The Analysis of Diversification in China---- The Motivations for Diversification of Chinese Organisations

Qiao, Zhenyu (2005) The Analysis of Diversification in China---- The Motivations for Diversification of Chinese Organisations. [Dissertation (University of Nottingham only)] (Unpublished)

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China, as a developing country, has become the focus of attention because of its recent strong and quick economic development. Studies aimed to understand Chinese organisations' behaviour is deemed important. Diversification, as core part of corporate strategy, is an important subject in these studies.

In the West, research on the impact of diversification of corporate performance is inconclusive. However, many Chinese companies choose diversification as their developing strategy. This paper explores the motivations for diversification of Chinese organisations and analyses the reasons resulting in this conflict, which would help managers and theorists understand Chinese organisations' special behaviour and provide some useful recommendations to their strategic decision.

The literature review part of this thesis includes key studies of diversification in the West. This body of research suggests that while diversification may have a positive impact on performance, in most cases diversification has a negative effect on the performance of firms based on the Western context. Then the thesis analyses the different requirements of diversification in emerging economies due to the different institutional environment and requirements of critical abilities of firms.

According to these differences, after analyzing the characteristics of Chinese organisations and the process of their strategic choice, the thesis finds that: 1) Utilizing their relations resources to the fullest ex tent as possible provides the main motivation for diversification in China. 2) The great competition pressure forces organisations to look for the future direction through unrelated diversification, i.e. entering into different industries. Three case studies have been conducted for proving these findings.

Based on these findings, the thesis provides 2 recommendations for practitioners operating in China. They are: 1) Managers should consider the long term development of firms when they decide their strategies, even if these strategies may have a negative effect in short term. 2) Strategy must fit the environment. Good strategies should help companies capture the chances in external environment and utilize their resources to fullest extent as possible. These recommendations will help Chinese managers understand the characteristics of China society and choose their developing strategies.

Item Type: Dissertation (University of Nottingham only)
Keywords: Strategy, Diversification, Motivation
Depositing User: EP, Services
Date Deposited: 08 Dec 2005
Last Modified: 16 Feb 2018 06:41

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