The Diversification Impact On Sustain Profitability Of HUNAN AVA HOLDINGS CO., LTD

First of all, this paper according to the sequence of the non-related diversification based on portfolio theory, related diversification based on synergistic effect and limited related diversification based on core competence , summing up the origin and development of diversification theory, looking back to the study outcome at home and abroad on the relationship between the diversified business strategy and the corporate continued profitability, holding that in order to keep sustain profit growth, the enterprises should own one or more strong core business to build a reliable platform of competitive advantage and successful expansion. The diversification will damage sustain profitability eventually while deviating from the core business and core competitiveness .And then, do a case analysis for HuNan Ava Holdings Co.,Ltd.on the diversified business strategy. Firstly, make an analysis on diversification strategy deviating from the core business of the company on the point view of the main business, the core business operation, the relevance betwen diversified business and core competitive business. Use the financial indicators, focus on the analysis of the adverse effects of diversification on core business for the dairy industry and seed industry , at the same time, through the financial evaluation indicators analysis such as the total return on equity, solvency, the cost of the period, cash flow to show that how the diversification to undermine the core business and the business continu profitability.Finally, make a conclusion that it is difficult to achieve sustained profit growth for the diversified business model in Ava which building on a non-core business.