1.4.2

Ownership

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Ownership: Vertically or Horizontally Integrated

Ownership patterns and structures influence the production, distribution and circulation strategies of the industry.

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Ownership patterns

  • Ownership patterns and structures influence the production, distribution and circulation strategies of the industry.
  • Traditionally an institution would be any of the following structures:
    • Independent, vertically integrated or horizontally integrated.
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Vertically integrated

  • A vertically integrated business owns all of the stages of production.
    • E.g. production, distribution and circulation.
  • Because of this, it means all work can be completed in house, meaning the overall production is cheaper.
  • As well as this, all profit is maintained by the institution.
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Horizontally integrated

  • A horizontally integrated business means it owns multiple businesses at the same stage of production.
  • Because of this, they may become specialists in their field and will be able to sell their expertise to other companies at different stages of the production chain.
  • This means the institution will need to work in synergy with others to pass a product through all stages of production and to make profit.
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Working in synergy

  • When two companies work together to mutually benefit each other it is referred to as working in synergy.
  • Working in synergy has benefits as it allows institutions to work with specialists, gain funding from other sources or to share resources.
  • Working in synergy does not mean either company owns the other.
  • When a company is taken over by another company, this is referred to as a merger.

Ownership: Diagonal and Independent Integration

Diagonal integration means having cross-ownership of a range of mediums and stages of production. In contrast, independent institutions often only owns one stage of production.

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Diagonal integration

  • Due to institutions expanding even further, being diagonally integrated is very common for the largest institutions.
  • This means they have cross-ownership of a range of mediums and stages of production.
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Diversification

  • Diversification is the process of an institution operating vertically in multiple industries which leads to them becoming diagonally integrated.
  • As industries become dominated by large institutions, it can lead to less choice in products for audiences, as well as making it harder for independent companies to compete and survive.
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Sony and Disney

  • Sony and Disney are good examples of cross-ownership.
    • They own multiple different companies across a range of industries.
      • E.g. TV, Film etc.
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Independent institutions

  • An independent institution means that the stage of production is solely owned by a private company and no one else, including the government.
  • Often the independent institution only owns one stage of production e.g. production - creation of the product only.
  • In order to distribute the product the institution will need to work with another company to do this.

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1Overview

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3Component 1: Section B

4Component 2: Section A

5Component 2: Section B

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