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Spotify’s Corporate Strategy
QUESTION
Based on the article attached, the Spotify case, and your own knowledge and experience with Spotify, describe Spotify’s Corporate Strategy in terms of their Vertical Integration, Horizontal Diversification, and Geographic Markets.
Subject | Business | Pages | 2 | Style | APA |
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Answer
Spotify’s Corporate Strategy
Vertical Integration
Spotify’s acquisition of Anchor and Megaphone demonstrate its efficacy with respect to backward and forward integration. This argument is inspired by the roles each of these brands play in its value chain. The Gimlet and Anchor are upstream platforms which offer Spotify access to a significant portion of raw materials in the form of (podcast content). It is worth noting that Anchor accounts for at least 15 percent of the global podcast market; thus, this move is highly likely to prove lucrative (Fast Company, 2019). On the other hand, the acquisition of Megaphone facilitates a forward integration in Spotify’s value chain. Noteworthy is the fact that Megaphone is a digital platform which offers technological sales and marketing solutions for not only podcast publishers in its systems but also brands intending to market their products on podcast sessions/content (Graham, 2020).
Horizontal Integration
Unlike vertical integration, which focuses on improving the processes, horizontal integration focuses on the portfolio of products at an organization’s disposal. So far, Spotify’s acquisition of major media brands such as the Ringer and Parcast demonstrates an expansion of Spotify’s product catalog. Believably, the former’s focus on sports content and the latter’s specialization in scripted storytelling expands the product base in Spotify’s audio market (Spangler, 2020; Fast Company, 2019). Therefore, this kind of integration is bound to enhance the company’s capacity to compete with its arch rival, Apple Inc.
Geographic Diversification
Inasmuch as the assigned case does not discuss Spotify’s approach in matters pertaining to geographic expansion, it is apparent that the organization’s online audio streaming business model allows it to serve various markets regardless of geographic constraints. This advantage is best evidenced in a statement made by the company’s CEO Daniel Ek: “… radio is moving online” (Spangler, 2020).
References
Fast Company. (May 11, 2019). Anchor is Spotify’s Best Bet to Beat Apple for Control of Your Ears. Fast Company. Graham, M. (Nov 20, 2020). Spotify to buy Podcast Ad Company Megaphone for $235 Million. TECH. Spangler, T. (Feb 12, 2020). Spotify is Paying Up to $196 Million in Cash to Acquire Bill Simmons’ The Ringer. Variety.
Appendix
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