This Lord is Very Scientific-Chapter 637 - 569: The 2nd Large Tribe Brought Under Control
(Anti-theft, sent at night.) Abstract: With the advancement of technology and the coverage models of intelligent networks, the rise of the gaming industry in recent years has been witnessed by the populace. The methods of game dissemination are no longer confined to rigid promotional models, and the influence of games has gradually expanded to all aspects of life. Correspondingly, gaming companies need to continuously integrate resources, innovate, and update to improve performance, in line with the rapid development of the times. A diversification strategy precisely caters to the planning needs and development goals within the gaming industry. Against the backdrop of economic globalization, diversification strategy as a preferred mode of enterprise development also applies to gaming companies. This article uses Sanqi Mutual Entertainment Company as an example to illustrate the impact of diversification strategy on the performance of gaming companies.
Keywords: Diversification strategy; Gaming company; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategic approach adopted by enterprises during operations to capture and expand new markets. It is also a strategic plan used to avoid risks encountered in operating a single business and to prepare for entering new business fields. Applying diversification strategy to gaming companies can effectively enhance company performance, bringing about a process of transformation from quantitative change to qualitative change for the development of gaming companies.
1. The macro background of diversification strategy
Entering 2021, with the effective control of the pandemic in the country, people's lives have returned to normal, and the economy and culture are showing a vibrant recovery. On April 30, 2021, according to the relevant data released by the National Bureau of Statistics, the development of the national cultural industry has basically returned to pre-pandemic levels [1]. This is very beneficial news for the gaming industry, which accounts for a large portion of the cultural industry. Although the pandemic did not significantly impact the gaming industry, the impossibility of conducting offline activities has always affected the performance of gaming companies. The recovery of the cultural industry means a great opportunity for many gaming companies, as it can promote more gaming companies to embark on a path of sustainable development [2].
From the outbreak of the pandemic last year to its current stabilization, the country has introduced relevant policies to support the development of the cultural industry in various aspects, including finance, systems, and banking. Although the pandemic has hindered people's travels, it cannot control the rapid spread of online networks. More and more new media have emerged, driving the development of the cultural industry during pandemic prevention and control. However, as each enterprise strives to enter the online market, the competitive environment in the cultural industry is extremely fierce. Many traditional offline enterprises have succumbed to the impact of the pandemic and were eliminated by society. Yet, in these short two years, many culturally-related enterprises have successfully transformed. These enterprises largely rely on the accelerated transformation and upgrade through diversification strategy modes, and during the pandemic prevention and control period, when resident consumption levels significantly increased, they have also reaped rich rewards. This has led to more diverse development models and income channels, for instance, the transformation made by Sanqi Mutual Entertainment Company during the pandemic prevention and control period is worth emulating by most gaming companies [3].
2. A brief analysis and classification of diversification strategy
(a) A brief analysis of diversification strategy
Diversification strategy was proposed by the father of strategic management, Igor Ansoff. In his book "What is Corporate Strategy," he mentioned the classification of diversification strategy. This world-influencing strategic model has been involved in management guidelines and policies of multiple countries. As a result, today, every large and small enterprise seeks a foothold following the development model of diversification strategy [4].
(b) Classification and meanings of diversification strategy
There are four types of diversification strategies: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. Each mode derived from diversification strategy has different implications. Horizontal diversification refers to enterprises producing new products that meet new user needs by utilizing the original conditions provided by the market, thus driving market consumption. Vertical integration involves enterprises extending vertically based on their development status, penetrating other market fields through product industry chains to seek new consumers. Concentric diversification focuses more on the innovation of existing technology, requiring the production of new products within the original production scope, and the entire process is realized through the transformation of existing technology. Conglomerate diversification emphasizes the expansion of operational scope, whereby enterprises need to integrate factors related to their products, such as raw materials, technology, and market, to expand their operational scope [5].
3. Impact of diversification strategy on the performance of gaming companies
It can be said that in the operation process of all gaming companies, the impact of diversification strategy on performance is uniformly divided into two parts: changes in the operational mode and shifts in strategic planning. The effects from these two parts gradually lead to improved company performance. The impact brought by diversification strategy is multifaceted. This paper will take Sanqi Mutual Entertainment Game Company as an example to analyze the impact of diversification strategy on gaming companies' performance [6].
(1) Changes in operational mode
Currently, the main operational scope of Sanqi Mutual Entertainment Game Company is quite extensive, thanks to the advantages brought by diversification strategy. The company's business not only involves the operation of interactive entertainment but also entirely handles the development and distribution of mobile games and web games. Furthermore, in recent years, keeping pace with technological advancement, it has continuously innovated, expanding its market to include film and anime, also shaping its unique market cultural industry chain within music, VR technology, and various live entertainment businesses.
Sanqi Mutual Entertainment Game Company was established in 1995, but the initial development path was not smooth sailing. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, and at the beginning, the industrial chain did not involve operations in gaming and other entertainment industries, facing constant risk of being absorbed by the market. However, relying on steady development of a single industry, Sanqi Mutual Entertainment Company went public in 2011. Nonetheless, coupled with poor post-period operations and market tightening, Sanqi Mutual Entertainment ultimately couldn't escape being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of shares of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Despite being acquired nominally, this presented Sanqi Mutual Entertainment with a development opportunity worth seizing. The two companies, through multi-party collaboration, completed asset restructuring across different industries. Notably, the strategy Sanqi Mutual Entertainment had been operating had already begun to show promise. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before the acquisition to a dual main-business listed company, simultaneously advancing production manufacturing and modern cultural creativity. Correspondingly, the company's business strategy has been changing, with the original scope of operation involving cultural creative industries evolving significantly.
