Star Diversification Strategy Evaluation

Through development over 20 years, China's industry of household electrical appliances nowadays has been in the most competitive condition and become the most mature industry in the domestic market. For the disorderliness of business competition, the compelling bargain ability of the large-size chain stores and the entering of the household electrical appliances of world famous brand, the surviving of domestic companies of household electrical appliances has become more and more threatening.Dating back to the early 1990s, the industry of household electrical appliances featured high profits and fast development. Driven by high profits, many enterprises threw themselves into such industry. With competition becoming fiercer, enterprisers gradually found the downtrend of the profit. Therefore, exploiting diversification of business became the main strategy to avoid running risk and find new profit increasing point. However, the business situations of the diversified corporations still were not optimistic. Many companies finally failed. Only few ones succeeded. More and more critics became skeptical about the strategy of diversified development in the industry of household electrical appliances.The Skystar Company was one of the earliest air-conditioner producers who developed diversification. Its diversification includes household electrical appliances, automobile, motorbike, electric cycle and new energy resources, machine manufacturing, etc. During the development over ten years, the Skystar Company made constant adjustment of its diversification strategy. By now, this company still keeps on its diversification. Because of the representative role of the diversification strategy of the Skystar Company, the research on it may bring significant reference to other companies. Based on the theories of diversification and competition, this thesis begins with the developing history of the Skystar Company, and then makes an analysis on the motive and influence factors of the company's diversification. Finally, we come to the conclusion as follows: the key factors influencing the diversification of the Skystar Company are its internal resources and competence, especially the core competence composed of key technology, management capacity of human resources, brand's influential power, competition strategy, etc. According to such clue, the thesis is divided into six chapters. In the first one, I narrate briefly the holistic condition of diversification of the household electrical appliances companies and the reference significance of the researching on the Skystar Company's diversification strategy to other ones. In the second one, I briefly introduce the theories this thesis bases on, for instance, the diversification theory, human resources management, core competence theory, brand theory, competition theory, etc. In the third one, making it background the running situation of the Skystar Company before China's entering of WTO, it discusses particularly the key factors about the Skystar Company's transition from specialized business to the top of diversified running. In the fourth one, making it background the running situation of the Skystar Company after China's entering of WTO, I particularly analyze the factors which made impact on the downturn of the Skystar Company's diversification. Finally, I make an analysis on the internal and external environment of the Skystar Company with SWOT model. integrating the research results of those two periods, I put forward several suggestions on the development of modern enterprise and give some reference opinions about diversification of China's industry of household electrical appliances.