MARKET INTEGRATION

The Market Integration

Importance of International Financial Institutions

The twenty-first century requires procedures and measure that enhance the
transformation of global scenarios. Today the International financial
institutions (IFls) are increasingly engaging countries that are economically
poor into investing in resourceful developments that support economic
growth. (IFC Magazine, 2010)
This has been possible to achieve due to the strict measures taken over
violations involving the internationally applied humanitarian laws.
 The Market Integration

There are various hindrances to the role of IFIs to act as agents of

promoting and ensuring adherence to international humanitarian laws.
These obstacles include countries structural and political concerns. The
institutions, however, have the advantage by the fact of being in a position of
publicly making harsh utterances against such countries, indicating the
country's level of tolerating violations or ability to absorb them. They can place
weight behind the humanitarian law thus forcing those in need of support to
abide by the rules.
 The Market Integration
With this reasoning, they have the leading role in investigating a country's
commitment to impunity before loaning or funding projects. The institutions
have the communal role of influencing engagement even if symbolically meant
for financial considerations.
The steady growth of the private developing markets contributes hugely to
fill the needed investment of flowing capital. The institutions support the
growth of the savings gap in the developing nations and reduce people
dependency by diversifying and sourcing funds in terms of strategically
planned investments.
 The Market Integration
According to Wogan (2010), the financial institutions use the flow of private
capital to fill the financial gaps by conveying technologies, changing the market
behaviors, investing in the enhancement of managerial skills and funds
distribution channels. They thus have a crucial role in assessing the impact
resulting from the flow of private capital on the developing economies.
The international financial bodies have to play the role of changing market
positions. The traditional objectives of some of these institutions such as the
World Bank and the IMF (International Monetary Fund) entail elevation of
poverty in developing countries, enhancing measures that promote economic
growth and protection of the environment.
 TYPES OF MARKET INTEGRATION

There are three basic kinds of market FORWARD

integration.

HORIZONTAL
• Horizontal integration.

VERTICAL
• Vertical integration.

• Conglomeration. BACKWARD
 Horizontal integration

• This occurs when a firm or agency gain control of other firms or agencies
performing similar marketing functions at the same level in the marketing sequence.

• In this type of integration, some marketing agencies combine to form a union with a
view to reducing their effective number and the extent of actual competition in the
market.

• It is advantageous for the members who join the group.

• It Leads to reduced cost of marketing.

 Vertical Integration

• This Occurs when a firm performs more than one activity in the sequence of the
marketing process.

• It is a linking together of two or more function in the marketing process within a

single firm or under a single ownership.

• This type of integration makes it possible to evercise control over both quality
and quantity of the product from the beginning of the production process until
the product is ready for the consumer.

• It Reduces the number of middle men in the marketing channel.

 Conglomeration

• A Combination of agencies or activities not directly related to

each other may, when it operates under a unified management,
be termed a conglomeration.

Effects of conglomeration
• Risk Reduction through diversification
• Acquisition of financial leverage
• Empire – building Urge
Characteristics of a Multinational Corporation

• 1. Very high assets and turnover

• To become a multinational corporation, the business must be large and
must own a huge amount of assets, both physical and financial.
• 2. Network of branches
• Multinational companies maintain production and marketing operations
in different countries.
• 3. Control
• In relation to the previous point, the management of offices in other
countries is controlled by one head office located in the home country. 
Characteristics of a Multinational Corporation

• 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
• When a company goes global, they need to make sure that their investment
will grow substantially.
• 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.
Characteristics of a Multinational Corporation

• 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.
• 8. Good quality products
• Because they use capital-intensive technology, they are
able to produce top-of-the-line products.
HISTORY OF GLOBAL MARKET INTEGRATION
- GLOBAL MARKET INTEGRATION DID NOT HAPPEN OVERNIGHT. IT WAS THE RESULT OF THE
ESTABLISHMENT OF A GLOBAL ECONOMY THAT INVOLVED THE HOMOGENIZATION OF TRADE AND
COMMERCE. PRIOR TO THE TRENDS IN GLOBALIZATION OF THE 20TH CENTURY, INTERNATIONAL TRADE
AND EXCHANGE OF GOODS AND SERVICES WERE ALREADY PRACTICED. HARVEY (1990) SEES THAT CITY
AND COUNTRIES WERE ABLE TO EXTEND THEIR REACH BEYOND BORDERS AND PATTERNS OF TRADE AND
TECHNOLOGY BECAUSE OF DEVELOPMENTS IN SHIPPING AND NAVIGATION.
 THIS WAS OBSERVABLE IN THE DEVELOPMENT OF MARITIME TRANSPORT THROUGHOUT HISTORY.
COLONIALISM AND IMPERIALISM ROSE AS THE NEW WAYS OF PUTTING ORDER TO THE ECONOMIC
INTERRELATIONSHIPS AMONG COUNTRIES. EQUITY, CORPORATE OWNERSHIP, MANAGEMENT
SUBSIDIARIES, AND CENTRAL HEADQUARTERS WHICH SUPPLY AND DISTRIBUTE GOODS AND SERVICES
WERE ESTABLISHED THROUGH COLONIALISM. THE SPANISH GOVERNMENT IN THE 1960S, FOR INSTANCE
MADE USE OF ITS COLONIES LIKE THE PHILIPPINES AND MEXICO AS SUPPLIERS OF IT RESOURCES FOR
TRADE.
THE INTEGRATION OF THE GLOBAL MARKET STARTED WHEN BIG AMERICAN CORPORATIONS BEGAN TO
EMERGE AFTER THE SECOND WORLD WAR WITH THE RISE OF NEW CONGLOMERATES. INTERNATIONAL
TELEPHONE AND TELEGRAPH BOUGHT AVIS RENT-A-CAR, CONTINENTAL BANKING, SHERATON HOTELS, AND
HARTFORD FIRE INSURANCE (AMERICAN HISTORY, 2018). LATER, JAPAN AND EUROPE FOLLOWED SUIT.
JAPANESE GLOBA AUTOMOBILE CORPORATIONS LIKE TOYOTA, NISSAN, AND ISUZU TOOK OFF AFTER THE
GIANT AMERICAN COMPANIES FLOURISHED.
THESE COMPANIES PROSPERED AS THE PRIMARY AND GLOBAL MAKERS OF TRUCKS FOR JAPANESE MILITARY
(DOWER, 1992). RENAULT AUTOMOBILES, A FRENCH MULTINATIONAL AUTOMOBILE MANUFACTURER, WAS
ALSO USED TO HELP IN THE MILITARY POSTWAR OPERATIONS. THE RISE OF AMERICAN, JAPANESE, AND
EUROPEAN GLOBAL CORPORATIONS PAVED THE WAY FOR THE FURTHER DEVELOPMENT OF INTERNATIONAL
TRADE. IWAN (2012) IDENTIFIES THE DIFFERENCES AMONG INTERNATIONAL, MULTINATIONAL,
TRANSNATIONAL, AND GLOBAL COMPANIES.
 INTERNATIONAL COMPANIES ARE IMPORTERS AND EXPORTERS WITH NO INVESTMENTS OUTSIDE THEIR
HOME COUNTRIES. MULTINATIONAL COMPANIES (MNCS) HAVE INVESTMENTS IN OTHER COUNTRIES, BUT DO
NOT HAVE COORDINATED PRODUCT OFFERING IN EACH COUNTRY. THEY ARE MORE FOCUSED ON ADAPTING
THEIR PRODUCTS AND SERVICES TO EACH INDIVIDUAL LOCAL MARKET.
 - GLOBAL COMPANIES HAVE INVESTMENTS AND ARE PRESENT IN MANY COUNTRIES. THEY TYPICALLY MARKET
THEIR PRODUCTS AND SERVICES TO EACH INDIVIDUAL LOCAL MARKET.
 - TRANSNATIONAL COMPANIES (TNCS) ARE MORE COMPLEX ORGANIZATIONS THAT HAVE INVESTMENTS IN
FOREIGN OPERATIONS, HAVE A CENTRAL CORPORATE FACILITY BUT GIVE DECISION-MAKING, ESEARCH AND
DEVELOPMENT, AND MARKETING POWERS TO EACH INDIVIDUAL FOREIGN MARKET.
 * AMERICAN CORPORATIONS OPERATING INTERNATIONALLY WERE AT A_ GREAT ADVANTAGE AFTER THE WAR
FOR THEY HAD NO COMPETITION. THEY HAD THE CAPACITY TO PRODUCE, ORGANIZE AND DISTRIBUTE
PRODUCTS BECAUSE AMERICA WAS NOT DEVASTATED BY THE WAR. LITERATURES OFFICIALLY TRACED THE
START OF THE CONTEMPORARY MARKET INTEGRATION FROM THE RETURN OF THE JAPANESE AND EUROPEAN
CORPORATIONS TO THE GLOBAL MARKET. IT WAS ACKNOWLEDGED IN 1974 THAT THE MAJOR GLOBAL
ECONOMIC ACTORS WERE MNCS. COLLECTIVELY, THEY WERE DESCRIBED TO BE A PARTICULAR CORPORATE
FORM TO DOMINATE GLOBAL PRODUCTION AND EXCHANGE (NEUBAUER,2014). CAROLL (2003) TERMED THE
EMERGENCE OF INTERNATIONAL, MULTINATIONAL, GLOBAL, AND TRANSNATIONAL COMPANIES