External Environment,Core Capability And Diversification Strategy

With the deepening of reform and opening up and the implementation of supplyside structural reform and rural revitalization strategy,China’s agricultural industrialization and modernization have been fully developed,and the quality of agricultural development has been steadily improved.However,due to the changes in the external environment,such as the increasingly downward pressure on ’new normal’ economy,growing problems in periodicity and structure,China’s agricultural development is facing a complex and severe situation.Cultivating and developing l agricultural leading enterprises play an important role in building a modern agricultural industrial system,which is the main demand of China’s agricultural development.Facing the opportunities and challenges of the external environment,agricultural leading enterprises need to form their own unique core capabilities,which help them make strategic responses to environmental changes and make strategy adjustments timely and appropriately.Many agricultural leading enterprises have started exploring roads on diversified development,trying to achieve scale effects and scope effects in diversified strategies.However,the diversification strategy is like a ’double-edged sword’.Therefore,exploring effective diversification strategies has become a topic of increasing concern for agricultural leading enterprises.This dissertation builds a conceptual model of the external environment,core capability and diversification strategy.Through a comparative case study of Archer Daniels Midland Company in the United States and New Hope Group Co.,Ltd.in China,this dissertation try to analysis the interaction mechanism of how can agricultural leading enterprises choose diversification strategies when they cultivate and enhance the core capabilities on the basis of external environment.,in order to explore the diversification strategy selection and implementation rules of enterprises,and provides effective path reference suggestions for the sustainable development of agricultural enterprises in China in the future.There are many factors to be considered when agricultural leading enterprises adopt diversification strategy.Among them,the external environment and core capabilities of agricultural leading enterprises have gradually become an important factor that attracts scholars’ attention.This dissertation builds a conceptual model of the external environment,core capability and diversification strategy.Through a comparative case study of Archer Daniels Midland Company in the United States and New Hope Group Co.,Ltd.in China,this dissertation try to analysis the interaction mechanism of how can agricultural leading enterprises choose diversification strategies when they cultivate and enhance the core capabilities on the basis of external environment.According to the characteristics of internal and external resources in different life cycle of enterprises,this dissertation explores the diversification strategy selection and implementation rules of enterprises,and provides effective path reference suggestions for the sustainable development of agricultural enterprises in China in the future.The results show that affected by the external environment and core capabilities,agricultural enterprises will choose different diversified strategic combinations and implement different business models in different development stages.Among them,the external environment has six dimensions: political environment,economic environment,social and cultural environment,human resource environment,technological environment and location resource condition.The core capabilities includes five capabilities: perception capability,production capability,resource integration capability,resource reconstruction capability and innovation capability.The diversification strategy is divided into two aspects:industrial diversification and geographical diversification.It is found that the core capabilities of agricultural enterprises determines the decision-making choice of diversification strategy,and the implementation of diversification strategy promotes the improvement of core capabilities.The core capabilities and diversification strategy are mutually iterative and evolved,in which the improvement of core capabilities is a spiral promotion process.The external environment affects the composition characteristics of core capabilities,and the core capabilities play a role in the diversification strategy.The results of the case study explore the relationship among the external environment,core capability and diversification strategy,and provide a theoretical basis for further exploring the construction of agricultural industry value chain and obtaining sustainable competitive advantage for agricultural enterprises.Thus,agricultural enterprises need to pay more attention to the changing characteristics of the external environment,combined with their own core capabilities to make appropriate strategic arrangements for diversification.At the same time,agricultural enterprises need to pay attention to the cultivation and formation of core competence and promote the leap of core competence.Finally,the diversification strategy of agricultural enterprises should focus on building the value chain of agricultural industry,strive to enhance the added value of agricultural products,and continue to deepen the development of agricultural industrialization with strong competitive advantages.