An Analysis Of Diversification Strategy For The Small And Medium-sized Enterprise In The West

In the increasingly competitive market environment, more and more small and medium-sized enterprises (SMEs) begin to choose diversification strategy, expanding its scale, optimizing the allocation of resources through the development of diversified management. However diversification is a double-edged sword which, if without proper control, would leave the enterprise with various risks. Many enterprises have problems in the development of strategic objectives, industry selection, implementation timing, leading to the failure of diversification strategy and damage to main business capacity. Western private SMEs are especially lack of technology, brand, corporate governance, financial strength, etc., resulting poor ability to resist risks. Therefore, it is urgent for western private SMEs to solve the problems of how to choose the right timing and formulate correct diversification strategy.This article selects the Ningxia Wanhe Group Co. Ltd as the case-study object and by analyzing the internal and external environment of the group and using SWOT model to summarize the advantages and disadvantages of the enterprise’s business diversification together with the opportunities and threats faced, furthermore offering the overall strategy and guiding principles to promote the coordinated development among different business sectors and achieve the systematic operation advantages. Meanwhile the case analysis first summarizes the problems Wanhe Group faced in the implementation of diversification and proposes the universal problems in the management of western private SMEs combining with the characteristics of western private SMEs and then analyzes the hidden theory problems behind through the common phenomenon, searching for the fundamental reasons influencing western private SMEs’ implementation of the diversification strategy. Eventually the article concludes that in order to succeed in the implementation of the diversification strategy, western private SMEs need not only to choose the right time and proper method to enter, but also to establish corresponding security measures to support the implementation of strategy and to reasonably avoid the management risk of the enterprise.