Diversification Strategy Research Of Laiwu Steel Group

Diversification strategy is a popular competitive strategy adopted by many corporations. Especially when corporations have large-scales, they are more likely to adopt the diversification strategy. No matter how to decrease industry risk or to gain cooperative action synergy in external environment or to reduce transaction costs or to use the remaining resources in the groups, corporation can gain much more economic benefits by successfully diversification. If the corporation had failed to carry out the diversified operations, it would have confronted with a lot of uncertain business risk or even leading to bankruptcy. Therefore, based on their actual situation, choosing the right proper development path of diversification strategy has become the most important implementation for the corporations who had adopted the diversification strategy.Since the1990s, companies have started to implement diversification strategy in China. Diversification strategy has become the dominant business strategy. Laiwu Steel Group was also beginning to implement the process of diversification strategy. This process can be divided into three stages, birth, expansion and integration. Moreover, the system of diversification of Laiwu Steel Group includes six plates, resulting at more than twenty business units and involving more than ten industrial areas. In recent years, Laiwu Steel Group has implemented diversification strategy successfully. So, the company has gain heavy rich harvest returned on investment and help itself spend the cold winter for China’s steel industry. At the same time, this process has lots of problem. Therefore, Laiwu Steel Group needs to stand on a high level with a comprehensive vision and to consider the unsolved problems in the process of diversification which make big sense for the development of the whole group.This paper will focuses on the history data of diversification strategy of Laiwu Steel Group. Firstly, this paper will introduce multi-industry development status and find out a series of problems existing in the process of diversification of company. Secondly, this paper will execute PEST analysis and SWOT analysis for company in order to demonstrate the necessity and probability of corporate diversification strategy discussion. Thirdly, in order to assess clearly the key points and core of the company, this paper will evaluate the diversification strategy by using the GE matrix analysis. Finally, this paper will summarize a series measures to promote the Group’s diversification strategy and hope that these measures may be useful for other steel companies to choice diversification strategy.