. As one of the operation modes, a kind of controversial mode is increasingly occupying the important position, it is diversification. China's household electrical appliance enterprises play a very important role in this industry, and with the expanding of their asset scale and sales scale,the importance of them in the national economy is gardually emerging, therefore the study on their operation behaviors and situations is becoming more and more necessary.At present, the empirical researchs on diversification strategy mainly aim to all of the listed companies in our country, and the theoretical study also stay on the universal sense, such as the meaning of diversification and the type of strategy. As an expansive strategy, the diversification of enterprises at home and abroad have been the subject of theoretical circles and business community , it is also a hot topic for public. In recent years, this controversial mode is more and more appearing out of the operation decision in China's household electrical appliance enterprises. However, some related studies on the diversification of China's household electrical appliance industry is still much less, and the distinction between related and non-related diversification impact is a blank. Therefore, this paper will focus on the diversified operations of household electrical appliance enterprises, and then distinct furtherly the different impacts between related diversification and non-related diversification.This paper discussed the diversification's concept, type, Causes and factors as well as reviewed the related research literatures, using mathematical statistical methods,such as: charts, correlation analysis, analysis of variance and regression analysis, meanwhile,45 samples of household appliances listed company in Shanghai and Shenzhen were mainly selected as a research object, to empirically study the relationship among correlation, diversified types and the performance. At the same time, taking into account that diversification is a kind of strategy, with postpone, there is a process from the formation of strategy to the generation of economic performance, this process will vary with the different industry. This paper selected 45 household appliance listed companies in the Shanghai and Shenzhen stock markets to study the relation between diversification and enterprise performance from 2003 to 2006. First of all, the correlation among variables was analyzed, and the linear was tested, after all, descriptive statistics, multiple regression analysis and analysis of variance methods was used.Through regression analysis, it shows that the higher degree of the listed companies'diversification in China's household electrical appliance industry, the poorer financial performance they have, the performance of lower degree diversified company is superior to the higher, the diversification and performance level have a negative correlation.It means that in the present China's household electrical appliances listed companies, the level of diversification influence the enterprises'performance, it is that the economic efficieny of lower diversified enterprises is higher than the related diversification. Although diversification strategy plays a positive role, such as: scale-economic effects, internal edge effect, risk spreading effects, synergies, these positive effect on enterprises could bring certain benefits, however the expansion of business will lead to other consequences, the negative effects of the diversified strategy is not to be ignored.Implementing related diversification enable appliance enterprises to play a more effective synergistic effect in the brand, technology, procurement, technology, finance, marketing channels, while without the related diversification, not only the scale-economic effects, internal edge effect, risk spreading effects and synergies maybe absent, but also a higher capacity of internal coordination is required, otherwise it is possible that the transaction costs, operating costs and management costs may increase, even the lost control of management may present, thus reducing the efficiency of business, and the performance of enterprise is impacted, so the performance of related diversified enterprise is better than the non-related. Therefore, China's household electrical appliance enterprises should choose diversified strategy.Along with the deepening of China's economic system reform, the improvement of socialist market economic vitality of the main micro-enterprises and the enhancement of economic strength, diversification is the only way for the development of household electrical appliances. In the process of the development of China's household electrical appliance enterprises, they should return to the main industry, enhance the main industry and cultivate it, should consider frequently the core competencies and resources of ist own, operating in the field in which they have competitive advantages rather than simply consider the market attractiveness and enter other fields blindly, otherwise it will mostly fall into the traps of diversification. Therefore, we must learn from domestic and foreign enterprises about the experiences and lessons, so as to avoid the mistakes and enable the diversification of China's household electrical appliance enterprises to develop healthily.