The Impact Of Unrelated Diversification Strategies On Financial Performanc

In the process of continuous development,when the saturation and market share of the industry tend to be stable and it is difficult to further expand,the non-related diversified development strategy has become an important means for most enterprises to increase profits.Many enterprises choose the direction of non-related diversification strategy,not through detailed planning,just the temptation of "tuyere".Because of the survivor bias,the successful cases of unrelated diversification strategies are copied by various enterprises,and the problems exposed by strategic failure enterprises are often ignored.Then,how does the irrelevant diversification strategy affect the financial performance of the enterprise? What problems should companies avoid when choosing unrelated diversification strategies? Obviously there is no uniform paradigm for different companies and different industries.It is necessary to analyze one by one according to the actual situation of the respective enterprises and the characteristics of the industry and the market situation.This paper mainly studies the influence of unrelated diversification on the financial performance of enterprises.As the leader of garment enterprises,Youngor is also a pioneer in implementing the strategy of unrelated diversification,which has certain reference significance as a case study.In this paper,the theoretical literature related to non-relevant diversification strategy is summarized as the theoretical basis of this paper.From the perspective of individual enterprises,the actual analysis of Youngor is introduced,and the diversification of Youngor is divided by specialization rate(SR),so as to study the implementation motivation and industry selection of Youngor’s diversification strategy.According to Youngor’s operating results(four indicators of financial performance),this paper analyzes the effect of the implementation of unrelated diversification strategy,and summarizes the problems that should be considered and avoided in the implementation of unrelated diversification strategy.The study found that when Youngor first entered the real estate industry,the performance of this sector did present great advantages,so that it failed to see the bubble performance after high income,and there was a phenomenon of "putting the cart before the horse" ignoring the main business.With the increase of market risks such as the financial crisis,it realized the importance of returning to the main business.Therefore,the following conclusions are drawn: diversification brings different influences to the development of enterprises in different degrees.When an enterprise is planning an unrelated diversification strategy,first of all,it should not blindly enter the industry unrelated to the main business.It should first make relevant planning and equip corresponding talents.Second,we should not ’neglect’ the main business because of the temporary good performance of non-related diversified industries.