This Lord is Very Scientific-Chapter 630 - 562: Unified Alliance? (Additional Update 1)
(Anti-theft chapter, same number of words, will release in the evening~) Abstract: With the advancement of technology and the coverage model of intelligent networks, the rise of the gaming industry in recent years is evident to the public. The methods of game promotion are no longer confined to rigid advertisement models, and the influence of games has gradually expanded to all aspects of life. Correspondingly, game companies need to continually integrate resources, innovate, and improve performance in line with the rapid development of the times. Diversification strategy aptly meets the planning needs and development goals within the gaming industry. In the context of economic globalization, diversification strategy, as a preferred mode of enterprise development, is also applicable to game companies. This article uses Sanqi Mutual Entertainment Company as an example to explain the impact of diversification strategy on the performance of game companies.
Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company; Diversification strategy is a market strategic measure implemented by enterprises during their operations to capture new markets and develop new ones. It is also a strategic plan used by enterprises to avoid risks encountered in running a single business, aimed at strategically entering new business fields with targeted preparations. Applying a diversification strategy to game companies can effectively improve company performance, bringing the company's development from quantitative change to qualitative change.
1. The macroscopic background of diversification strategy
Entering 2021, under the effective control of the pandemic by the state, people's lives have returned to normal, and the economic and cultural landscape is showing a promising trend of recovery. On April 30, 2021, according to relevant data released by the National Bureau of Statistics, the development of the national cultural industry has basically recovered to its level before the pandemic. For the gaming industry, which holds a significant proportion within the cultural industry, this is very favorable news. Although the arrival of the pandemic did not significantly affect the gaming industry, the inability to conduct offline activities continued to impact the performance of game companies. The revival of the cultural industry implies that this large-scale development and prosperity can promote more game companies to embark on a path of sustainable development.
From the outbreak of last year's pandemic to the current stabilization, the state announced policies supporting the development of the cultural industry from multiple aspects such as finance, systems, and finance. While the pandemic restricted people's travel, it could not control the speed of online network dissemination. The emergence of more and more new media stimulated the development of the cultural industry during the pandemic prevention period. However, as various enterprises sought to enter the online market, the competitive environment within the cultural industry became fierce. Many traditional offline enterprises could not withstand the pandemic's impact and were eliminated from society, but in these short two years, many successful transformations occurred within the cultural industry. These enterprises largely relied on a diversification strategy model to accelerate their transformation and upgrade, achieving considerable success in a period when residents' consumption levels significantly increased during pandemic prevention, gaining more diverse development models and funding channels. For example, the transformation undertaken by Sanqi Mutual Entertainment Company during the pandemic prevention period is worth learning from by most game companies.
2. A simple analysis and classification of diversification strategy
(1) Simple analysis of diversification strategy
Diversification strategy was proposed by the father of strategic management, Igor Ansoff. In his book, "Corporate Strategy," he mentioned the classification of diversification strategy. This world-influencing strategic model has been involved in the management policies of multiple countries, leading every large and small enterprise to seek a place according to the development model of diversification strategy.
(2) Classification and meaning of diversification strategy
Diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. The four different modes derived from the diversification strategy also have distinct meanings. Horizontal diversification refers to the production of new products that meet new user needs using original market conditions, thereby driving market consumption. Vertical integration involves the enterprise deriving vertically based on its own development situation, penetrating other market fields with the product supply chain to seek new consumer targets. Concentric diversification focuses more on the innovation of existing technologies and requires producing new products within the existing production range, achieving the entire process through the transformation of existing technologies. Conglomerate diversification focuses more on the expansion of operating range changes, requiring enterprises to connect raw materials, technologies, and market factors related to their own products to expand the operating range.
3. The impact of diversification strategy on the performance of game companies
It can be said that in the operations of all game companies, the impact of diversification strategy on company performance is divided into two parts: changes in the operation model and shifts in strategic planning. The effects gradually arise from these two changes, promoting the improvement of company performance. The impact of diversification strategy is multifaceted. This thesis will take Sanqi Mutual Entertainment Game Company as an example to analyze and study the impact of diversification strategy on the performance of game companies. 𝑓𝘳𝑒𝑒𝓌𝘦𝘣𝘯ℴ𝑣𝘦𝑙.𝘤𝑜𝑚
(1) Changes in the operation model
Currently, the main operation range of Sanqi Mutual Entertainment Game Company is very extensive, which is an advantage brought by the diversification strategy. The company's business not only involves the operation of interactive entertainment but also encompasses the development and distribution of mobile games and web games under Sanqi Mutual Entertainment Game Company. In recent years, the company has continuously innovated by keeping pace with technological advancements, expanding the market to include film and animation layouts. It also establishes a market cultural industry chain belonging to Sanqi Mutual Entertainment Game Company in music and VR technology and various general entertainment businesses like live broadcasting.
Founded in 1995, Sanqi Mutual Entertainment Game Company did not have a smooth development path in its early stages. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, and initially, its industrial chain did not involve the operation of games and other entertainment industries, constantly facing the risk of market annexation. However, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company went public in 2011, but due to poor later-stage operations and market contraction, Sanqi Mutual Entertainment still eventually succumbed to acquisition.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. shares. Although it was nominally acquired, for Sanqi Mutual Entertainment Company, it was a development opportunity worth seizing. The two companies completed asset restructuring of various industries through multi-faceted collaboration. Notably, the cultural and creative industry operated by Sanqi Mutual Entertainment was not covered by other industries. Under this development model, the diversification development strategy has begun to show its edge. Sanqi Mutual Entertainment Company transformed from a single modern cultural creativity company before the acquisition to the current advanced manufacturing and modern cultural creativity.
