Market integration is the fusing of many markets into one.

Global market integration

means that price differences between countries are eliminated as all markets become
one.

One way to the progress of globalization is to look at trends how prices converge or
become similar across countries. The time when the costs of trading across the country
fall and that is the time the other firm will take advantage of price differences, other
countries may enter the market of the other country.

What is Vertical Integration?

A vertical integration is when a firm extends its operations within its supply chain. It
means that a vertically integrated company will bring in previously outsourced
operations in-house. The direction of vertical integration can either be upstream
(backward) or downstream (forward). This can be achieved either by internally
developing an extended production line or by acquiring vertically.

Vertical Integration is a term that is used to describe a strategy that many

businesses use to increase their profits.

Vertical integration happens when a company multiplies its production operations

and potential into different stages of manufacturing on the same path, such as when a
company owns its distributor and/or providers.

Vertical integration is extremely useful in helping companies increase profits and

helping them to improve their efficiency by decreasing costs such as transportation
expenses and production time because time is a very valuable resource in industry.

For example, if we consider a random solar power company and this company
manufactures their own photovoltaic products plus fabricates the cells that are used to
produce said products; this is an excellent portrayal of what a vertically integrated
business looks like. In this case, the company had ownership of many products along
the supply chain and assumed the manufacturing duties of them, thus conducting
vertical integration

Vertically integrating, greater control over production process is achieved in the

sense that information flows more freely between the different supply chain members.
As a result, this allows for greater flexibility in adapting to changes in demand, which
improves the elasticity of supply

Vertical integration, the company is able to reduce these input costs by the margin. In
reality, the prices of input do not fall by an amount equal to the margin but within some
range between the costs of production and market prices. Transfer pricing describes
how two vertically integrated entities set a price for exchange while the overall.

Conclusion

Vertical Integration is an important milestone that companies try to attain to

improve their profitability and achieve a superior edge over their competitors and
differentiate themselves from them and at the same time delivering better value for the
customers. This is an important step in enhancing the efficiency in the value chain..

Disadvantages of Vertical Integration

One of the primary disadvantages of vertically integrating is the increase in managerial

complexity. This is because entering a new line of work requires a new set of expertise
to complement the existing business. A clear result of this is the increase in divestitures
to return a company to its core competency.

Economies of scale are cost advantages reaped by companies when production

becomes efficient. Companies can achieve economies of scale by increasing
production and lowering costs

An economy of scope is an economic concept that the unit cost to produce a

product will decline as the variety of products increases. That is, the more
different-but-similar goods you produce, the lower the total cost to produce each
one.

Backward integration involves buying part of the supply chain that occurs prior to
the company's manufacturing process,

 Forward integration involves buying part of the process that occurs after the
company's manufacturing process. Forward integration is a business strategy that
involves a form of downstream vertical integration whereby the company owns and
controls business activities that are ahead in the value chain of its industry, this might
include among others direct distribution or supply of the company's products

A conglomerate merger consists of two companies that have nothing in common.

Their businesses do not overlap nor are they competitors of one another;
however, they do believe that there are benefits in joining their firms
A conglomerate merger is "any merger that is not horizontal or vertical; in
general, it is the combination of firms in different industries or firms operating in
different geographic areas". Conglomerate mergers can serve various purposes,
including extending corporate territories and extending a product range. One
example of a conglomerate merger was the merger between the Walt Disney
Company and the American Broadcasting Company.[1][2]
Because a conglomerate merger is one between two strategically unrelated
firms, it is unlikely that the economic benefits will be generated for the target or
the bidder. As such, conglomerate mergers seldom occur today. However,
conglomerate mergers were popular in the U.S. in the 1960s and 1970s. Many
conglomerate mergers are divested shortly after they are completed. [3]