This Lord is Very Scientific-Chapter 640 - 572: Continental Travel Studies
(Anti-theft, posted in the evening.)
Abstract: Accompanying the advancement of technology and the coverage model of intelligent networks, the rise of the gaming industry in recent years has been evident to the public. The dissemination methods of games are no longer constrained to rigid promotional models, and the influence of games has gradually expanded to all aspects of life. Correspondingly, gaming companies also need to continuously integrate resources, innovate, and update to improve performance alongside the rapid development of the times. A diversification strategy fits well with the planning needs and development goals within the gaming industry. In the context of economic globalization, diversification strategy, as the preferred model for corporate development, is equally applicable to gaming companies. This article explains the impact of diversification strategy on the performance of gaming companies using Sanqi Mutual Entertainment Company as an example.
Keywords: Diversification strategy; Gaming company; Performance; Impact; Sanqi Mutual Entertainment
Diversification strategy is a market strategy method adopted by enterprises in their operations to capture more and develop new markets. It is also a strategic plan that enterprises use to avoid the risks encountered in operating a single business by entering new business fields with purpose and preparation. Applying diversification strategy to gaming companies can effectively improve company performance, bringing about a process of transformation from quantitative to qualitative change for the development of gaming companies.
1. Macroeconomic Background of Diversification Strategy
Entering 2021, with the country's strong control over the pandemic, people's lives have returned to normal, and economic culture is showing signs of recovery. According to data published by the National Bureau of Statistics on April 30, 2021, the development of the national cultural industry has basically returned to pre-pandemic levels [1]. This is very good news for the gaming industry, which accounts for a large proportion of the cultural industry. Although the pandemic did not greatly affect the gaming industry, the inability to conduct offline activities has always impacted the performance of gaming companies. The recovery of the cultural industry means, for most gaming companies, that the major development and prosperity of the cultural industry can promote and drive more gaming companies toward sustainable development [2].
From the outbreak of the pandemic last year to the current stability, the government has introduced relevant policies to support the development of the cultural industry from fiscal, institutional, and financial aspects. Although the pandemic hindered people's travel, it could not control the speed of online network dissemination. Increasing numbers of new media have emerged, driving the development of the cultural industry during the pandemic. However, due to various enterprises vying to enter the online market, the competitive environment within the cultural industry has become extremely fierce. Many traditional offline enterprises could not withstand the impact of the pandemic and were eliminated by society during this period. However, in this short span of two years, numerous successful cultural industry transformations have emerged, and most of these enterprises have relied on diversification strategy modes to accelerate transformation and upgrading, achieving fruitful results during the pandemic prevention period with significantly increased consumer levels, acquiring more diverse development modes and income channels. For instance, the transformation made by Sanqi Mutual Entertainment during the pandemic prevention period deserves to be emulated by most gaming companies [3].
2. Simplified Analysis and Classifications of Diversification Strategy
(a) Simplified Analysis of Diversification Strategy
Diversification strategy was proposed by the pioneer of strategic management, Igor Ansoff. In his book "Corporate Strategy," he mentions the classification of diversification strategy. This world-influencing strategic model is involved in the management policies of multiple countries so that today, every enterprise, big or small, seeks to establish a place under the development model of diversification strategy [4].
(b) Classification and Meaning of Diversification Strategy
Diversification strategy can be divided into four types: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. The four different modes derived from diversification strategy have distinct meanings: Horizontal diversification refers to enterprises using the original market conditions to produce new products that can meet the new needs of users, thereby driving market consumption; Vertical integration is enterprises extending vertically based on their own development, using the product industry chain to penetrate into other market fields 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, realizing the process through the transformation of existing technology; Conglomerate diversification emphasizes the expansion of the business scope, where enterprises need to associate with factors such as raw materials and technology related to their products and markets to expand their business scope [5].
3. Impact of Diversification Strategy on Gaming Company Performance
In the operation process of all gaming companies, the impact of diversification strategy on gaming company performance is uniformly divided into two parts: changes in the operation model and shifts in strategic planning. These two changes gradually produce effects that drive performance improvement. The impact brought by diversification strategy is multi-faceted. This paper will analyze and study the impact of diversification strategy on gaming company performance using Sanqi Mutual Entertainment Game Company as an example [6].
(1) Changes in Operation Model
Currently, the main operation scope of Sanqi Mutual Entertainment Game Company is very broad, which is also due to the advantages brought by diversification strategy. The company's business not only involves the operation of interactive entertainment but also fully covers the development and distribution of mobile games and web games. In recent years, the company has kept pace with the technology of the times, continuously innovating, and expanding the market to include film, animation, and the two-dimensional realm of anime. Additionally, it is establishing its market cultural industry chain through general entertainment businesses such as music, VR technology, and various live broadcasts.
Sanqi Mutual Entertainment Game Company was founded in 1995. However, the early development path was not smooth. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise that initially did not involve the operation of gaming and other entertainment industries within its industry chain, and there was always the risk of being swallowed by the market. Nevertheless, by relying on the steady development of a single industry, Sanqi Mutual Entertainment Company went public in 2011. Still, due to poor later operations and market contraction, Sanqi Mutual Entertainment ultimately could not escape the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. with 60% of the shares. Although it was acquired in name, for Sanqi Mutual Entertainment, this was a development opportunity worth seizing. The two companies completed asset restructuring of various industries through multi-faceted cooperation. Notably, the exhibition strategy consistently operated by Sanqi Mutual Entertainment had already begun to show promise at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before the acquisition into a double-main-business listed company of advanced production manufacturing and modern cultural creativity, corresponding to changes in the company's operation strategy as well, where the scope of business coverage included in the culture and creativity industry
