This Lord is Very Scientific-Chapter 641 - 573: Preparations for the Hundred Schools of Thought Conference! All Flowers Bloom!
(Anti-theft, posting at night.) Abstract: With technological progress and the coverage model of smart networks, the rise of the gaming industry in recent years is evident to the public. The way games are disseminated is no longer confined to rigid promotional modes, and the influence of games is gradually extending to all aspects of life. Correspondingly, game companies need to continually integrate resources, innovate and iterate, and improve performance in line with the rapid development of the times. Diversification strategy precisely meets the planning needs and developmental goals within the gaming industry; against the backdrop of economic globalization, diversification strategy as the preferred mode of enterprise development is also 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 Company
Diversification strategy is a market strategic approach adopted by enterprises during their operations to capture new markets more effectively and expand their reach. It is also a strategic plan that enterprises use to avoid risks encountered during the operation of a single business, and they enter new business fields with focus and preparation. Applying diversification strategy to gaming companies can effectively improve company performance, leading to a transformation from quantitative change to qualitative change in the development of gaming companies.
1. The macro background of diversification strategy
Entering 2021, with the country's effective control over the pandemic, people's lives returned to normal, and both the economy and culture exhibited a positive recovery trend. On April 30, 2021, according to relevant data released by the National Bureau of Statistics, the development of the national cultural industry had basically restored to pre-pandemic levels [1]. This is highly favorable news for the gaming industry, which makes up a significant portion of the cultural industry. Although the arrival of the pandemic did not greatly impact the gaming industry, the inability to conduct offline activities consistently affected the performance of gaming companies. With the recovery of the cultural industry, most gaming companies view this as an opportunity to embark on a path of sustained development driven by the grand development and prosperity of the cultural industry [2].
From the outbreak of last year's pandemic to the current pandemic stability, the country has introduced relevant policies from financial, institutional, financial, and other aspects to support the development of the cultural industry. Although the pandemic has hindered people's travel, it cannot control the speed of online network dissemination. Increasingly more new media emerged, driving the development of the cultural industry during pandemic control periods. However, due to various enterprises wanting to squeeze into the online market, the competitive environment within the cultural industry became very intense. Many traditional offline enterprises were unable to withstand the impact of the pandemic and were eliminated by society during this period. Nevertheless, in these short two years, many cultural industries successfully transformed and emerged, largely relying on diversified strategy models to accelerate transformation and upgrade. Amid a notable increase in residents' consumption levels during pandemic control periods, they likewise harvested substantial gains and acquired more diverse developmental models and revenue channels. For example, Sanqi Mutual Entertainment Company's transformation during pandemic control periods is worth emulating by most gaming companies [3].
2. Brief analysis and classification of diversification strategy
(i) 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 strategies. This globally impactful strategic model is involved in the management policies of multiple countries, leading every large and small enterprise today to seek a place according to the diversified strategy development model [4].
(ii) Classification and meaning of diversification strategy
There are four types of diversification strategies: horizontal diversification, vertical integration, concentric diversification, and overall diversification. The meanings of the four different models derived from diversification strategy also vary. Horizontal diversification refers to enterprises using the primitive conditions provided by the market to produce new products that meet new user demands, thereby driving market consumption. Vertical integration is when enterprises derive vertically based on their development situation, using the product industrial chain to penetrate other market fields to seek new consumer targets. Concentric diversification emphasizes innovation of existing technology and requires producing new products within the existing production range, achieving the process through the transformation of existing technology. Overall diversification focuses more on expanding the scope of business changes. Enterprises need to connect and expand their business scope by linking raw materials, technology, and market factors related to their products [5].
3. The 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 gaming company performance is uniformly divided into two parts: changes in the operating model and shifts in strategic planning. From the transformation of these two parts, effects gradually arise, driving the improvement of company performance. The impact of diversification strategy is multifaceted. 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 the operating model
Currently, Sanqi Mutual Entertainment Game Company's main operating areas are very extensive, which is also due to the advantage brought by diversification strategy. The company's business not only involves the operation of interactive entertainment, but also fully undertakes the research and distribution of mobile games and web games under Sanqi Mutual Entertainment Game Company. In recent years, the company has kept pace with the times, innovated continuously, and expanded the market to include films and animae, and has also shaped Sanqi Mutual Entertainment Game Company's market cultural industry chain in music, VR technology, and various live entertainment businesses.
Sanqi Mutual Entertainment Game Company was founded in 1995, but its path of development was not smooth in the early stages. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, initially not involved in the operation of gaming and other entertainment industries within its industrial chain, always facing the risk of being swallowed up by the market. By relying on the steady development of a single industry, Sanqi Mutual Entertainment Company went public in 2011, but following poor post-period operations and market tightening, 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 sixty percent equity. Although nominally acquired, for Sanqi Mutual Entertainment, this was a development opportunity worth seizing. The two companies accomplished asset restructuring across various industries through multi-party collaboration. It is worth mentioning that the exhibition strategy operated by Sanqi Mutual Entertainment already began to show its prowess at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creativity company before acquisition into today's dual main business listed company combining advanced production manufacturing and modern cultural creativity, corresponding to changes in Sanqi Mutual Entertainment's company operational strategy, previously covering the business scope of cultural creativity industry.
