Horizontal and Vertical integration

Horizontal integration

Horizontal integration is where a production company expands into other areas of one industry. This means that the company can develop in a particular area of production or they can buy out another company of that deals with these areas.

Advantages/benefits:  

The benefits of horizontal integration is that it reaches a wider audiences. Secondly it has lower costs, increased differentiation and increased market power and reduced competition.it also helps remove cost abundancy, it less expensive to offer the same product from different areas than it might be to present a totally new product 

Disadvantages/drawbacks:

The one disadvantage of horizontal integration is that one company could merge with another and it may increase the values of companies secondly larger companies are more difficult to handle and they are less adaptable into bringing new developments with businesses.

Vertical integration

Vertical integration is when the production has ownership of the means of production, distribution and exhibition of the film by the same company, because of this they receive all of the profit.

Benefits/advantages:

The benefits of vertical integration is that it reduces transportation costs if common ownership results in closer geographic proximity. Improve supply chain coordination.

Disadvantage/drawbacks:

The disadvantage of vertical integration is the expense. Companies must invest a great deal of capital to set up or buy factories. Another disadvantage could be the loss of focus, also another disadvantage is the inability to increase product variety this is if the significant development within the company is needed, it will decrease the organization ability to increase its product variety 

Co-operative integration:

Media cooperatives are a form of cooperative that report on news based on the geographic location of their membership, or on the general interest of the membership. Often they are a form of alternative media critical of capitalism with left-wing stances.