The Change of Diversification Degree in Dynamic Environment: Case Study from a China Listed Company

This study extends the enterprise diversification strategy study in a dynamic way and the main question is how degree of diversification changes in dynamic environment. Based on the existing theories, the study puts forward propositions that high dynamic environment leads to low degree of diversification and low dynamic environment leads to high degree of diversification. To test the propositions, the study combines with the diversified strategy experience of Jianfeng, a China listed company, reaching the following conclusions. First, main environment factors, including macroeconomic, institution and industry factors, can affect dynamic environment. Second, degree of diversification changes to low with the increase of dynamic environment. And degree of diversification changes to high with the decrease of dynamic environment. These conclusions have practical implications for the Chinese diversification enterprises.