The Research Of Diversification Strategy In Yum (China) Group

Large corporations which want to achieve sustainable growth will inevitably move towards diversification. This opinion has already been proved in European, American and Japanese companies. In a market economy system, the diversification is not only a common enterprise growth strategy, but also the direction of diversification, the way and the relationship between business performance and diversification, also showed the same characteristics. Therefore, the research in this field has move beyond the level of diversification or not, and to how to diversify and which diversification is the most effective.This article is based on this premise. Through analysis and conclusion of the current theories of diversification strategy, combined with my working experience, especially for the developing process of Yum in China, the author want to explore how a foreign company surpass the world's first fast-food industry giants - McDonald in China through diffierentiation strategy with target customers positioning, reasonable product positioning and innovation, human resources management, the site selection strategy, supply chain management, and franchise operators strategy. Now Yum has become the most famous fast-food company in China, and the speed of new sites' open is 2 times faster than McDonald's in China which left McDonald far behind. In the development process Yum has formed its own core competitiveness.When Yum has extra resources, capability, core competitiveness and more inputs, it begins the implementation of diversification. QuanSheng is established in this context. In order to enhance the market influence, the company chose diversification strategy, which helps the company gain market influence. This article focuses on the best-selling products - egg tarts to analyze the vertical integration of diversification strategy. Through the analysis of five forces in fast food industry, the market leader has to adopt lower prices, better quality, more styles and better performance to solidify their market position and keep their market share. Through the SWOT analysis, the conclusion is that though the product is relatively simple, we can increase the profitability based on expanding the production capacity more quickly, developing more species of egg tart style, and ultimately reducing the costs. These can further improve the market competitiveness.The research clarifies that diversification strategy should build on the base of the core competitiveness. The development of main business and the formation of core competitiveness are the base of diversified operation. The core competitiveness of enterprises is the most important intangible resources, which determine the business scope and direction of development. Therefore, diversification strategy must be premised on the core competitiveness and make the core competitiveness as a long-term pursued strategic objective. Otherwise, the enterprise will lose its competitive advantage. However, taking into account the complexity of the factors which could impact the core competitiveness, this article only analyzes the current industrial leaders, and especially the advantages of resources. As the research object of this paper, the companies should not be in difficult of resources. Although effective analysis is needed in analyzing the project, this article does not carry out the more in-depth analysis on incomes because of the similar reasons, which makes a little regrettable.Finally, the research conclusion may not be applicable for different service industries because of the special research targets. The further follow-up studies are needed for this topic.