Thoughts on the Risks of Diversified Investment of Zhejiang Kanglaite Group

Abstract

Diversified investment is a common strategy adopted by group companies for rapid development, but it is also a “double-edged sword”, and the impact on corporate risks is uncertain. While reducing the volatility of corporate returns, problems such as excessive volatility caused by diversified investment, increased funding and allocation pressure, increased financial risks, and reduced organizational competitive advantages and coordination capabilities are not diversified to a certain extent. It is self-expanding risk. On the basis of summarizing and drawing on the existing results, this paper uses Zhejiang Kanglaite Group as a case to explore the motivations of diversified investment, and uses the analytic hierarchy process to identify and evaluate risks. The study found that management capability risk, core technology risk and industry familiarity are the main risks that affect the success or failure of the company's diversified investment. It is recommended to improve risk management capabilities, supervisory management capabilities, and operational management capabilities to effectively avoid risks and improve risk response capabilities.