Social Networking

A vertical integration strategy is when "a firm owns its upstream suppliers and downstream buyers" (QuickMBA, 2010). There are a number of different ways that this could manifest for a firm in the social networking business. The first is that one needs to consider who the upstream suppliers are, and who the downstream buyers are. The inputs in a social networking business are everything from servers and web development staff to the advertising company that helps to sell the content to advertisers. Many major tech companies will own and manage their own server farms, while smaller ones will rent space. A social networking site by definition needs to achieve a certain critical mass in order to be relevant to either consumers or advertisers. Thus, there is a case to be made for integration of servers and other back-end equipment. Owning these will allow the company to have a...
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