Research On The Motivations Andapproach Of Diversification Strategy For Private Enterprises

Since the reform and opening up policy，private enterprises in China have playedan increasingly important role in the economy, both the number of firms and outputvalue, China private enterprises’ contribution show a steady upward trend, whichalso expressed China’s private enterprises in the national economy status is rising,and its influence on the economy has been strengthened. Facing the intense marketcompetition, more and more private enterprises have chosen diversification strategy.The research on the diversification of private enterprise mainly have risk averse,strategic analysis, but more research on motivation. Therefore, This thesis aims toexplore the motivations for diversification and implementation approaches.The mostcommon motivations includes economy of scope, spread risk and so on. Theimplementation approaches includes internal development, acquisition or merger,strategic alliance, related diversification and unrelated diversification. Combinedwith the research on the diversification motivation and implementation approach forthe two cases of the company, by contrasting their motivation and approach,summarizing the experience, Hoping that we can give some suggestions to thoseprivate enterprises which is implementing diversification or ready to implementdiversification.This thesis is divided into five parts. Chapter1is an introduction, elaborated thebackground and significance of this topic, the main research method and structure ofthe article in detail. Chapter2is the related literature review. First of all, severalmain concepts are explained, such as private enterprise, diversification, relateddiversification and unrelated diversification. Secondly, exemplified on theory of theenterprise motivation. Lastly, summarized the literature of the related motivationwhich been researched from domestic and foreign country. Chapter3summarizedthe motivation of diversification and implementation approach for private enterprisebase on the perspective of theory. It can be divided into three approaches accordingto the entrance mode: internal development, acquisition or merger, and strategicalliance. It also has three approaches according to the correlation degree of productand market: the vertical chain type, the related type and unrelated type. In addition,briefly describe some factors which influencing diversification approach’s selection.Chapter4is case study, the first case is China’s biggest Internet company alibaba group’s diversification strategy, firstly introduced the development of alibaba group,and analyzed the reason of its diversity, and its diversification implementationapproach. The second case is the yi jie hong tai lion lake group. The case mainlyanalyzes its diversification approach and motivation of diversification, thencompared the similarities and differences between the two companies, finally made asummarize. Chapter5gives some suggestions to the private enterprise who isimplementing diversification or ready to implement diversification.