Research On Relationship Between Diversification Operation Strategy And Corporate Performance

In recent years, Chinese real estate development industry and financial investment industry are developing rapidly, which has attracted numerous domestic enterprises. Youngor group was considered to be a successful model of diversification in these two industries, but with the passage of time, diversification of Youngor gradually got into dilemma. This paper will research on diversification strategy of Youngor by case study, reveal hidden problems, which lead Youngor’s diversification from prosperity to decline, in order to provide valuable experience to enterprises, which is getting diversification in these two industries, and prepare to enter these two industries.At first this paper will introduce the case, include the review background of industries and company; secondly, combine with the basis theory to analyze financial performance of case company; finally, summarizes the problems of case company and presented related countermeasures and suggestions.The case study found that, Youngor exists the following problems in the process of diversification: First, Youngor overestimated development prospects of diversified industries, misunderstand of the national policy, resulting in invest high-risk project. Second, Youngor failed to build core competitiveness in industries of diversification by mistake of manager. Third, Youngor lost main core competitiveness by invest excessively in diversified industry; fourth,Youngor got low correlation between industries, failed to engender synergistic effect by unreasonable response to the plight of the operation. Finally this paper presented relevant policy suggestions according to the problems mentioned above.