Clet, Jose Vicente M.

March 4, 2022
BSMA-1202 Contemporary

Unit II - Market Integration

1. In your own words, define market integration and global corporation in two
paragraphs.

What is Market Integration really means? Is it beneficial to us?

Market Integration is the ease with which two or more markets can trade with one
another is referred to as market integration. It happens when pricing in different
areas or for identical commodities follow similar trends over time. Prices often
move in proportion to one another, and when this relationship is very evident
among distinct markets, the markets are said to be integrated. In short, a
circumstance in which two or more markets for the same product merge into one,
such as when an import tax in one market is eliminated. And It has been
beneficial to us as consumers, that we gain from market integration because it
broadens the range of financial services and investment options available to
them and increases competition in the provision of those services.

On the other hand, A global corporation is one that operates in two or

more nations and uses the global environment to approach different markets to
generate money. These corporations’ activities are undertaken because of the
strategic potential given by technical advancements, which make sourcing
production and pursuing growth more convenient and profitable in new markets.
For example, when a company expand their firm into another countries, they also
grow their consumer base. It's possible that the market for instances in the
United States is flooded with products like the company. However, they might
find that this is not the case in another country. And expanding to another country
where production or labor prices are cheaper are beneficial to the global
corporation. Because it allows a corporation to reduce their operational costs.
This will help them make more money. Indeed, lowering operating costs is a
major driver of global expansion for many businesses.
 2. Using a Venn diagram, show the differences and similarities of the 'Types of
Related Markets where Integration Occurs."

'Types of Related Markets where Integration Occurs."

STOCK MARKET FINANCIAL MARKET

INTEGRATION INTEGRATION

- In two or more marketplaces
around the world, similar trends in
trading prices for assets associated
to a certain industry can be found.
- high tendency towards the
creation of new alliance You sent
- Within a country, integration may - Occur when lending rates in
entail the establishment of similar several different markets begin to
patterns in the capital, stock, and move in tandem with one another.
financial markets, with these trends
combining to have a significant impact
on the economy of that country.
- significantly larger and more liquid
- Both have effects on the prices equity market.
- Market Size

- Volatility - a lower cost capital

- more predictable
- Dominant Industry

- Both are volatile and more correlated - improved credits ratings

with world market returns.

- Both address a wide range of stock

market interrelationships. - real exchange rate appreciation.

- Both increased economic growth

- Useful tool in identifying trends that - advancement in information and

are less than desirable. computers technologies.

- Subject to highest price risk

- Both benefits globalization of national - liberalization of national financial

economics. and capital markets