The Study On The Impact Of Pien Tze Huang's Diversification On Its Financial Performance

As the pace of economic globalization is accelerating,a global competition pattern has been formed.A single operating business and model is susceptible to external environmental shocks,and its ability to resist risks is poor.Therefore,diversified business strategies has become the most important business strategies choice for various enterprises.However,the degree,breadth,and effectiveness of diversified operations differ significantly between different enterprises,which makes the motivation for diversified operations and its impact on corporate performance a question worthy of further investigation.At present,the public is paying more and more attention to health and medical care.At the same time,the "Healthy China" strategy has become a national strategy.In this dual context,various types of pharmaceutical companies will expand their business fields and embark on the path of diversified development of the large health industry.As a treasure of traditional medicine in China,traditional Chinese medicine has various functions such as health,health care,medical treatment,and rehabilitation.Its development will also play an important role in the development of the large health industry and provide a new impetus for the development of enterprises.This article selects the Chinese medicine company Pien Tze Huang as the research object,taking its diversified operation and development as the main line,using Hoskisson and Hitt(1990)“ Diversity Motivation-Diversification Strategy-Corporate Performance” research ideas to conducte a case study on the impact of Pien Tze Huang 's diversified operation on its financial performance.The research conclusions of this paper are as follows:(1)Diversification which combines internal motivations such as resource endowment,brand value,asset portfolio,and external motivations such as industry situation,policy effects,have improved Pien Tze Huang 's financial performance level.The growth trend of financial performance and related performance indicators are better than the previous years,and also better than the control enterprises.(2)Among the diversified business operations,the related diversified pharmaceutical and commercial business has a significant effect on corporate performance and performance pulling effect,effectively achieving synergies between businesses.The development of non-relevant diversified businesses such as daily-use cosmetics and food is relatively lagging,resulting in the small volume and light proportion of business income.Therefore,they have a limited effect on the diversification of a company's operating risk.(3)For the time being,diversified operations have brought about a significant positive impact on the development of Pien Tze Huang.From a long-term perspective,companies should focus on improving their overall development capabilities by enhancing their core R & D and innovation capabilities,strengthening corporate governance and operational management capabilities,and introducing strategic investors as appropriate.The application value of this case lies in the following aspects: on the one hand,it provides reference for the company's diversified strategy selection and operation management,it also provides data support and strategic support for the case company's further decision-making.On the other hand,it could provides some practical support for relevant government departments when they need to formulate policies and master the development status of traditional Chinese medicine industry.