Research On The Impact Of S Coal Group’s Diversification Strategy On Financial Performance

Chinese economy has entered a stage of high-quality development from high speed development.With the trends of energy demand slowdown,clean energy substitution,and structure optimization of coal production driving the coal industry to an inflection point,the single business structure and the extensive development can no longer meet the long-term development needs of enterprises.For purpose of maintaining the sustainable development capability,coal enterprises have to expand their business scope and explore the diversification strategy.S Coal Group is a large state-owned coal enterprise,involved in seven business sectors: coal mining,domestic and foreign trade,financial investment,real estate,technology research and development,new energy,and modern agriculture.There are some shortcomings in its diversified development model,which have negative effects on the financial performance of the enterprise.In order to achieve high-quality development of the enterprise and continuously enhance the core competence of the diversified business,S Coal Group should make improvement in the diversification strategy.Beginning with theories related to diversification as the theoretical basis and the impact of S Coal Group’s diversification on its financial performance,this thesis focuses on the main problems in its diversification and making suggestions for improvement.Firstly,a qualitative and quantitative study of S Coal Group’s diversified development is conducted.Secondly,based on analyzing the impact path of diversification on financial performance and constructing the financial performance evaluation system,the financial performance of the enterprise before and after the implementation of diversification was compared in six aspects of profitability,solvency,operational capacity,growth capacity,value creation capacity and risk control capacity,and the entropy TOPSIS model was applied to evaluate the overall impact of diversification on the comprehensive financial performance of the enterprise.Finally,the problems of S Coal Group’s diversification were pointed out and targeted suggestions were put forward.The thesis found that S Coal Group’s related diversification as a start is worthy of recognition,but its unrelated diversification has reduced the financial performance,which is contributed by factors such as the unrelated diversified business taking up a large amount of capital,improperly formulated diversification strategies,and inefficient management of diversified business.Therefore,S Coal Group has to address the above-mentioned problems in a targeted manner,at the financial level,invest cautiously in unrelated diversified business and pay attention to the control and use of funds;at the strategic level,build a synergistic business system and flexibly regulate diversified strategies;at the operational management level,improve the internal control system and comprehensively promote market-oriented management mechanisms.This thesis helps S Coal Group to attach great importance to the diversification strategy of the enterprise,and provides theoretical support for the construction of a better diversified business system in the future,so as to achieve high-quality sustainable development of the enterprise.It is also hoped that this thesis can provide reference for other diversified enterprises to promote the long-term and stable development of diversified management.