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From common viewpoints, when more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs, economies of scale are considered to be achieved. Certainly, economic growth may be achieved when economies of scale are realized.33

However, the effect of economies of scale deters entry by forcing the aspirant either to come in on a large scale or to accept a cost disadvantage. Scale economies can also act as hurdles in distribution, utilization of the sales force, financing, and nearly any other part of a business.

Theoretically, economies of scale can be divided into internal and external economies of scale34. Generally, when a company reduces costs and increases production, usually through division of labor and specialization, internal economies of scale have been achieved. External economies of scale occur outside of a firm, within an industry. Thus, when an industry's scope of operations expands due to, for example, the creation of a better transportation network, resulting in a subsequent decrease in cost for a company working within that industry, external economies of scale are thought to have been achieved. E.g. In 2002, Nokia invited its main global partners including mainly hardware providers to invest about RMB 10 billion together in Star Net Industry District in order to form integrated production capabilities and to decrease cost. And Motorola invested USD 1.7 billion in Tianjin to build its integrated circuit base. Surely, with external economies of scale, all firms within the industry will benefit.

External economies of scale can be reaped if the industry lessens the burdens of costly inputs by sharing technology、well-known brand and managerial expertise. As is well known, transnational companies spare no effort in constructing brand and investing in R&D. E.g. it is as early as 1991 that Nokia established its brand constructing strategy, and from then on, Nokia has invested heavily in brand polish and maintenance. According to the market investigation by IDC on Dec. 7, 2006，the results of recent multi-client study and survey of mobile phone and smart phone subscribers across five countries reveals that top global brands are in demand not only in developed countries such as the U.S., U.K., and Germany, but also in emerging countries such as India and China. The relative influence of brand on product choice (especially in China and India) suggests that many people seek out global brands and the prestige that they carry.35

2. Product differentiation

Advertising, customer service, being first in the industry, and product differences are among the factors fostering brand identification. And, brand identification creates a barrier by forcing entrants to spend heavily to overcome customer loyalty.

On the one hand, companies may compete by changing the characteristics of the product they sell. The idea is to make product different to a本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。