Enterprise Business Strategy Choice And Empirical Analysis Based On Life-Cycle Theory

Specialization and diversification are growing strategies of enterprises. Growing up with specialization or diversification is a question can not be avoidable during the process of development. Is specialization good or is diversification good? Answers to this question had been very controversial. This thesis argues that the strategy itself is not good or bad. Choosing specialization or diversification is depending on the actual situation of enterprises and enterprises' life-cycle stage.From 1960's, a great deal of enterprises in the western developed countries represented by the United States implemented diversification strategy. But in 1980's some of them gave up diversification strategy and shifted to specialization. In 1980's, China has gradually establish a market economy, along with development of reform and opening-up, a new upsurge in diversification was rising in the enterprises in China.The thesis researched on the relationship of diversification strategy and the enterprise performance. based on Enterprise Life-Cycle theory. The thesis gave a brief introduction about concept of specialization and diversification strategy, motivation, development paths and which strategy should be taken by the different life-cycle's enterprise. On the basis, the thesis proposed the research hypotheses. Adopting a multi-regression model, the thesis analyzed the relationship between diversification level and operating performance of different life-cycle's enterprise with a sample of Shanghai and Shenzhen A-share listed companies. The results showed that operating performance positively correlated with diversification in mature enterprises, while in enterprises during growth stage and decline stage, operating performance negatively correlated with diversification.According to the theoretical analysis and empirical analysis, this paper considered that the business operation should be based on specialization as a starting point, then through diversification and then shifted specialization, that is, through specialization-diversification-specialization such a course.