Vertical Integration is a production company that has the ownership of a production distribution and exhibition of the film of the same company and they also receive all of the profit. The pros of doing this is gaining a lot more money from selling products. The quality of products made will be high, the costs of transaction will become lower. The disadvantages of this are decreased flexibility , capacity balancing problems and it can create some barriers to market entry. An example of vertical Integration is Marvel, whenever they make a new film they will make official action toys, the main distributor is Disney because the own and merged with Marvel so all the money that the franchise makes belongs Disney. Disney does this with a lot of companies and they own all of their assets. Disney is making more money from owning Marvel because of the productivity made. For example Captain America which is a film made in the marvel universe which will make a lot of money will now belong to Disney.
Horizontal Integration When a company expands into a different industry so the company can make more money in another area of production or they can buy out other companies that deal with these areas. The advantages of Horizontal integration are Lower costs, Increased differentiation this means that the combined companies can offer more products and service features. An example of this is when Facebook bought out Instagram and received the ownership,so all the money that Instagram makes legitimately belongs to Facebook
No comments:
Post a Comment