Research, Knowledge-based Diversification Strategy

With the advent of knowledge economy era, the competition among corporations is more and more based on knowledge, and knowledge is becoming the origin for corporations to obtain the sustainable competition advantage. Strategic management models have traditionally defined the firm's strategy in terms of its product/marketpositioning-the products it makes and the markets it serves. It has paid too muchattention to explicit aspect while ignored evaluating the assets' strategic importance and neglect corporations' knowledge and capabilities. This brought great damages to corporations. While knowledge-based diversification, which positions themselves strategically based on their unique, valuable, and inimitable resources and capabilities rather than the products and services derived from those capabilities, allowing for knowledge as an important strategic tacit resource, can obtain scale and scope economy, time and pace advantage and sustainable competition advantage, and has been a new effective style of diversification. But by now the researches about this type of diversification have been at the stage of beginning, and many executives need a pragmatic, yet theoretically sound model to business this strategy.This paper provides a framework for describing and evaluating an organization's knowledge-based diversification. It focuses on establishing the strategic analysis framework, the course to carry out it and the supportive system. It aims to be the guidance for the corporations to practice knowledge-based diversification, improve their strategic management level and management skills in order to survive in today's uncertain and dynamic competitive environments.This paper consists of three parts. Section one is chapter 3, which clarifies the definition, gives its economics explanation, analyzes what advantages it can bring and why. Section two consists of chapter 4 and chapter 5, which gives the decision-making steps under the knowledge-based SWOT analysis and the course to carry out it. It provides a framework and tool for corporations to implement knowledge-baseddiversification. Section three is chapter 6, which states the supportive system, including organizational structure system, organizational culture system, knowledge management system and human resource system.In knowledge economy era, traditional diversification strategy needs to be changed. Corporations should carry out diversification based on knowledge. The choice of diversification is determined by the impossibility of using corporation's existing knowledge. Diversification based on knowledge can succeed because its knowledge can be used in new fields. Under the knowledge-based SWOT analysis, corporations make the decision of when and how to carry out the diversification strategy. Corporations should build a net organizational structure based on knowledge, a scientific system to encourage employers, an information technology and corporation culture whose feature is "learning, sharing, innovation", in order to carry out knowledge-based diversification successfully.