Profit Margin And Entry: Case Studies Of Iron & Steel Industry

Profit Margin and Entry: Case Studies of Iron&Steel IndustryThe corporation's entry and exit problem is one of the core problems of the west industry organizing theoretical and demonstration research in recent decades. In recent years many scholars of our country have been doing a lot of study, combining our industries' specific characteristics. Among them there are a lot of significative productions with many attentions. In these years Chinese steel industry has been developing quickly. The output and the number of corporations have expanded dramatically and caught nearly everybody's eye. There are considerable research papers and arguments about the steel industry theory. This paper's main job and goal is to give the demonstration analyses on the steel industry corporations' entry and quit problem. Based on the former research and combing the latest methodology production, our paper aims to get some original conclusions and do some revise to the certain research in our country in a certain extent.In this paper, we first comment on the archival literatures about the driving forces and the impacts of entry, then propose an analytical framework. In this framework, we characterize the bidirectional relationship between the entry behavior and profit margins; compare the entry barriers and the competition intensity in 4 sub-industries. We explain why so many companies entered certain sub-industries when the profit margins of them were negative. The analytical framework we proposed can also be used to analyze other industries.