Abstract
To avoid the risk of single and homogeneous development, China’s coal enterprises have explored a diversified development model and are actively developing coal-based industries such as electric power, coal chemical, coal equipment manufacturing, logistics, and building materials. In previous studies of the diversification strategy, the focus has been placed on the motivation for diversification, the measurement of diversification, and the relationship between diversification and enterprise performance. From an enterprise strategic decision, we predicted the optimal size of each industry by considering the limited enterprise capital, human resources, the synergetic relationship among industrial clusters (mainly the scale coordination), and policy factors. The optimal decision model for diversified industrial management was constructed using linear programming methods. The decision target was to maximize the enterprise’s profit, but to also consider the social and environmental benefits. One of the largest listed coal enterprises in China, China Coal Energy (also a typical diversified enterprise), was selected as a case for analysis. Data were collected from surveys and annual reports from 2010 to 2014. The optimal scales of coal, electric power, chemical, and equipment manufacturing were predicted, and could be used as a reference for future enterprise production decisions. Furthermore, this decision model can be used as a reference for other diversified enterprises.
Highlights
As China’s most important energy source, coal supports the development of the national economy and is of critical significance for national energy security
The healthy development of coal enterprise is significant in maintaining the sustainable development of the national industry and national economy
We built a decision model to predict the optimal size of each industry for diversified coal enterprises
Summary
As China’s most important energy source, coal supports the development of the national economy and is of critical significance for national energy security. Coal will still be the primary energy in China for an extended period. The healthy development of coal enterprise is significant in maintaining the sustainable development of the national industry and national economy. Since 2012, the operating performance of China’s coal enterprises has fluctuated significantly [3]. Impacted by excess capacity, imported coal, the stress of environmental protection, and weak downstream demand [4], China’s coal enterprises have suffered significant loss. According to the latest data from the National Bureau of Statistics of China, revenue from coal mining and washing industries from January–June 2016 decreased by 13% and total profit fell by 38.5% [5]. Overreliance on the coal industry may cause business risk to coal enterprises, as its performance is constrained by the finite nature of coal resources and fluctuations of downstream industries such as steel and building materials [6]
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