Chapter 104 9. Ten billion is not the starting point, and hundreds of billions is not the end

Cai Yanming has now invested in hospitals and hotels, but he still said: "It's more exciting to do the main business. There may be people fighting with you at any time in China. The domestic market is too big." In 2007, the momentum was strong. China's Want Want China has set a revenue of 10 billion yuan in the snack food industry, but for 50-year-old Cai Yanming, this is just the beginning. In 2008, after strategic integration, Want Want China focused more on developing its main business of rice crackers.Of the funds raised at the time of its H-share listing, 65% will be used to expand food and beverage production capacity, including the construction of new production facilities; 25% will be used to enhance the distribution network, including adding 55 new sales offices in China; the remaining 10% For general working capital.

However, while diversification has brought unprecedented wealth to Want Want, it has also planted huge hidden dangers. The title of "World Milong" is not easy to come by, and Wangwang also cherishes it very much.Such a "golden dragon" logo hangs in the Want Want rice and cracker business department. This golden dragon represents the determination and fighting spirit of Want Want to overcome difficulties and strive for pursuit in the process of starting a business.However, with the expansion of the enterprise scale, Want Want has also encountered some vigilant problems. The sales force is increasing and the expenses are increasing. Although the performance keeps increasing every year, the profit of the enterprise is declining.

With the changes in the market, the product advantages that Want Want was once proud of are gradually disappearing. The current competitive environment is not the same as it was more than ten years ago. In the past, Want Want’s success was not due to its own strength Strong, but because there is too little competition.But now, looking around, a large number of competitors such as Shanghaojia, Lay’s, Dali, etc. have emerged one after another. The popularization of new technology for products and the diversification of consumer demand for products have given these companies a broad space for growth.

However, Want Want is still resting on its past achievements, and it is difficult to make substantial progress.More than ten years have passed. Although Want Want has launched many new products, the main products are still the ones when it started its business, and the successor main products have not yet been formed.Once the current flagship products enter the recession period, Want Want will face a dangerous situation of product failure and weak successor. For such a problem, it has undoubtedly attracted Cai Yanming's attention. We will wait and see how Cai Yanming will shock the "world" in the next step.

Of course, we still believe that every employee of Want Want China remembers what Cai Yanming said: "Ten billion is not the starting point, and 100 billion is not the end." We also believe in Cai Yanming's judgment and ambition: "Choose any American (rice cracker) brand Look, in the domestic market of the United States, last year it made almost 8 billion US dollars. The population of China is four times that of the United States, and the stomach of the Chinese is not smaller than that of the United States, right? If it is possible to become the largest in China in the future, then it is possible It is the largest in the world.”

The diversification strategy was proposed by the famous product strategy master Ansoff in the 1950s. It refers to the development of products, market expansion or market expansion in multiple related and unrelated product fields in order to create benefits and maintain lasting competitiveness. The act of reorganizing, selecting and managing its business.The reason why the diversification strategy is adopted by many enterprises is because: first, diversification can diversify risks; second, diversification can make full use of the existing resources and advantages of the enterprise.In addition, new profit growth points can be created.Therefore, in order to pursue the maximum profit, it is a natural choice for enterprises to carry out diversified operations.

However, diversification also faces many risks: 1.Risks from the original business industry.Enterprise resources are always limited, and the strategy of diversification often means that the original business industry will be weakened.This kind of weakening is not only in terms of funds, but also the distraction of management's attention, and the consequences it brings are often serious.However, the original industry is the basis of diversified operation, and the new industry needs the support of the original industry in the early stage. If the original industry is rapidly weakened, the company's diversified operation will face crisis.

2.overall market risk.A popular saying in support of diversification is that diversification resolves business risks by "putting eggs in different baskets" - as the saying goes, "the east is not bright and the west is bright".However, the extensive interconnectedness in the market economy determines that various industries with diversified operations still face common risks.In other words, the "eggs" are still placed in one basket, but the basket is slightly larger.Under the impact of macro forces, the diversification of resources in corporate diversification increases the risk.

3.Industry entry risk.Industry entry is not a simple "buy" process.After entering a new industry, enterprises must continue to inject follow-up resources to learn from this industry and cultivate their own workforce to shape their corporate brand.On the other hand, the competitive situation in the industry is constantly changing, and the strategies of competitors are also unknown. Enterprises must constantly adjust their business strategies accordingly.Therefore, entering a certain industry is a long-term and dynamic process, and it is difficult to use static indicators such as the usual investment amount to measure the entry risk of the industry.

4.Industry exit risk.Companies often seldom consider the issue of exit before diversifying their investments.However, if a company is deeply involved in a wrong investment project but cannot get out of the whole body, it may lead to the complete annihilation of the company.A well-designed exit channel can effectively reduce the risk of diversified operations. 5.Risk of internal operation integration.The newly invested industry will have a comprehensive impact on the company and its existing industry operations through financial flow, logistics, decision-making flow, and personnel flow.Different industries have different business processes and different market models, so they have different requirements for the management mechanism of enterprises.As a whole, the enterprise must integrate the management mechanisms of different industries in some form.The conflict between the multiple goals of diversified management and the limited resources of the enterprise makes the integration of the management mechanism more difficult, and the strategic goal of the diversified management of the enterprise is finally compromised and changed due to internal conflicts.