Term Paper for Graduate StudentsAnalysis of China Resources Group Diversification Strategy Course Business Strategy Name Zhang Mohan Number 2012265 Date 2013.12 AbstractAs we all know, China Resources group is one of the most famous enterprise in China. Its business is closely related to our daily life, such as, supermarkets, real estate, energy source and so on. In this paper, we focus on the diversification of the group, and analysis the reasons, management, beneficial and problems of the diversification. This paper provides a comprehensive analysis of China Resources group diversification.1. China Resources GroupChina Resources (holdings) co., LTD. is a diversified holding enterprise group which registered and operating in Hong Kong. Its predecessor named Lianhehang was established in Hong Kong in 1938, and changed its name to China Resources company in 1948. In 1983, China Resources restructured its subsidiaries by using the stock equity as the link of company and based on that established the China Resources (group) co., LTD. Since then the main business of China Resources changed from the general trade to self business, and through a series of industrial investments, promoting the enterprise gradually to develope into an influential industrial enterprise group in Hong Kong and the mainland.The business of China Resources is closely related to public life, main business including manufacture and distribution of consumer goods , real estate and related industries, infrastructure and public utilities.China Resources group consists of seven big strategic business units,and 21 first-class profit centers. In Hong Kong it has 6 listed companies, China Resources Development, China Resources Power, China Resources Real Estate, China Resources Microelectronics, China Resources Gas. It is one of the world top 500 enterprises, with industry as the core of enterprise group.2.The classification and definition of diversification strategy 2.1 The definition Diversification strategy is also called the pluralism strategy. It refers to a development strategy that the enterprise runs two or more different products or services at the same time. It is different from the traditional specialized operation, which can be divided into two parts, the related diversification strategy and the unrelated diversification strategy.2.2 The classification(1)Related diversification strategy: The enterprise enters to the new business which is matching with the existing business on value chain.(2)Unrelated diversification strategy: the enterprise adds new products or services which have no direct or indirect contact with the existing technology or market.Strategy ModeInstructionApplicationDiversification strategyEnter to the related business based on the existing work.The enterprise has stronger competitive advantages, and the growth of the industry gradually falls down. Unrelated diversification strategyEnter to the unrelated business, no contact with the existing work.The industry is lack of attraction, and the enterprise has no ability to enter to other related products or services.3.Reasons of China Resources group diversification(1) China Resources has always been the general agent of China import and export trade company in Hong Kong and Macao and southeast Asia. After reform and opening up, with mainland trade system reformed at the same time, many companies owned the self-management import and export rights, thus China Resources trade agent position is weakening. Therefore, looking for a new business for the further development of the China Resources is necessary. Diversification is a choice of China Resources.(2) China Resources group has the special background, and advantages in mergers and acquisitions which others can not compete with. Therefore through mergers and acquisitions, China Resources can realize the diversification of development.(3) China Resources has a huge capital strength and the unique advantages of government resource. It makes the China Resource has plenty of reasons for the diversification: government resources not only help China Resource solve the problem of foreign trading costs, and build the incomparable financial strength to domestic investors(4)The GE group has a great influence and guidance on diversification of China Resources.4.Management of China Resources diversification(1) In order to rational allocate resources and gain industry competitive power, China Resources group established the development strategy group diversification, profit center specialization”. The group set up the associated and diversified business inside, thus enhance the anti-risk ability to ensure steady growth of overall performance; While its profit centers use competitive strategy as the guide, with professional management, effort to build professional enterprise wit