Analysis On The Value Of Sustainable Competitive Advantage In Yili Industrial Corporation

As the current hot topic, Chinese food security has been eagerly concerned. As one of the leaders in dairy industry, Yili's development model, internal structure and market strategies is on the behalf of the development trend. Five forces of Michael Porter's Five Forces Model compose this paper. By collecting public announcement from Shanghai and Hong Kong Stock Exchange and news from newspaper and internet, data of financial analysis and none financial analysis from 2004-2009 was used to study Yili. The study not only play a part in Yili and other companies'market activities, but also in helping investors to find the long-term investment value of companies.Choosing indicators of vertical competition from the importance and quantities of suppliers and backward integration which affect suppliers bargaining power, from importance and demand of customer, inconsistent information and forward integration which affect the bargaining power of customers, are carried on analyzing. The results show that Yili has the limitation of packaging materials, however, it also has the obvious vertical integration, corporate responsibility and consumer loyalty, all of which state Yili has super competitive advantage by competing with customers and suppliers.Choosing indicators of horizontal competition from resource requirement, economies of scale and policy protection which affect the threats of potential entrants, from performance–price value, differentiation and the power of substitute's competition which affect the threats of substitute companies, are carried on analyzing. The results show that resources advantage, economies of scale and policy support build up the high barriers to potential entrants, the powerful substitutes may treat to Yili, but Yili still has the strong competition from high performance-price value, product diversity and substitutes market penetration which increase the consumer switching costs. The competitive advantages of horizontal are also obvious.Comparing with financial indicators of other three public companies-Mengniu, Sanyuan and Bright Dairy, which are divided into profitability, growth, operating capacity, solvency, technical and human resource capacity factors, Yili has sustainable competitive advantage by gaining stable growth in business scale and investment return. Meanwhile, Yili also has the characteristics of short-term liabilities risk and higher cost & expense. From the whole papers'analysis, the competition advantage form vertical, horizontal industry chain and peer companies are established, from which Yili has the obvious value of long-term investment.Finally, integrating of the full text articles from vertical, horizontal and peer companies, paper gets the Yili's sustainable competitive advantage. All above advantages ensure companies potential long-term investment value.