LESSON 3:

MARKET INTEGRATION
Objectives:

• Define Market Integration

• Discuss the global market integration

• Explain the role globalization in the integration of market

 Market integration

 is the fusing of many markets into one. Global market integration

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

 Two or more markets are exerting effects that also prompt similar
changes or shifts in other markets that focus on related goods.
 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 firms will take advantage of price
differences, other countries may enter the market
of the other country.

 Trading cost fall when new product invented or

developed becomes cheaper and also, some
cost are man-made like when they impose a
barriers for trade.
The THREE Types of MARKET
Integration

 Conglomerate Integration

 Horizontal Integration

 Vertical Integration
Conglomeration
• A less frequently used type of integration. This is when an organization
acquires a company providing an unrelated product or service.

• Its main goal is diversification, allowing business growth in new areas.

 Merger involves the merger of two

firms making different products.

 The main motive behind a

conglomerate merger is
diversification.
Horizontal integration

• a firm gains control of other firms or agencies performing similar marketing

functions at the same level in the marketing It is advantageous for the
members who join the union.

• Sequence marketing agencies combine to form a union with a view to reducing

their effective number and the extent of actual competition in the market.

  Merger involves the merger of two

firms making different products.

 For example, an electricity company

may merge with a travel company
and an insurance company may
merge with a chocolate producer. The
main motive behind a conglomerate
merger is diversification.
Vertical integration
• A firm performs more than one activity in the sequence of the marketing process. It is
connecting together of two or more functions in the marketing process within a solo firm or
under a single ownership.

• Makes it possible to exercise control over both quality and quantity of the product from the
beginning of the production process until the product is ready for the consumer
Integration

Today, markets are more integrated than ever as transportation costs have continued to fall and
most tariffs have been scrapped altogether. One vision of the future of globalization involves
the elimination of other kind’s barriers to trade caused by institutional difference between
countries.

Markets are embedded in institutions such as property rights, legal systems, and regulatory regimes.
Differences in institutions between countries create trading costs in the same way that tariffs or distance
do. For example, there may be different laws in Kenya, China about what happens when a buyer fails to
pay.
Complete integration requires the ironing out of legal and regulatory differences to create a single
institutional space..

Consider a multinational firm choosing a country in which to locate its factory. All policy decisions
become oriented toward maximizing integration with global markets. No goods or services would be
provided that are incompatible with this.

This economic interest also become part of a political strategy that transformed people into individual
political economic subjects.
THANK
YOU