Diversification Strategy And Company Performance Analysis On Yangnong Chemical And Xinan Chemical

Diversification strategy can help enterprises to increase profit and control risks, but the dispersed financial resources may also weaken the competitiveness of the core business. On the one hand, considering environmental pressure and seasonal risk in pesticide industry, on the other hand, due to the support of national policy, the new technology revolution and the green product upgrading, many companies will choose diversification strategy to a certain degree.This paper first describes the motivation of diversification strategy, reviews the literature on the correlation between diversification strategy and company performance, introduces the strategic analysis and financial analysis tools; then it links theory with practice, using case analysis method, taking Yangnong Chemical and Xinan Chemical as examples, analyses diversification motivation and performance of the companies, including:firstly it introduces the background of diversification strategy of the case companies; secondly it studies motivaion of the case companies, from gaining growth, improving profitability and reducing risk, based on General environment analysis, Value chain analysis and Potor’s five forces analysis; finally based on financial analysis, from perspectives of growth, profitability and risk control, it analyzes the economic consequences of diversification strategy of case companies. The research results can help those listed pesticide companies make effective strategy, by gaining growth, improving profitability and reducing risks.