From different points of view, including Resource-Based Theory, Resource-Advantage Theory, and Structure Conduct Performance, the research was firstly discussed if the iron and steel enterprises would have different competitive advantages with different strategy segmentations. In addition, how investors make investment decision and how management level distribute resource into which financial indicator in order to strengthen competitive advantage were discussed as well. The research was collected financial data (from year 2004 to 2008) of 40 domestic iron and steel companies which are listed in public stock market (including OTC) as sample pool. The sample pool was segmented into four groups, such as products, value chain of upstream to downstream, and top-to-down consolidated strategic groups. Competitive advantage was classified by average of equity return ratios of shareholders, and financial ratios were applied to analyze the source of competitive advantage in iron and steel industry. Firstly, started to analyze financial ratios of each group by description statistic method and implemented factor analysis to figure out common factors. Furthermore, from investors point of view, to clarify how those factors to be reflected on operating performance by applying multiple regression analysis. Moreover, from business operating level¡¦s eyes, to distinguish enterprises with competitive advantage from each strategic group. The result was shown that each strategic group has different sources of competitive advantage. Therefore, recommendations of the research are listed: I. Investors should invest in enterprises with better current ratio, quick ratio, and guarantee of multiplied interest. II. Aggressive investors should invest in enterprises that have stainless steel products and consolidated business from upstream, mid-stream, to downstream. III. Conservative investors should invest in enterprises that have plate steel products and consolidated business from upstream, mid-stream, to downstream. IV. In order to create resources of competitive advantage, management level of each strategic group should increase financial signals as first priority: 1. Plate steel and downstream enterprises: value-added of unit salary and percentage of employee bonus out of profit. 2. Bar iron, stainless enterprises with consolidation of upstream to mid-stream and top-to ¡Vdown conformity: current ratio, quick ratio and guarantee of multiplied interest. 3. Alloy steel enterprises: ratio of debt out of net assets, percentage of loan, stock and account receivable out of net assets ratio, and net assets out of assets ratio.