Industries: Ownership and Control
Read this article about Facebook’s acquisition of Instagram and complete the tasks below:
1) Why did Facebook buy Instagram for $1bn?
Zuckerberg wanted to buy Instagram as it was becoming a threat to Facebook. "Facebook, by its own admission saw Instagram as a threat that could potentially siphon business away from Facebook".
2) What are the benefits for media companies of vertical integration?
A vertical integration strategy can deliver advantages, including greater economies of scale, lower variable production costs, decreased logistics costs and quality concerns and — yes — increased profitability.
3) What are the benefits for media companies of horizontal integration?
horizontal integration can benefit companies and typically takes place when they are competing in the same industry. The advantages include increasing market share, reducing competition, and creating economies of scale.
4) What is a subsidiary?
A subsidiary is a company that is more than 50% owned by another company
5) Give three examples of media companies that have used synergy to maximise the profit from a brand (there is one above to help you).
- Disney -Marvel
- Sony-Spiderman
- Facebook-Instagram
6) Read this BBC article on Disney buying 21st Century Fox. List 10 companies that are part of the Disney media empire. This graphic may help you:
- Marvel studios
- A&E Networks.
- Sky
- Fox
- Hulu
- ESPN
- Lucas film
- Pixar
- ABC news
- RMI records
7) Why did Disney buy Fox - what are the benefits?
But one of the primary rationales for buying Fox was to increase Disney's arsenal of general entertainment content
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