The Competitive Strategy Research Of Military Enterprises Based On Product Differentiation

On March 4, 2015, the growing rate of military budget was suggested to be nearly 10% in the NPC and CPPCC. Based on China’s military budget of RMB 808.2 billion yuan last year, this number is supposed to rise by RMB 889 billion yuan in 2015, which will be almost quadruple as much as that of 2005.Although the growing rate(10%) slightly declined than last year(12%), the budget continued to sustain a rapidly growing trend, ranking the second in the world. It stated that defence budget will be increasing by 12%, which is approximately 8109 billion RMB in the year of 2014 on the 12 th National People’s Congress. This fund injection mainly used for enhancing high-tech weapons and equipment and supporting facilities construction investment. As the national strategic industries, the satellite manufacturing, application and service industry, core weapons manufacturing present rapid development momentum. Military enterprises have encountered unprecedented developing opportunities. The development and production of high-tech weapons rely on the military high technology. However, military technologies are very sensitive among countries. Imitation cannot help us to achieve the state of art military technology. Furthermore, encountering with market pressure, in the meantime, pursuing sustainable development and enhancing enterprises competitiveness, military enterprises required to make technology innovation, produce differentiated commodity in endeavour to maintain competitive advantage. Therefore, military enterprises need to solve pressing problems in terms of seizing opportunities, facing challenges from international and national enterprises competition.In this current paper, it defines concepts related to products differentiation and military enterprises. Aiming at characteristics of military enterprises products differentiation, this research analyses the influencing factors of military enterprises competition strategy, and constructs the theoretical framework of influencing factors of products differentiation based competitive strategy in military enterprises. Establishing game model based on innovation ability, technology innovation overflow, government subsidizes, expounding competition strategy of military enterprises products differentiation, which verify the importance of differentiation of products. The main content of this present paper including:Firstly, this research defines the concepts related to differentiation products and military enterprises. Through analysing the characteristics of military enterprises competition strategy, this research proposes that products differentiation of military enterprises is technology innovation based of technical difference, consequently, discovering the primary influencing factors on products differentiation competition strategy of military enterprises, which are innovation capability, technology spillover, and government subsidy. This is the construction of theoretical framework based on products differentiation in military enterprises, and provides theoretical supports for following research.Based on theoretical analysis of influencing factors of enterprises innovation capabilities on military enterprises competition strategy products differentiation, and proposes corresponding hypothesis. On the basis of classical Hotelling model, this paper includes the innovation rate parameters, and constructs two-phase game model of innovation capabilities based two oligarchs military enterprise products differentiation strategy, utilizing reversed induction method to calculate balanced profits, balanced market share, and balanced product pricing of two oligarchs military enterprises, and analyses the impacts of innovation ability differentiation on competition strategy of military enterprises.This paper adopts technology spillover coefficient in the Hotelling model, constructs two-stage game model based on technology spillover, analyses the competition strategy of two oligarchs military enterprises, which produce differentiated products, in the existing of technology spillover. In addition, this paper discusses position location tendency in the same circumstances. This research adopts numerical simulation and simulation model for the data analysis, and makes the conclusion more compatible with the actual situation.Based on the theoretical analysis of impacts of government subsidies on military enterprise competition strategy, this research puts forward the corresponding assumptions, includes government subsidies parameters in the Hotelling model, and makes the analysis of the results of balance profits, balanced market share and equilibrium pricing from two oligarchs military enterprises in the case of technology spillover and absence of technology spillover, respectively.Drawing on the classical cobb-douglas production function, this paper establishes panel data econometric model, utilizes 22 listed China’s military industrial enterprises as samples, adopts annual accounting data during the year of 2008-2012, and uses regression analysis method to conduct empirical text to the influence on innovation ability, technology spillovers, and government subsidies on enterprise innovation and competition. The results indicate that the innovation ability significantly influences enterprises’ innovation behaviour, which presents positive relationship. In addition, the enhancement of innovation ability facilitates the products of military enterprises to implement the differentiation and reinforces enterprises competitiveness. Technology spillovers are significantly inversely proportional with the enterprise innovation output. This result proves that on account of diminish in the level of products differentiation by technology spillover, and it indeed damages military enterprise technology innovation capabilities. Furthermore, the government subsidies have a non-significant impact on product differentiation in military enterprises, and the correlation coefficient is relatively small, which indicates that the government subsidies have limited influences on competition of military enterprises. The possible reasons are military enterprises always invest tremendously, and the promotion functions of government subsidies are unconspicuous.