This Lord is Very Scientific-Chapter 723 - 655
(Anti-theft, to be released at the time.) Abstract: With the advancement of technology and the coverage model of intelligent networks, the rise of the game industry in recent years is apparent to the public. The way games are marketed is no longer confined to rigid promotional modes, and the influence of games has gradually expanded to all aspects of life. Correspondingly, game companies also need to continuously integrate resources, innovate, and improve performance in line with the rapid development of the times. A diversification strategy aptly meets the planning needs and development goals within the game industry. In the context of economic globalization, a diversification strategy, as the preferred development model for enterprises, is equally applicable to game companies. This article takes Sanqi Mutual Entertainment Company as an example to illustrate the impact of diversification strategy on the performance of game companies.
Keywords: Diversification strategy; Game company; Performance; Impact; Sanqi Mutual Entertainment Company
The diversification strategy is a market strategy employed by enterprises in their operations to capture and develop new markets. It is also a strategic plan used to avoid risks encountered in operating a single business by strategically and preparedly entering new fields of endeavor. Applying the diversification strategy to game companies can effectively enhance company performance, leading to a process of qualitative change from quantitative change in the development of game companies.
1. The macro background of the diversification strategy
Entering 2021, with effective control of the pandemic by the state, people's lives have returned to normal, and the economic and cultural landscape has shown great recovery. As of April 30, 2021, data released by the National Bureau of Statistics show that the development of the national cultural industry has basically returned to pre-pandemic levels[1]. This is very favorable news for the game industry, which holds a significant share within the cultural industry. Although the pandemic did not have a significant impact on the game industry, the inability to conduct offline activities has always affected the performance of game companies. The cultural industry's recovery means that for most game companies, the great development and prosperity of the cultural industry can promote more game companies to embark on a path of sustainable development[2].
From the outbreak of last year's pandemic to the current stabilization, the state has promulgated relevant policies to support the development of the cultural industry from financial, institutional, financial, and other aspects. Although the pandemic has hindered the movement of people, it has not controlled the speed of online dissemination. More and more new media have emerged to lead the development of the cultural industry during the pandemic prevention period. However, as each company competes to enter the online market, the competitive environment within the cultural industry has become extremely intense. Many traditional offline enterprises have been eliminated by society during this time due to the pandemic's impact. However, many successfully transformed cultural industries have emerged within these short two years, most relying on diversification strategy models to accelerate transformation and upgrade. During the pandemic prevention period, when household consumption levels significantly improved, these enterprises also gained considerably, acquiring more diversified development models and income channels. For example, the transformation Sanqi Mutual Entertainment Company made during the pandemic prevention period is worth imitation by most game companies[3].
2. Brief analysis and classification of diversification strategy
(1) Brief analysis of diversification strategy
Diversification strategy was proposed by Igor Ansoff, the father of strategic management. In his book "Corporate Strategy," he mentioned the classification of diversification strategies. This world-influencing strategic model is covered in the management guidelines and policies of multiple countries, so that today every large and small enterprise seeks a place according to the development model of a diversification strategy[4].
(2) Classification and meaning of diversification strategy
Diversification strategy is divided into four types: horizontal diversification, vertical integration, concentric diversification, and conglomerate diversification. Each of these four different models derived from the diversification strategy has its own meaning. Horizontal diversification refers to the enterprise using the original conditions provided by the market to produce new products that meet new user needs, thereby driving market consumption; vertical integration is where the enterprise advances vertically based on its own development situation, penetrating other market fields with product industry chains to seek new consumer targets; concentric diversification focuses more on the innovation of existing technology, requiring new product production within the original production scope. This whole process is realized through the transformation of existing technology; conglomerate diversification emphasizes changes in extending the business scope, requiring enterprises to expand the business scope by relating to raw materials, technology, market, and other factors associated with the enterprise's products[5].
3. The impact of diversification strategy on the performance of game companies
It can be said that in the operation process of all game companies, the impact of diversification strategy on game company performance is uniformly divided into two parts: the change of operating model and the transfer of strategic planning. The effects gradually produced from these two parts drive the improvement of the company's performance. The impact brought by the diversification strategy is manifold. This paper will take Sanqi Mutual Entertainment Game Company as an example to analyze and study the impact of diversification strategy on game company performance[6].
(1) Change in operating model 𝙛𝓻𝒆𝓮𝒘𝙚𝙗𝒏𝙤𝙫𝓮𝒍.𝓬𝒐𝙢
Currently, the main operating scope of Sanqi Mutual Entertainment Game Company is very extensive, which is also an advantage brought by the diversification strategy. The company's business not only involves the operation of interactive entertainment but also covers the research and distribution of mobile and web games under Sanqi Mutual Entertainment Game Company itself. In recent developments, it continuously innovates in line with modern technology, expanding the market to include layouts in film and animation, as well as creating its market cultural industry chain in music, VR technology, and various live broadcast and pan-entertainment businesses.
Established in 1995, Sanqi Mutual Entertainment Game Company did not have a smooth early development path. The predecessor of Sanqi Mutual Entertainment was a small enterprise, and initially, Sanqi Mutual Entertainment's industry chain did not involve the operation of games and other entertainment industries, always facing the risk of being absorbed by the market. However, relying on the steady development of a single industry, Sanqi Mutual Entertainment Company went public in 2011. Yet, due to poor management and market contraction in later stages, Sanqi Mutual Entertainment ultimately did not escape the fate of being acquired.
In 2014, Wuhu Shunrong Auto Parts Co., Ltd. acquired 60% of the shares of Shanghai Sanqi Mutual Entertainment Technology Co., Ltd. Although nominally acquired, for Sanqi Mutual Entertainment, this was a development opportunity worth seizing. Through multiple collaborations, the two companies completed a series of asset restructurings in various industries. It is worth noting that the strategic aspects that Sanqi Mutual Entertainment has been operating have already shown their edge at this time. Sanqi Mutual Entertainment Company transformed from a single modern cultural creative company before acquisition to a dual-main business public company that synchronizes advanced production manufacturing with modern cultural creativity. Correspondingly, the company's operational strategies have changed, and the business scope initially covered by the cultural creative industry.
