Analysis of the effect of industrial integration

Industrial development follows the general law of economic development, i.e., the pursuit of profit maximization and cost minimization. Industrial integration is a development mode and industrial organization form for industries to improve productivity and competitiveness under the background of economic globalization and rapid development of high technology.

1. Innovative optimization effect: industrial integration promotes the innovation of traditional industries, which in turn promotes the optimization of industrial structure and industrial development. As industrial integration is prone to occur between high-tech industries and other industries, new technologies, new products and new services generated in the process of industrial integration objectively improve the level of consumer demand, replacing certain traditional technologies, products or services, resulting in the gradual shrinkage of market demand in these industries, and the status and role of the entire industrial structure is declining; at the same time, industrial integration has spawned the integration of more new technologies into traditional industrial sectors, changing the traditional industrial structure optimization and industrial development. At the same time, new technologies arising from industrial integration integrate more traditional industrial sectors, change the production and service mode of traditional industries, and promote the upgrading of their product and service structure. The continuous upgrading of products and services in turn leads to the upgrading of the demand structure, which in turn drives the upgrading of the industrial structure. Due to the blurring of boundaries between industries as a result of industrial integration, two or more industries have formed the ****same technological and market bases, which makes it easy for certain industries to change their structural layout, transition from one industry to another with agility, and realize industrial innovation and development. Due to the extensive connection between high-tech industries such as electronic information, bio-engineering, new energy, new materials and other industries as well as the high industrial growth of these industries, the blurring and disappearance of boundaries caused by industrial fusion can enable other industries to switch to high-tech industries and, through the chain reaction of industrial fusion and industrial innovation, enable the conversion and upgrading of a country's industrial structure. The integration of information industry and traditional industry has transformed some traditional industry sectors from capital and labor intensive to information, knowledge and technology intensive. Information technology, network technology, digital technology and so on have been successively integrated into traditional industrial sectors, profoundly changing the industrial properties of traditional industries. The integration of traditional agricultural sector with industrial technology and information technology has greatly improved its own productivity level. Promote the development of agricultural industrialization and agricultural informationization, but also for the development of network economy has laid a solid foundation. The biggest sign that the information technology revolution has entered the industrialization stage is that the information industry and its integration with traditional industries have become the leading industries in the national economy. The industrialization of the achievements of the information technology revolution is the result of transforming information technology into social productivity, the basic condition of industrial integration, and one of the main driving forces for the upgrading of industrial structure. With the transition from real economy to virtual economy, the information industry and service industry have begun to integrate and form a series of emerging information service industries. Sectors with higher information content within the service industry have been developed faster and accounted for a larger and larger proportion of the service industry, thus promoting the development of the whole service industry in the direction of informatization and networkization.

2. Competitive structure effect: Industrial integration promotes the market structure to be rationalized in the changes of enterprise competition and cooperation. According to the current market structure theory, the combination of limited market capacity and enterprises' pursuit of economies of scale will lead to the concentration of production and the reduction of the number of enterprises. After industrial integration, the market structure will undergo more complex changes. Industrial integration can change the scope of competition by creating and realizing new linkages between industries and firms' organizations, promoting greater competition. In the process of industrial integration, firms from other industries will also join in, and competition will be further intensified. Prior to industrial integration, groups of enterprises belonging to the same industry were in a competitive relationship within the industry and among the enterprises, and from the strict definition of the industry, it could not be called a competitive relationship beyond the industry. However, in the process of industrial integration, industrial sectors that previously had fixed business boundaries and market boundaries cross and penetrate each other, so that the original non-competitive relationship between industries is transformed into a competitive relationship. In the process, there are also a large number of new participants from other industries, which further intensifies the degree of competition. In the process of competition intensification, there are bound to be tragedies such as enterprise closure and enterprise absorption and merger. In industrial integration, some form of monopoly may also emerge due to network externalities and other reasons. However, changes have also taken place compared to traditional monopolies. One of the more obvious examples is the convergence of information infrastructures. Although the TCP/IP protocol is very different from the line-switching technology used for voice communications in the telephone network, the same physical wires and cables are used in the infrastructure for Intemet and telephone communications. Moreover, as sound and television signals are digitized, the same network facilities can handle Intemet, telephone, and television data simultaneously. From this perspective, as telecom infrastructure converges, competition tends to intensify, and voice, video, and Intemet services may become less expensive. On the other hand, however, industrial convergence also provides firms with the opportunity to expand their scale and extend the scope of their endeavors, which greatly facilitates the development of new products and services, among other things. The entry and opening of new markets by new players in industrial convergence enhances competitiveness and the shaping of new market structures, which is conducive to the rational allocation of resources, increased employment and human capital development, etc. A series of mergers, acquisitions and other activities of firms occurring in industrial integration have shaped new market structures, and the new market activities reflect a substantial change in the value chain from simple transmission of information to the production and packaging of content or the provision of online services and transactions. Liberalization and competition have made the transmission and delivery of information services an everyday commodity and transformed them into low marginal cost, high volume business activities, thus changing the current market structure. ¨

The traditional theory of market structure suggests that the combination of limited market capacity and the drive of firms to seek economies of scale results in a concentration of production and a reduction in the number of firms. After industrial integration, market structure will undergo more profound changes. The disappearance of market boundaries between industries and the deregulation of the government will lead to two kinds of reversal effects on the market structure: on the one hand, the integration of an industry with other industries leads to a rapid increase in the number of enterprises in the industry, and there are constantly new entrants to participate in the competition, which greatly reduces the market concentration of the integrated industry; on the other hand, the individualization of consumer demand and the trend of integration of the enterprises prompted by the large-scale production, standardization gradually to small batch, multi-species transition, economies of scale in corporate strategy is replaced by economies of scope, on the basis of technological convergence and business convergence, to promote horizontal mergers and acquisitions or mixed mergers and acquisitions between enterprises, resulting in a reduction in the number of competing firms, thereby increasing the market concentration of the industry.

In short, industrial integration transforms the market from monopolistic competition to perfect competition. Economic efficiency increases substantially. This situation is most obvious in the information product industry and markets with little product differentiation. Indeed, it is only with the arrival of information technology, which permits continuous transactions across time and space after industrial convergence, that certain types of markets come close to the economists' definition of efficiency. Markets that are more geographically and time-constrained are less plagued by monopoly. The efficiency of markets is based on the efficiency of information.

3. Organizational structural effects: Industrial integration not only leads to a major restructuring of property rights between business organizations, but also triggers innovations in the internal structure of business organizations. The impact of industrial integration on market behavior is concentrated in the enterprise's organizational adjustment strategy level. Corporate mergers and acquisitions have begun to evolve from vertical to horizontal or hybrid mergers and acquisitions, and the acceleration of technological convergence is one of the main drivers of the shift from simple to complex mergers and acquisitions. Under the effect of transaction costs***, the organizational structure of enterprises has begun to develop gradually from vertical integration to horizontal integration, hybrid integration and virtual integration. From the point of view of Western economics, the vertical integration of enterprises is the result of the organization through trade-offs, that the company's internal transaction costs are greater than the external market transaction costs. Horizontal integration, on the other hand, focuses on cooperation and ****existence with external organizations, and transactions with the outside world are non-pure market transactions. However, in the case of industrial integration, firms are required to have the ability to enter a related or unrelated business market in the shortest possible time and to specialize across industries. In order to achieve rapid response, enterprises often use inter-firm horizontal alliances to capitalize on fleeting market moments. Moreover, technological integration allows different businesses of enterprises to be carried out on the same operational platform, and they can complement each other and play a greater effect through collaboration. Therefore, horizontal integration at this time is a business model that fully utilizes the enterprise's own resources and external resources in order to quickly respond to market demand. In this mode, the enterprise grasps the most core things and carries out a wider range of business integration, which is conducive to the realization of the overall interests of the enterprise and the formation of competitive advantages. Under industrial integration, horizontal integration has become the main form of restructuring the external organizational structure of enterprises.

The internal organizational structure of enterprises in the industrial economic era was a hierarchical one. The hierarchy is complicated, easy to breed bureaucracy pyramid type structure, can not adapt to the flexible and changeable modern information economy and society. The modern social and economic form has stepped into the virtual economy and the real economy interacting with the dual structure form, the virtual enterprise will become one of the mainstream mode of enterprise operation in the future. Virtual enterprise is based on the development of industrial integration in the birth of a new type of enterprise cooperation form, it can become a large degree of industrial integration to expand the important micro-organizational basis. Virtual enterprise is the use of Internet technology, the joint knowledge and capabilities of multiple enterprises, to realize the dynamic integration of resources, *** with the creation of a product and service process, is a kind of network-type value creation *** with the body. Virtual enterprise breaks the traditional enterprise pyramid vertical management mode, the implementation of flat horizontal management. Virtual enterprises in the information network platform, accelerate the speed of enterprise resource integration, and on this basis to achieve the enterprise's rapid response to the market ability, new technologies and products are constantly pushed out, so as to continue to meet the consumer's personalized and comprehensive needs, to achieve the effect of the speed economy. The innovation of industrial organization caused by industrial integration requires industrial organization theory to make changes to adapt to the development trend of industrial organization adjustment. From the viewpoint of research content of industrial organization theory, since industrial integration involves cross-industry enterprise behaviors and relationships, the traditional industrial organization theory and methods (such as SCP paradigm), which are limited to the competitive and cooperative relationships among enterprises within industries, can no longer adapt to the in-depth research on industrial integration, and thus need to put forward a new framework for analyzing industrial organization. After the industrial integration, the existing industrial control policy gradually loses its original effectiveness due to the complexity of the competitive and cooperative relationship between enterprises of different industries, and the industrial organization policy will be changed from strict market access to the maintenance of the normal order of the market economy and the creation of a good environment for industrial development.

4. Competitive ability effect: Industrial integration helps to improve industrial competitiveness. Competition between industries is actually the competition of each link of the industrial value chain. No country can have a competitive advantage in all links, therefore, the country or region with competitiveness in the link with the highest added value and the best development prospect will occupy an advantageous position in the inter-industry competition and have a competitive advantage in the future development of the industry in the long term. Industrial integration makes the original discrete industrial value chain partially or completely integrated, and the new value chain link integrates two or more industries' value, and compared with the original industry, the new value chain link integrates two or more industries' value, and the new value chain link integrates two or more industries' value, and the new value chain link integrates two or more industries' value. The new value chain link integrates the value of two or more industries, and compared with the original industry, the integrated industry not only has higher added value and larger profit margin, but also creates more, more convenient and higher-value products or services for consumers, which represents the inevitable trend of demand development. The competitiveness of the industry will naturally increase with the change of demand trend to the mainstream of consumption. The enhancement of industrial competitiveness enables the relevant enterprise groups to obtain more market share, scarce resources, strong capital accumulation and larger development space, which provides favorable material and market conditions for the industry's technology R&D activities. The continuous improvement of industrial technology R&D capability in turn actively promotes the development of technology integration, thus providing an internal driving force for industrial integration. Therefore, the development process of industrial integration and industrial competitiveness has inherent dynamic consistency. Technology integration provides the possibility of industrial integration, and enterprises advance the integration process to various operational levels, thus transforming the possibility of industrial integration into reality. Horizontal integration among enterprises in different industries accelerates the process of industrial integration and improves enterprise competitiveness and industrial competitiveness. At the same time, industrial integration poses new challenges to enterprise integration strategy. The competitive and cooperative relationship of enterprises in industrial integration has been changed, the number of enterprises within the integrated industry has been increasing, the competition between enterprises has been intensified, and the innovation and flexibility of enterprises have been elevated to a new strategic height. In this technological revolution and industrial change, enterprises with weak innovation ability and poor flexibility will be eliminated from the market at a faster rate.

5. Consumption capacity effect: Industrial integration helps to enhance consumption. The economic effect brought by industrial integration on consumption enhancement is mainly reflected in:

(1) Industrial integration has given rise to many new products and services, which satisfy people's demand for higher-level consumer goods after their income and living standards have been raised. The law of "supply creates its own demand" tells us that the final demand for products will be continuously improved with industrial integration.

(2) Industrial integration promotes more participants to enter and open up the market, which enhances the competitiveness of the market and shapes the new market structure. At the same time, the cost savings (including the cost of large-scale production, corporate organization and governance costs and transaction costs) resulting from the extension of the industrial chain and the integration of industrial questions have enabled a large number of enterprises to greatly add value to their value, which ultimately promotes consumption through the growth of revenues and price reductions.

(3) Industrial integration requires the creation of a large number of complex senior talents. The cultivation of talents and investment in human capital have significant dual economic effects, and are enablers that promote a virtuous economic cycle after a certain level of economic development. Human capital investment itself is a good labor market prospects of senior talent production process, itself can increase employment as well as labor productivity; human capital "consumption" as a kind of economic operation of the final pull force, in the modern economic conditions can greatly drive production growth.

6. Regional effect: industrial integration helps to promote regional economic integration. Regional economic integration refers to the different spatial economic subjects in order to production, consumption, trade and other benefits of access to the process of market integration, including from the product market, the production factor market (labor, capital, technology, information) to economic policy unification of the gradual evolution. Regional economic integration is the unity of state and process, means and ends. Industrial integration breaks the technological boundary, business boundary, market boundary and operation boundary of traditional industries, and at the same time, it will play an important role in breaking regional boundaries and promoting regional economic integration.

The role is specifically manifested as follows: (1) The development of industrial integration will promote the diversification and complexity of regional industrial structure. (2) Industrial integration improves the trade effect and competition effect between regions and accelerates the flow and reorganization of resources between regions. Industrial integration will break the boundaries between traditional enterprises and industries, especially between regions, and utilize information technology platforms to realize business reorganization and develop new businesses, which will accelerate the flow and reorganization of resources between regions and produce trade effects and competition effects. (3) Industrial integration will promote the development of enterprise networks and improve the level of connection between regions. The development of enterprise network organization brought about by industrial integration will become the main body of regional connection, which will help break down the barriers between regions and enhance the connection between regions. (4) Industrial integration expands the polarization and diffusion effects of regional centers and helps improve the spatial dual structure of regions. (5) Industrial integration will promote the institutional construction of regional economic integration.