Market

Integration
Market Integration
• occurs when prices among different location or related
goods follow similar patterns in a long period
• If group of prices move proportionally to each other, it
is said that the markets are integrated.
• defined as “a process which refers to the expansion of
firms by consolidating additional marketing functions
and activities under a single management”
• Trade liberalization contributes to international
market integration
 Positive 'Can-Do' Attitude
• To remove transaction costs
• Foster competition
• Provide better signals for optimal generation
and consumption decisions
• Improve security of supply
• Theoretically one can integrate two markets
without interconnection
1. Horizontal Integration
- occurs when a firm or agency gains control of
other firms performing similar marketing functions

Effects:
a. Buying out a competitor in a time bound way to
reduce competition
b. Gaining larger share of the market and higher
profits
c. Attaining economies of scale
d. Specializing in the trade
Types of Market Integration
2. Vertical Integration
- occurs when a firm performs more than one
activity in the sequence of the marketing process
a) Forward integration – if a firm assumes another
function of marketing which is closer to the
consumption function
b) Backward integration – involves ownership or a
combination of sources of supplies
Effects:
a. More profits
b. Risk Reduction
c. Improvement in bargaining power
d. Lowering costs
Types of Market Integration
3. Conglomeration
- a combination of agencies or activities not
directly related to each other (operates under a
unified management)

Effects:
a. Risk Reduction
b. Acquisition of financial leverage
c. Empire – building urge
Degree of Integration
1. Ownership integration
- occurs when all decisions and asserts of a firm
are completely assumed by another firm
Example: a processing firm from which buys a
wholesale firm

2. Contract integration
- involves an agreement between two firms on
certain decisions, while each firm retains its
separate identity
Example: tie up of a dhal mill with pulse traders for
supply of pulse grains
 Role of International
Financial Institutions in
the Creation of a Global
Economy
Roles of International Financial Institutions

What are International Financial

Institutions?
These are financial institutions that have been
established by more than one country, and hence are
subjects of international laws. It is created to finance
productive development projects or to promote
economic development.
Roles of International Financial Institutions

A. International Monetary Fund (IMF)

- created in 1945, the institution was designed to
monitor the system of pegged or fixed exchange rates.

Role of IMF
• To promote global monetary
cooperation and international
financial stability.
• To provide short-term loans to
prevent devaluation and retain the
state's fixed exchange rates
• Facilitate the expansion and
balanced growth of international
trade.
• The IMF also lends to countries
with balance of payments difficulties,
to provide temporary financing and to
support policies aimed at correcting
Roles of International Financial Institutions

B. International Bank for Reconstruction and the

Development or World
- was created to grant long-term loans for the economic
development of less developed countries and the reconstruction
or war-torn countries in Europe.
Composed of 2 institutions:
 International Bank for Reconstruction and Development
(IBRD) - provides lending to middle -income and
creditworthy low-income countries.
 International Development Association (IDA) – grants credits
and loans to lowest-income countries.
Roles of International Financial Institutions

Role of World Bank

• Fights poverty by offering developmental
assistance to middle-income and low-income
countries.
• Give loans and offer advice and training in both the
private and public sectors
• Aims to eliminate poverty by helping people help
themselves.
Roles of International Financial Institutions

C. General Agreement of Tariffs and Trade (GATT) and the

World Trade Organizations
• The purpose of GATT was to avoid trade wars by raising
protectionist barriers as witnessed during the interwar period.
• The forum was created years after the Bretton Woods due to the
refusal of the U.S. to sign the Havana Charter that would create
International Trade Organization (ITO) at par with that of the IMF
and GATT.
• While it was effective in liberalizing trade, GATT was unable to
address the expansion of trade in services, investment, and
intellectual property.
• It was also incapable of providing a strong and efficient
system for dispute settlement.
 Brief History of
Global Market
Integrationin the 20th
Century
Brief History of Global Market
• The worldwide economic integration accomplished during the
nineteenth century was largely unwounded in the 20th by two
world war and the Great Depression.
• The Second Great War brought the liberal economic order of the
late nineteenth century to a sudden end;1914 denoted an
substantial and discontinuous break previously.
• Import shares fell just insignificantly in Britain during the
conflict. In France, the import share recorded at 16.7% increase
before the war during it; again exports fell sharply.
• Export proportions rose in neutral economies, for example, in
Sweden, Japan, and North America, where
grain production extended sharply during the
war during the years to satisfy Allied need.
Brief History of Global Market
• The shortfall of European fabricated exports on world business
sectors invigorated the development of industrial capacity, most
importantly in the United States and Japan, yet additionally in
nations like India, Australia, and Latin America.
• The Great Depression was a significant justification for the
selection of extreme protection, and not simply in the outskirts.
• Starting in 1932, there were a few signs that probably a few
nations were attempting to direct, if not converse, the expansion
in protectionism of the earlier year or two.
• Post war economic reintegration was upheld by a few
components, the political and technological.
Attributes of
Global
Corporations
Attributes of Global Corp.

What are Global Corporations?

- generally referred to as a multinational corporation (MNC)
- a company that operates in two or more countries,
leveraging the global environment to approach varying markets in
attaining revenue generation. These international operations are
pursued as a result of the strategic potential provided by
technological developments, making new markets a more
convenient and profitable pursuit both in sourcing production and
pursuing growth.
Attributes of Global Corp.
4. Continued growth
- multinational corporations keep growing. Even as they
operate in other countries, they strive to grow their economic
size by constantly upgrading and by conducting mergers and
acquisitions.

5. Sophisticated technology
- In order to achieve substantial growth, they need to make use
of capital-intensive technology, especially in their production
and marketing activities.

6. Right skills
- Multinational companies aim to employ only the best
managers, those who are capable of handling large amounts of
funds, using advanced technology, managing workers,
and running a huge business entity.
Attributes of Global Corp.
7. Forceful marketing and advertising
- One of the most effective survival strategies of multinational
corporations is spending a great deal of money on marketing
and advertising. This is how they are able to sell every product
or brand they make

8. Good quality products

- Because they use capital-intensive technology, they are able to
produce top-of-the-line products.
References

J. Gutierrez. The Contemporary World (Mindshapers Co., Inc.,

2018), p. 24-26.

Link References:
https
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poratio­n
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onal-corpora­tion
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