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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

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Insusrty intergration

  • 2. 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.
  • 3. 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.
  • 4. 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