Analysis On The Transformation To Refocusing Strategy And Transformation Effectiveness Of Diversified Enterprises

The refocusing strategy first appeared in the fourth wave of mergers and acquisitions in the United States,when many diversified enterprises were in poor business condition and were struggling.Therefore,many enterprises carried out a large number of asset divestitures in order to change this situation.Markides defined this behavior as "Refocusing" for the first time,and then put forward the refocusing strategy theory.Similar to the United States,many diversified enterprises in China are also falling into the dilemma of excessive diversification.There are many difficulties in the operation and development of enterprises,and the profitability of enterprises is greatly reduced,which hinders the further development of enterprises.As Chinese economy has changed from high-speed growth stage to high-quality development stage,extensive development is no longer suitable for enterprises,and it puts forward higher requirements for the quality of companies.At the annual meeting of China Association of Listed Companies,Yi Huiman,chairman of the CSRC,clearly put forward the requirement that listed companies should "highlight their main businesses and refine their specialties",and the 2020 government work report also put forward that state-owned enterprises should focus on their main businesses.These all release the same signal to promote excessively diversified enterprises to focus on the development of their core businesses and return to the right track of enterprise development.Only by cultivating the main business can they turly promote the steady and long-term development of enterprises.Therefore,more and more diversified enterprises are increasingly aware of the importance of returning to their main business and "the prodigal sons" begin to gradually turn back and focus on the development of their core business.Based on this,it is worth discussing that how to smoothly implement the refocusing strategy,to ensure that the refocusing strategy achieves good implementation results,to improve the business situation of enterprises and the value of enterprises.In this context,this thesis selects the typical Chen Ming Paper Company as the case study object,and spots out the basic situation,development process and the whole process of transformation to refocusing strategy of the company.Firstly,the enterprise established the overall goal and implementation plan of refocusing,and clarified the development direction of focusing on the main papermaking industry.Then,the implementation of refocusing strategy mainly focuses on stripping non-core business and strengthening core business.In terms of non-core business,enterprise adopt the contraction strategy,mainly through asset stripping to gradually withdraw from relevant industries.In terms of core business,enterprise expand the main papermaking industry by improving the industrial chain,expanding product production capacity,optimizing marketing mode,increasing investment in R & D and innovation,introducing strategic investors to form strategic alliances and implementing equity incentives,so as to realize the improvement of the core competitiveness of the enterprise.Combined with the changes of the internal and external environment of the enterprise,this thesis further analyzes the motivation of Chenming Paper’s transformation to refocusing strategy,and finds that the motivation of Chenming Paper’s implementation of the refocusing strategy is that the increasing concentration of paper industry promotes the refocusing of enterprise under the background of supply side reform,concentrate resources to develop the main papermaking industry with core competitiveness and get rid of the disadvantages brought by excessive diversification.However,the fundamental reason is that blind diversification distributes the resource allocation of the enterprise,and also causes the great financial burden on the enterprise,which makes the enterprise maintain high leverage operation for a long time and increases the operation risk of the enterprise.The enterprise wants to improve the operation status of the enterprise and promote the long-term development of the enterprise through refocusing.Then,this thesis studies the effect of Chenming Paper’s refocusing strategic transformation.On the whole,the effect of refocusing strategic transformation is significant and has a positive effect on enterprise.After the transformation to refocusing strategy,Chenming Paper’s core competitiveness has been improved,the asset-liability ratio has been reduced,the enterprise performance has increased steadily,and the enterprise value has been improved.Finally,this thesis explores the reasons for the effectiveness of Chenming Paper’s refocusing strategic transformation,mainly including stripping the business at a competitive disadvantage to improve the efficiency of resource allocation,increasing the investment in core business to improve the overall core competitiveness of the enterprise,shrinking the scale of the enterprise after refocusing to reduce the debt,and deeply cultivating the core business after refocusing to promote the improvement of management efficiency.The main contributions of this thesis are as follows:(1)At present,domestic and foreign scholars’ researches on the refocusing strategy mainly focus on the comparison with the diversification strategy and the implementation effect of the refocusing strategy,but less on the detailed analysis of the whole process of the implementation of the refocusing strategy and the comprehensive analysis of the implementation motivation,path and effect of the refocusing strategy.Therefore,this thesis combs the whole process of implementing the refocusing strategy of the case company in detail,which enriches the motivation analysis of refocusing and provides ideas of path which can promote the effective implementation of refocusing strategy,in order to provide some reference for other enterprises implementing the refocusing strategy.(2)Through case studies,Chen Ming Paper is a typical case of successful transformation to refocusing strategy,which effectively promotes the high-quality development of enterprise,from which we can get the corresponding enlightenment on the strategic choice of enterprises in the current domestic economic environment.Enterprises should carefully choose the mode and degree of diversification in combination with their own actual situation,and avoid blind diversification,otherwise enterprises are likely to pay a heavy price for it.When enterprises fall into the dilemma of excessive diversification,enterprises need to be aware of the problems brought by excessive diversification,timely adjust their business strategy,transform to the refocusing strategy,and take the correct refocusing path to effectively get out of the dilemma.Moreover,enterprises should learn the lessons that blind diversified expansion may increase risks,and deeply realize that deep cultivation of the core main business is the correct way to promote the healthy development of enterprises,and mastering the core competitiveness is the magic weapon for enterprises to deal with the fierce market competition.