Abstract-The global financial crisis and the downturn in the domestic economy mean increased pressure and impetus to get rid of the inertia of extensive economic growth and deepseated corporate problems. In this context, timely adjusting business development strategies by improving innovation capacity is called upon so as to adapt businesses in China to external changes and a new economic model. Based on the innovation theory and the theory of transitional development, this paper puts forward the theoretical logic and multi-stage model of development strategy for enterprises in a transitional economy. Meanwhile, this paper explores the gradual process of enterprises obtaining resource base, market base and dynamic competitive advantage.

Small medium-sized enterprises (SMEs) are important strength in the development of national economy, its healthy and sustainable development has been plagued the development of China's economy and society. Therefore, SMEs must have a clear development strategy, namely, to clear development direction, determine development goal, and promote development ability. This paper, based on the Life Cycle Theory (LCT) in biology, relying on the enterprise's internal resources, focusing on the enterprise's external resources, establish the three-dimensional model aboutinternal resources, brand status, and the enterprise life cycle (LC). By integrating internal and external factors of SMEs into a model, systematically analyze the path and wayof enterprise development strategy at different stages.