Digital Convergence and Horizontal Integration Strategies

Digital Convergence and Horizontal Integration Strategies

DOI: 10.4018/978-1-4666-2919-6.ch070
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Digital technology is unique in that it enables convergence of access devices and content as well as convergence of industry participant operations and strategy. This digital convergence creates opportunities, and threats, for developing new business models and unique growth strategies for digital product companies. The purpose of this chapter is to discuss examples where digital product companies have taken advantage of digital convergence through horizontal integration strategies that enable them to create unique mixes of products/services and reach larger markets. Actual horizontal integration strategy examples are discussed for several industries where products are in a digital form. In addition, potential cross-industry integration strategies and online intermediary (cybermediary) strategies are identified along with tactical level strategies for mass customization and use of interactivity tools and social networking. Strategic alternatives for introduction, growth, and maturity lifecycle stages are also discussed. The rationale for these strategies and implications for managers of digital product companies are discussed along with directions for future research.
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Two issues are presented in this section to provide the background for understanding the rationale behind the strategies described in the next sections. These two issues include three dimensions of digital convergence (technological, content, and industry) and a description of the goal for strategic management, process used for strategic analysis, how technology changes are incorporated into this analysis, and the range of strategic alternatives available to companies that wish to pursue the opportunities presented by digital convergence.

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