The Effect Of Diversification On The New Continent Group's Operating Performance

Diversification has been a hot problem in academic circles, some enterprises obtain benefits because of diversification,but some enterprises became mismanagement or even have manage difficulties due to diversification. It is hard to say the relationship between firm performance and diversification. When the companys management growth to a certain stage, they will face the problem that whether to diversify or not and how to diversify. In order to have a place in the fierce market competition, many enterprises choose diversification. But it is a pity that many enterprises do not achieve the original purpose of diversification. It is means that each business unit produce together and create new profit growth point. Diversification takes up the resources of the enterprises, make enterprises become to mismanagement. This article focus on study how the diversification effects the manageent performance and how to use diversification better in company management.Coal industry belongs to the resource-based industry, largely restricted by natural conditions, such as the limited resources and non-renewable resource. It also been affected by the industry cycle, as well as systemic risk. Especially in recent years, the oil price decline attacks on the coal industry.Only relys on coal production this single business is very difficult to support sustainable development of the enterprise, how to sustainable development in the fierce competition, is the problem that each coal enterprises are actively to solve. The pattern of diversification provides a development direction for the coal industry.By increasing the economic business unit or enter to the other industries, seek new profit growth point, produce synergistic effect,the companies achieve the goal of improve business performance.New Continent Group has became to be a predominantly management of coal industry after transformation since 2007, now the group is faced with the same development difficulties with other companies. Nowadays new continent group's business management involves multiple industries, formed the development pattern of one with N, and constantly explore the pattern of diversification.This article consider the New Continent Group as the research object, and combined with related theories and tools to analysis the New Continent Group's business performance. It mainly evaluates the management performance of the New Continents from the profitability, cash flow analysis, financial risk analysis and benefit risk analysis At the same time the article also use Tobin Q to measure the enterprise value of NewContinent Group. The study shows that the New Continent Group's diversification not only profitability but also the overall enterprise value is lower than the average, diversification is not become the medicine which helps enterprises to improve business performance.Compared with empirical research, to study the diversification through case studies will be more specific in-depth. According to study the New Continent Group's diversification,this article wants to help the enterprises which is similar to the New Continent Group to take more objective and rational view of diversification, and avoid enterprise blindly diversified behavior. Hopes the companies can take some reference value for similar enterprise diversification.