Southwestern College of Maritime, Business and Technology, Inc.

Quezon Drive, Calero, Calapan City, Oriental Mindoro

www.scmbt.edu.ph / slmifnav.official@gmail.com / slmifnav@yahoo.com.ph

SUBJECT: The Contemporary World DATE:

MODULE #: 4 TEACHER: Ms. Judith Mae R. Zamora

I. TOPIC: Market Integration

II. TARGET LEARNING OUTCOMES

At the end of the lesson, the student is expected to:
1. Explain the role of international financial institutions in the creation of a global
economy.
2. Narrate a short history of global market integration in the twentieth century.
3. Identify the attributes of global corporations.

IV. MATERIALS NEEDED AND REFERENCES

Lobo, Joliver L. et. al.,The Contemporary World. Barangka Drive, Mandaluyong City:
Books Atbp. Publishing Corp.2019.

Aldama, Prince Kennex R. The Contemporary World.Nicanor Reyes Sr. St., Sampaloc,
Manila:Rex Book Store, Inc.2018

V. GEAR UP YOUR MIND

Kohls and Uhl have defined market integration as a process that refers to corporate
expansion by consolidating additional marketing functions and activities within a single
management framework. Examples of market integration are the establishment by food retailers of
wholesale facilities and the establishment by a milk processor of another plant. In each case, in the
hands of single management, there is a concentration of decision-making.

Types of Market Integration

1. Horizontal Integration is a competitive strategy that can create economies of scale,
increase market power over distributors and suppliers, increase product differentiation, and
help businesses expand their market or enter new markets. By merging two companies,
they may be able to generate more revenue than they could have done independently.
However, when horizontal mergers succeed, especially if they reduce competition, it is
often at the expense consumers. If horizontal mergers concentrate market share among.
2. Vertical Integration a company becomes involved in new portions of the value chain. This
approach may be desirable if the suppliers or buyers of a company have gained too much
power over the company and use their ability to earn more profit at the expense of the
company.
3. Backward vertical integration involves a company moving back or upstream along with the
value chain and entering the business of a supplier. If executives are concerned that a
supplier has too much power over their firms, some firms use this strategy.
4. Forward Vertical Integration involves a company moving further down the value chain to
enter the business of a purchaser, Amazon, the company that defined the online trade
world, is now entering the physical retail world – experimenting with stand-alone,
automated “Kindle Kiosk “ vending machines at selected airports and shopping malls.
 5. A Conglomerate Integration is a fusion of companies involved in completely unrelated
business activities. There are two kinds of mergers of conglomerates: pure and mixed.
Pure mergers of conglomerates involve companies with nothing in common, while diverse
mergers of conglomerates involve companies looking for product extensions or market
extensions.

Advantages
There are a few concrete examples of merging benefits. A conglomerate merger benefits
from both companies reaching a larger target audience. It Y merges with Z, both companies share
the same market base, allowing them to spread their operations. Before the merger, each company
was able to target only their market areas, but the two companies combined have twice as much
reach, allowing both potential customers and businesses to grow and cross-refer to each other.
Diversification is crucial in business and finance alike.
Potential Downfalls
Diversification can sometimes be a decline for individual business because they can
spread in too many areas. An example of this is if one conglomerate that is involved in the merger
has an excessive fortification over the other conglomerate. This type of coalescence can be
detrimental as it limits the marketplace’s newly formed business options. This is accompanied by
the disadvantage of controlling and managing such a large conglomerate entity. When these
companies combine, they merge with different accounts all past customers. To take care of this,
the bureaucracy needed can be detrimental to the new conglomerate. Regardless, the structure of
the company will be changed, creating potential problems along with the advantages.
NAME OF STUDENT: The Contemporary World
SECTION: MODULE #: 4

VI. BOOST UP YOUR LEARNING

Activity 3: “The Corporation”
Write a film review about “The Corporation” directed by Mark Achbar and Jennifer Abbott using the
scheme below.
1. Introductory part
2. Historical accuracy
3. Reliability of the sources needed
4. The usage of creative elements
5. Your own opinion of the film
6. Summarizing the whole analysis
NAME OF STUDENT: The Contemporary World
SECTION: MODULE #: 4

VII. LEVEL UP YOUR LEARNING

Quiz #3: Identify the following items. Choose the correct answer from the choices below. Write your
answer on the space provided.

______ 1. A process which refers to the expansion of firms by consolidating additional marketing
functions and activities under a single management.
______ 2. This approach can be desirable when a firm’s suppliers or buyers have gained too
much power over the firm and are using their power to capture more profit at the firm’s expense.
______ 3. It involves a firm moving back, or upstream, along with the value chain and entering a
supplier’s business.
______ 4. The reason why firms would want to an increase in market share, synergy and cross-
selling.
______ 5. This happens when two companies that offer varying services or are involved in different
sectors of business merge together.
______ 6. It shows the relationship of the firm in a market. The extent of integration influences the
conduct of the firms and consequently their marketing efficiency.
______ 7. This can sometimes be a downfall for certain companies because they can spread
themselves across too many areas.
______ 8. Among the most vertically integrated firms today.
______ 9. It is a competitive strategy that can create economies of scale, increase market power
over distributors and suppliers, increase product differentiation and help business expand their
market or enter new markets.
______ 10. This can be useful for neutralizing the effect of powerful buyers.

a. Integration
b. Market Integration
c. Merge
d. Horizontal Integration
e. Backward vertical integration
f. Vertical Integration
g. Diversification
h. Conglomerate mergers
i. Forward vertical integration
j. Oil companies