Structure of media organisations

Structure of media organisations

Horizontal integration

Horizontal Integration is when other companies/organisations try to develop their own by buying up other competitors but in the same area of market, for example; if one radio station publisher buys out another smaller radio station publisher.

 

Pros:

-There is quite a few advantages with horizontal integration (or markets) and here is a few; firstly, the cost for these companies are lowered, and this is shown through the operational process which are linearly scalable, and therefore translating into a lower cost of production per unit.

 

-The second advantage is that the quality of the market are improved. These facts are proven and improved due to the company which have offers which specialize in a single product/service and they also have optimized techniques for top quality; these are also easier for the company to identify certain areas amongst the company which need improvement and allow them to continuously improve their product of quality.

 

-Horizontal integrations would have many advantages such as; increased market power or market share, achievement of economies of scale & economies of scope, reduction of production costs and increases in other synergies. These are especially used in media sectors such as film companies; Pixar, Walt Disney and Marvel Studios. Disney is considered as a horizontal integration because Disney aim their film at the younger audience, and to develop their own company they invested in other companies such as Marvel, Pixar and the Disney Music Group.

The advantages of this would be that, since the many companies join together and their business are working as one, this causes the decrease of the number of competitors and this is very good because it would allow them to release any excess stress about battling other companies/competitors, to be the best.

 

Cons:

-There is also quite a few disadvantages which come along with Horizontal Integration as well as advantages. These disadvantages are that companies may face antitrust issues and legalities, features like the reduction of flexibility are potentially destroying the value in the industry, rather than creating it.

 

-There's many disadvantages which occur in the media industry and these possible disadvantages are; the leaders which run the companies, will now have to look into their company more excessively and they take a bigger role of reasonability of making sure everyone is actually completing their tasks in their company, of what's actually needed from them.

Another disadvantage would be that; due to the company becoming very big, it would mean that certain areas within the company become less flexible compared to smaller companies. This is bad because it will make it harder to advertise new ideas across the different public audiences.

 

 

Vertical Integration

 

Vertical Integration is when a company's production has the full ownership of the means of distributions, production and exhibition of media/film by the same company. This is because they receive all the profit alone.

Pros:

 

-There is quite a few vertical integration advantages within the media industry. These come across companies such as BBC and this is because BBC brand owns and manages other aspects and run their multiple different channels, still with the same brand; other channels including BBC Two, BBC News, BBC One, BBC Three and CBBC. 

Pros of having these, are is that it allows many different competitive advantages within their system and company. It gives the company much more control over their business/company and, the cost of their transaction within their company become reduced and lowered.

-With the pros of vertical integration, cons are produced too. There's a few cons of vertical integration such as; firstly, in each company/organisation a lot of capacity balancing problems start to occur. Secondly, throughout the company due to the vertical integration a decrease of flexibility is produced. Finally, with having vertical integration within different companies or organisations, it can create a few barriers for market entry.

 Cons:

-There is multiple cons but here is a few; due to vertical integration, balancing problems start to occur, this means that the business with need to require more establishment for extreme upstream capacity assurance. This is where the previous supplier would think of retaliating which can potentially endanger the production.

- Flexibility decreases, meaning those businesses which involve upstream or downstream investments, will eventually result in a higher chance of becoming decreased in it flexibility. However, it can also increase in the coordination of the vertical related activities amongst the company.

- Due to vertical integration in some organisations and companies need significant development and therefore, this will decrease the inability to increase its product variety.

Co-operative

 Co-operatives in the media industry is an autonomous association, where similar or two/more organisations/companies join together voluntarily (normally on an online platform), for their own mutual and individual benefits. These businesses are normally within the same industry, for example: pizza stores, Asda and Pharmacies are located within the same geographic region or nationally. These media's normally develop their own through taking the form of a video or other aspect related to their organisation, which is outside their own funding abilities and create an idea together and, if they both agree on the idea, they produce the product together.

Pros:

-Purchasing power within your company is increased.

-Marking power within you company is increased.

Cons:

-Sharing prices with other company/competition.

-Marketing becomes generic and, you lose control.