http://sg.news.yahoo.com/rtrs/20091023/tbs-film-jackson-7318940.html
http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1010865/1/.html
The first article which touches on Columbia pictures, which is under Sony, releasing the movie “ This is It” on Michael Jackson. It shows us the expansion methods of Sony, which in this case is complementary expansion where they engage in production of complementary products , allowing them to not be dependent on others for certain products. In this case, Sony need not be dependent on other production houses to release or produce movies that they shot.
The next one would be the article on Mediacorp whose out of home advertising have received resounding success. There also have been mentions of the various means they are able to use for their advertising strategies in the article. Thus , we can see that Mediacorp used the vertical expansion. We are not strangers to the wide platform they have, the radios, television , internet, mobile media , print. They are thus less dependent on others to help advertise their products and programmes. For example, they can promote their newest drama not only television but also on the various print medias ,radio stations, internet pages, allowing them to reach out to a larger group of audiences.
By personal knowledge, Lucasfilm Animation Singapore opened another office here in 2005 besides the one is America. Here’s where we see a horizontal expansion taking place in the form of foreign direct investment (FDI). The other form being international trade through the export of media products where similar products are sold in different countries.
However , it is to be taken note that companies usually take a 2 prong approach in their expansion strategy. What if we compare them individually, which might be better for media companies?
I feel that for media companies, vertical expansion seems to be the best as advertising and promotion costs are saved through using own channels and sources. It is the most cost effective as it can reach to a large network of audience thus it is possible that more people will buy the products or tune in to the programmes meaning more advertisers might come on to tap on this big pool of people. This could mean more revenue and profits.
The company also would not be overly dependent on the other companies who uses complementary expansion where they buy companies to expand and not be dependent on others to buy or sell their products. However, if the company performs badly then there might be a possibly of the parent company having to make it up and make a loss or affect profit margins and may reflect badly on the parent company. Also, for horizontal expansion, time is needed for the company to settle down and get things started. It is also pretty much dependent on the country’s economy whether the FDI would reap rewards. Thus it may get a little time consuming and be dependent on others.
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Hey Yiran, you said " vertical expansion seems to be the best as advertising and promotion costs are saved through using own channels and sources". However, if companies are small and have tight budgets, does that mean this advantage doesnt apply to them? What do you think?
ReplyDeleteHello!
ReplyDeleteI think that the use of vertical expansion for Mediacorp is indeed a very good strategy. This is because OOH seems to be a trend that will last, and one that advertisers would be inclined towards. Just like television ads, they are able to reach to the masses and it can be even more efficient because consumers can go into the mall after they view the ad outside the mall on a certain product that is featured. Thus this bring in more clients and churn more profit for the company, which could be used for other developments as well.
Vertical expansion ftw!
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wecritique :
ReplyDeleteI don't really get your point actually but , if I have not interpreted it wrongly,
Companies that are small naturally ,well , I feel would have to start by depending on others first..maybe establishing themselves in something first before expanding..like Mediacorp who have sort of established themselves in television and radio before expanding over the years into Internet, publishing, mobile media and advertising.
Shu Ling:
ReplyDeleteYes. I think Out Of Home (OOH) advertising is really becoming something that advertisers use to reach out. Using many innovative ideas to reach out to masses and capture their attention.
Remember the fake cows that were placed at road side and open areas for moove media and now even trains have advertisment on the outside of the train itself and even in the interior. Trains used to be quite plain and all the same color kind.
Now it has even gone one step further to even decorate the interiors of the trains to suit the advertising that is outside. I even once took a bus where the seats were switched to suit the advertisment. I think it was the advert Panasonic.
indeed, mediacorp uses vertical expansion.to add on, mediacorp releases foreign tv programs. we are able to consume programs from other countries such as korean dramas on channel u, and hollywood shows on channel 5 without stepping out of our house. This shows the globalisation of tv programs.
ReplyDeleteHey Yiran! YUP that was what I meant (: So i see, it works when one talks about it in the long run.
ReplyDeleteI feel that vertical expansion is definitely a good strategy but mediacorp should also use more of horizontal expansion. This is because with the invention of internet, it enables mediacorp to sell its product directly to a wider range of customers, basically, anyone who has access to the internet.
ReplyDeleteWell, it does not really make sense for a company to branch out when it has just started does it? because it requires a large budget most of the time.
ReplyDeleteThough in the short run , they may be able to start expanding through making small investments in other companies which may be beneficial for them.