Flow Barriers And Strategic Behavior

A central subject of industrial organization theory is that firms enter and exit one industry. But both researchers and practitioners have long neglected to realize that not only do potential entrants to an industry select it from among other strategic choices, but also those same firms, which have been successful in other industries, move between strategic groups in accordance with changes in the environmentIn consideration of this, and following Caves and Porter's argument, the author generalized and expanded the concept of entry barriers to include the move between different strategic groups. Beginning with the analysis of the discrepancy between firms in profit margin, the dissertation analyzed each possible kind of mobility barrier existing during transition, and their effects upon firms. Furthermore, the author took two representative Chinese industries-beer industry and color TV industry-as the subjects of empirical research. Finally, based on the former analysis, the author arrived at the conclusion that firms should seek their own strategic positions during transition, and that it is vital for the government to reduce various unnecessary institutional mobility barriers. The basic tenets underlying this dissertation are: (1) to maximize profits, firms must analyze the external environment and internal resources, and then formulate business strategies accordingly, (2) different judgments will lead to different choices of strategies and the firms in the same industry can be classified into different strategic groups according to their strategies; (3) under the assumption that firms in different strategic groups will have different profit margins (this assumption has been verified by previous research), firms driven to raise profit margins are motivated to move between different strategic groups. However, whether the firms can move smoothly or not depends entirely on the severity of mobility barriers between strategic groups, including governmental and institutional barriers and the strategic behavior of the firm. The dissertation consists of six chapters (introduction and text). The main conclusions are:1. Whether in theory or in practice, we should emphasize research on firm movements and mobility barriers, particularly in regards to our domestic firms.2. Whether firms can move or not depends upon their intention to move and the severity of mobility barriers, and not all inferior firms have the intention to move.3. The influence of mobility barriers affects the strategic choice of incumbent firms and potential entrants: the former will actively erect strategic barriers to deter entrance of potential competitors, while the latter will work to break or evade said barriers.4. Based on empirical research of representative domestic industries, we find that institutional barriers are the prime mobility barriers to firms' moves. Quite often the incumbent firms have neither intention nor capability of setting up strategic barriers of their own.5. To improve profit margin and competitive advantage, firms must seek their exact position during transition.6. A key task for our government is to reduce unnecessary institutional mobility barriers, especially in regards to local protectionism and industrial monopoly. To improve the future competitive edge of state-owned monopolistic firms in the international market, some monopolistic firms should first open to domestic firms.