Industry integration, pros and cons

Horizontal and vertical integration Vertical integration is the process for example in

film industries a certain part of it goes from Production studio to distribution to cinemas.

However for gaming it can go from console manufacturer to games developer to games publisher. Game developers can have a horizontal integration where there can be more than one.

Pros and cons (vertical integration) Pros Increased ability to create credibility for new products. Can create differentiation through coordinated effort. Avoid getting shut out of the marketing for rare inputs

Cons May link to unprofitable adjacent businesses Reduces strategic flexibility due to being ‘’locked in’’ to

a business. Obsolete processes may be perpetuated.

Pros and cons (horizontal integration) Pros Reduction in cost. Increased market power. Economics of scope: sharing resources common to

different products. ‘’synergies’’.

Cons Costs Increased work load. Increased responsibilities