Price Competition In The Industrial Base Of The Industry And Its Role In The Effectiveness Factor Analysis

Accompany with the development of Chinese Market Economy, the price in the market is determining by the supply and demand, price competition becomes into the most frequently tactful method used by companies as well. Many industrial factors acting on each other in different circumstance caused the price war constantly breaking out in many industries, and the price war has done great harm to many companies. The tragic experiences of many enterprises in Chinese TV industry during price war are typical cases. Explore the operating function of the price war will give some directions to the managerial practice under this circumstance. This thesis is based on Professor Michael E. Potter's research on the five competitive forces, which decide the intensity of the competition. The thesis analyzed the industrial features that might induce price war and the factors, which affect the efficiency of the price competition through theoretic and empirical way. Based on those researches, the thesis came to a conclusion that price competition is a function of some basic industrial features. On the basis of the conclusion, the thesis figures that the enterprises taking the policy of price war can ease the pressure by following some basic strategies.