This Lord is Very Scientific-Chapter 715 - 647
(To prevent theft, it will be published in due time.) Abstract: With the advancement of technology and the coverage model of intelligent networks, the rise of the game industry in recent years is evident to the public. The way games are disseminated is no longer confined to rigid promotional models, and their influence has gradually expanded to all aspects of life. Correspondingly, game companies also need to continuously integrate resources, innovate, and update, improving their performance in line with the rapid development of the times. The diversification strategy exactly meets the planning needs and development goals within the game industry. In the context of economic globalization, the diversification strategy, as the preferred model for enterprise development, is also applicable to game companies. This article illustrates the impact of diversification strategy on the performance of game companies, taking Sanqi Mutual Entertainment Company as an example.
Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company
Diversification strategy is a market strategy means used by enterprises in the course of operation to capture and explore new markets. It is also a strategic plan to avoid the risks encountered in the operation of a single business, making targeted and prepared entries into new business fields. Implementing a diversification strategy in game companies can effectively improve company performance, bringing about a process from quantitative to qualitative change in the development of game companies.
1. Macroeconomic Background of Diversification Strategy
Entering 2021, with the effective control of the pandemic by the state, people's lives have returned to normal, and the cultural economy has shown a great recovery. On April 30, 2021, according to data released by the National Bureau of Statistics, the development of the national cultural industry has basically returned to the pre-pandemic level[1]. This is very good news for the game industry, which occupies a large proportion of the cultural industry. Although the pandemic has not caused much impact on the game industry, the inability to conduct offline activities has always affected the performance of game companies. The warming of the cultural industry means that for most game companies, the great development and prosperity of the cultural industry can promote and lead more game companies onto the path of sustainable development[2].
From last year's outbreak of the pandemic to the current stabilization, the state has issued relevant policies to support the development of the cultural industry in terms of finance, institutions, finance, etc. Although the pandemic has halted people's footsteps, it has not controlled the speed of online network dissemination. More and more new media have emerged, driving the development of the cultural industry during the pandemic prevention period. However, due to the competition among enterprises to enter the online market, the competitive environment in the cultural industry has become very intense. Many traditional offline enterprises could not withstand the impact of the pandemic and were eliminated by society. Nevertheless, within these short two years, many cultural industries have successfully transformed. These enterprises mostly relied on a diversification strategy to accelerate transformation and upgrading, and during the pandemic prevention period, when residents' consumption levels significantly improved, they also gained abundantly, obtaining more diversified development models and income channels. For example, the transformation made by Sanqi Mutual Entertainment Company during the pandemic prevention period is worth emulating by most game companies[3].
2. Brief Analysis and Classification of Diversification Strategy
(1) Brief Analysis of Diversification Strategy 𝚏𝕣𝐞𝗲𝐰𝕖𝐛𝐧𝕠𝕧𝚎𝚕.𝐜𝚘𝗺
The diversification strategy was proposed by the father of strategic management, Igor Ansoff. In his book "Corporate Strategy," he mentioned the classification of diversification strategies. This world-influencing strategic model is involved in the management policies of multiple countries, so that today, every large and small enterprise is striving to find its place according to the development model of diversification strategy[4].
(2) Classification and Meaning of Diversification Strategy
The diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. The four different models derived from the diversification strategy have different meanings. Horizontal diversification refers to enterprises using the original conditions provided by the market to produce new products meeting new user needs, thereby driving market consumption. Vertical integration involves enterprises deriving vertically based on their development situation, penetrating into other market fields with the product industry chain to seek new consumers. Concentric diversification focuses more on the innovation of existing technology, requiring the production of new products within the existing production range, achieved through the transformation of existing technology. Conglomerate diversification emphasizes expanding the scope of operation, where enterprises need to connect factors such as raw materials, technology, and markets related to their products to expand the scope of operation[5].
3. Impact of Diversification Strategy on the Performance of Game Companies
It can be said that in the operation of all game companies, the impact of diversification strategy on game company performance is uniformly divided into two parts: changes in the operation model and shifts in strategic planning. From these two transformations, effects gradually arise, driving the enhancement of company performance. The impact brought by the diversification strategy is multi-faceted. This paper will use the example of Sanqi Mutual Entertainment Game Company to analyze and study the impact of the diversification strategy on the performance of game companies[6].
(1) Changes in the Operation Model
Currently, the main operating range of Sanqi Mutual Entertainment Game Company is very broad, which is one of the advantages brought by the diversification strategy. The company's business not only involves the operation of interactive entertainment, but also Sanqi Mutual Entertainment Game Company itself undertakes the research and development and publishing of mobile games and web games. In recent development, constantly innovating with the times, the company expanded its market to cover film, television, and anime, creating its market culture industry chain in music, VR technology, and various live-streaming entertainment businesses.
Founded in 1995, Sanqi Mutual Entertainment Game Company's early development path was not smooth. The predecessor of Sanqi Mutual Entertainment Game Company was a small enterprise, initially without involvement in the operation of the game and entertainment industry, facing constant risks of being swallowed by the market. However, with the steady development of a single industry, Sanqi Mutual Entertainment Company was listed in 2011. Unfortunately, due to poor operations in later stages and market contraction, Sanqi Mutual Entertainment 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% equity. Although it was nominally acquired, for Sanqi Mutual Entertainment, this was a development opportunity worth seizing. The two companies completed the restructuring of various industries through collaboration. Notably, the strategic operations Sanqi Mutual Entertainment was running had already begun to show promise by that point. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before the acquisition into a dual-main business listed company concurrently engaging in advanced manufacturing and modern cultural creativity. This corresponded to changes in the operation strategy of Sanqi Mutual Entertainment, while the scope of business originally covered by the cultural creative industry
