Thursday, 3 April 2014

11. Intergration Conglomerate

Vertical Integration:  This is the process in which several steps in the production and/or distribution of a product or service are controlled by a single company or entity, in order to increase that company’s or entity’s power in the marketplace.

For example: The brand that you see on the bottle is the producer of the drink but not necessarily the maker of the bottles that carry these drinks. This task of creating bottles is outsourced to someone who can do it better and at a cheaper cost. But once the company achieves significant scale it might plan to produce the bottles itself as it might have its own advantages.
Vertical integration for Disney can profit from every aspect of making movies by using only Disney owned companies  produce them, market them, distribute them around them around the world and produce the merchandise for them
Horizontal Integration: Horizontal integration simply means a strategy to increase your market share by taking over a similar company. To merger or buyout can be done in the same geography or probably in other countries to increase their reach.
Example: Disney core product was 2D animation but they horizontally integrated in to live active films. The developed a branch of the Disney company to reach new audiences and therefore control more of the film industry whish means it makes more profit



  1. Pass: for merit explain how these companies are horizontally and vertically intergrated.