Industries: Ownership and Control

 1) Why did Facebook buy Instagram for $1bn?

He wanted to keep his company, and to keep being the Instagram visionary, just with none of the risks of independence. Facebook's network was already helping Instagram grow — and if Instagram was part of Facebook, they'd have unimaginable resources to keep growing, faster. This argument seemed to appeal to Systrom.

2) What are the benefits for media companies of vertical integration?

Vertical integration may lead to lower transportation costs, smaller turnaround times, or simpler logistics if the entire process is managed in-house. This may also result in higher quality products as the company has direct control over the raw materials used through the manufacturing line.


3) What are the benefits for media companies of horizontal integration?

Undergoing 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 company which is controlled by another company. For the purposes of the Companies Acts, whether or not a company (S) is a subsidiary of another company (H) (its holding company), depends on whether any one of the following tests are met: H holds a majority of the voting rights in S.

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).

1.Disney's acquisition of Pixar in 2006.

2.Procter & Gamble (P&G) and Gillette.

3.Exxon and Mobil merger.

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: 

  • Film studios.
  • Walt Disney Studios Motion Pictures.
  • Disney Theatrical Group.
  • Disney Music Group.
  • Disney Studio Services.
  • A&E Networks.
  • The Walt Disney Company Europe, Middle East and Africa.
  • The Walt Disney Company Latin America.


7) Why did Disney buy Fox - what are the benefits?

Moreover, Fox was a strong competitor for Disney in the film industry originally, and the threat made by Fox will disappear after the acquisition. Also, Disney can expand itself, increase market share and raise market competitiveness at the same time through the horizontal merger with Fox.























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