| With the accelerating process of urbanization in China, the Construction Industry has also ushered in the golden period of development. State -owned construction enterprises is an important part of our national economy and has provided great contribution in China’s infrastructure and city construction. Keeping state-owned construction enterprises long-term healthy development has the vital significance to China’s economy. At present, the state-owned construction enterprises are facing the pressure of market competition. On the one hand, construction industry relies on real estate project as a support. As construction work is at the lowest level of the industry chain, enterprises of construction in China face fierce competition; on the other hand, several problems such as old management mode and mismatched performance appraisal system existed in the state-owned construction unit. They have greatly restricted the development of enterprises.The business diversification strategy and practice in recent 5 years was deeply investigated in ECC group which is a state-owned enterprise in China. ECC was founded in 2008 after the reorganization of the ECC Company. The company’s decision makers proposed the implementation of business diversification when they finished the internal investigation on the market environment and enterprise itself. They try to upgrade traditional engineering survey and geotechnical business and build a "geological" industry chain pattern. The particularity of diversification exists in ECC group with its unique historical background:it could not only be described as related diversification based on the core competence, but also can be called the main business return based on business structure adjustment. In the new business, ECC group longitudinally extend upper to Engineering Survey, Engineering Consultation and downstream to Project Supervision, Assessment and Maintenance. Laterally it extended to geology environmental geology, geological drilling, and marine geology, mine geological and other directions. After the development of more than five years, ECC group has grown to a large group with geological ability as its core value. Corresponding with the external expansion strategy, ECC group implement the Balanced Score Card as the performance evaluation system in the internal management. Subordinates subsidiaries would be evaluated by this system as the results of strategy implementation. Balance Score Card performance evaluation method is most suitable comprehensive evaluation method of state-owned enterprise evaluation. The system keeps the balance of short-term and long-term, financial and non - financial, internal and external and it is widely considered as outstanding effective method for the enterprise performance appraisal.A quantitative analysis on the relationship between diversification and performance of the ECC group is also being concluded. Calculate out the change of diversification tendency during the recent five years by selecting financial and management data from 2009 to 2014 of ECC group and using Herfindahl index and entropy Index. Then uses the Balanced Score Card evaluation index system calculates the performance value of ECC group in each year. The conclusion shows that with the deepening of the degree of diversification, enterprise performance level is rising. On this basis, the ECC group current BSC evaluation system has been improved. In the framework of diversification strategy, the existing index system has been extended, and the weight of each index is readjusted by using analytic hierarchy process, so that the new index system is more in line with the group’s strategic objectives, which provides a reference for the performance evaluation practice of the future of the ECC group. |
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