By creating innovative ways such as this sets themselves apart from their competitors in order to affect the buying power by making it more attractive to buyers. Their supplier level is low since buyers have several choices on who they want their provider to be. There are several providers for cable, internet, and mobiles making price and quality of product reasons that buyers decide on a particular product. Depending on the product that is offered the threat of substitute products or services can be either high or low. The threat to cable tends to be the highest since there are alternatives ways to watch the shows or movies people would like.
Andrew Carnegie used vertical integration in the steel business to great profit. His operation controlled every step of the process from mining the ore, mining the coal, shipping the ore and coal to the foundry, actually making steel from the ores, owning and operating ships and railroads to transport the raw materials and finished goods, etc. What better way to make your business profitable than to arrange for much of the money it spends to be paid to another one of your businesses? Keeps the money in the family, prevents some other company from putting the screws to you by cutting availability or raising prices, and the peripheral businesses (such as railroads and shipping) may be stronger competitors for other business because they have
Lawmakers now claim that they are looking out for the consumers’ and competitors’ best interests, so as not to hinder any competition or new innovations. Others have weighed in on the debate such as Senator David Perdue, who claimed that this merger is simply an example of capitalism. President-elect Donald Trump claims that this type of merger will be blocked. Lastly, consumer groups have rejected the portrayals of AT&T and Time Warner as being weaker rivals, claiming that the merger of these two companies will create a powerhouse that every network and cable company will need to compete and negotiate with, all while pushing out smaller streaming services such as Sling TV and Hulu. Consumer groups ultimately fear that this merger will extinguish new
This is because they look to interact directly with the final customers. The book states that a firm should vertically integrate business activities where they possess valuable, rare, and costly-to-imitate resources and capabilities. With competition consistently playing a factor, Verizon had to find a way to gain a competitive advantage. In this case, network reliability, products and services, customer service, and familiarity are the different paths Verizon has chosen to differentiate products and secure a competitive advantage. The forward integration strategy stands to benefit the larger cellular providers more.
Disney pursues vertical integration by increasing its distribution channels for its products in house. This allows Disney to not only have control over the entire product my beginning to end consumer, but it also allows for Disney to increase its profits by cutting costs. An example of this in the case is that Disney creates its own content in-house for its channels like ABC. When Disney first acquired ABC, ABC had deals with Dreamworks, which was a rival company created by a former Disney employee, to finance jointly the cost of developing new TV shows. For Disney, this deal made no sense for them once they purchased ABC because Disney has their own production studio.
In addition to synergies another strategy is to control all creative and physical possess in the production of media, evidence of this is Warner Bros, they can buy a script only entrusting it too companies they own to film, produce and distribute the finished product. Allowing Warner Bros to profit from all stages, this form of market dominance is described as vertical integration. With the current global reach of conglomerates to dominate in this way it is easy to see how media concentration has occurred and how media companies have managed to diversify into other markets, this is seen by Virgin that not only provide media but financial services, healthcare and spaceflight (Just, 2009). However, these conglomerates are under threat from new media platforms and technological convergence. This means that the tech giants like Apple and Google can produce the technology that will allow you to view media but will always give the media they control an
Netflix now has less users and is making less money, and would thusly have to increase the price of their subscriptions to compensate for this. Overall this translates to disastrous costs for consumers and the transformation of everyday online services into expensive
Studios and networks are extremely vary of selling their content to the streaming service as it would indirectly encourage Netflix's popularity at the expense of traditional television viewership. However it is an uneasy relationship for these networks and companies as they reap enough revenue from selling to Netflix that it is hard for them to break
The difference between horizontal and vertical integrations is that vertical integration typically expands into another product stage rather than merging or acquiring the company in the same production stage. For example a company is vertically integrating if it expands from manufacturing industry to retailing industry. In the other hand Horizontal Integration would mean buying other firms in the same manufacturing industry. Advantages of horizontal integration are lower cost, in a large company like Quaker and PepsiCo that produces more products world wide. The higher output leads to better economies of amount and higher competence.
Although there exist valid arguments for legislating joint enterprise, there are concerns with the idea. Fundamentally, it is unconventional as it is a creation of the common law therefore, it would be untraditionally to legislate on the doctrine. Likewise, the common law allows more detail in its prescription, and its flexibility is one of its distinguishing features. Furthermore, it joint enterprise was governed by legislation, if that legislation needed to be altered, a considerable amount of time is required, as it can be a lengthy process.
What this created was the interaction between Netflix and their customers and with this created and stronger relationship in their ecosystem. Another move that Netflix did was the agreement with entertainment production films; this deal was based in exclusivity of some products like movies, shows and series. With this action Netflix it’s having a better relationship with the production companies. What they gained from is been able to have a balanced ecosystem were one will produce this the case of the production companies and the other will distributed the product been this Netflix.
It is essentially a pro if Netflix acquired any sources that would give them some independence in the supply or distribution field. Ferrell and Hartline (2014) explains that distribution and supply relationships are one of the most important decisions to any organization. Creating partnerships that would allow their customers to have some of their favorite content from certain providers would not only expand they company’s ability to reach customers and grow. Similar to its partnership with Dish Network that potentially created new customers, creating more partnerships can ultimately do the same (Luckerson, 2014). Not only developing partnerships with cable companies are can be pros, but kiosk could provide a different market for a target audience.
NETFLIX VS BLOCKBUSTER Netflix was able to gain a competitive advantage over its chief rival Blockbuster. Discuss the Netflix value proposition and how it successfully gained an advantage over Blockbuster. a) Accessibility, affordability, and availability Netflix is affordable as it charges $7.99 per month while blockbuster charges $19.99 which is quite expensive. The company also does live streaming online of videos making them easily accessible and highly available as compared to blockbuster which does not operate virtually but uses physical stores (Guina, 2017). b) Customer retention
In a industry dominated by a small number of firms, Netflix has been able to establish itself through its own competitive advantage. While many competitors such as Hulu, Amazon and HBO offer their own streaming services, Netflix has established an advantage through developing exclusive content only available to Netflix subscribers. Originally in order to differentiate themselves from the competition, Hastings pursued exclusive licensing agreements and partnerships in order to develop this original content. In 2013, Netflix released the now famous political drama House of Cards, which would be the first exclusive content to arrive to a streaming service.
The two firms combined will be the country’s dominant cable and Internet provider. Cohen’s rebuttal to the negative feedback of this news was that Comcast already has competition to worry about such as Amazon, Netflix, and Apple. Cohen is right to the extent that these corporations are giving Comcast some form of competition. But the competition isn’t remotely as effective as having a newly merged company with control of roughly 40 percent of the high-speed broadband Internet market. Cohen mentioned 3 companies that don’t even dabble in the cable business at the current time.
