The Contemporary World: - Week-3

The Contemporary
World
MARKET INTEGRATION
|week-3|
Market Integration
-occurs when
pricing among
different
locations or for
identical items
follow similar
patterns over a
long period of
time
oca cola company
-started in 1886 and
they maintain the
same price over a
long period of time
until it reaches 200
countries around
the world
Reasons for Market Integration
- to remove transaction cost
- foster competition
-provide better signals for optimal
generation and consumption decision
- improve security of supply
Forms of Market Integration
• Vertical Integration
• Horizontal Integration
•Conglomeration
Vertical Integration
- occurs wherein two companies at

different stages of supply chain
join together to form one company
Benefits
- combined company benefits from profit of both

companies
- offer low price to the final product
Types of Vertical Integration
• Forward Integration
• Backward Integration
• Balanced Integration
• Forward integration is a case
if a firm assumes another
function of marketing which
is closer to the consumption
function
• Backward integration
involves ownership or a
combination of sources of
supply.
• Balanced integration involves

two transactions – one
downstream, and another
upstream.
Horizontal Integration
-is the merger of two
companies at similar levels in
the production supply chain
Benifits
•Reduce cost
• Increased product differentiation
- product bundling
- cross selling
• Managing industry rivalry
•Increasing bargaining power
-market powerBenifits
Conglomeration
-is a combination of agencies or activities
not directly related to each other but
operates under a unified management.
Benefits
• diversification
• expanded customer based
• increase in efficiency
Importance of Market
Integration
market integration increase financial
and economic efficiency, and lead to a
higher economic growth.
Role of International Financial
Institution in the Creation of Global
Economy
IFI's - International Financial Institutions. It is chartered by
more than one country and therefore are subjects to
international law. It's owners or shareholders are generally
national governments.
The most prominent IFIs are

creation of mutiple nations,
although some bilateral financial
institution exists and technically
IFI's.
International Financial
Institutions (IFIs)
1. International Monetary Funds (IMFs)
2. Multi Cultural Development Bank
a. World Bank Group
b. African Development Bank
c. Asian Development Bank
d. Inter-American Development Bank
e. European Bank for Reconstruction and Development
Membership
Composition of IFIs
1. Only sovereign countries are admitted as member-owner
2. Broad country membership to include borrowing

developing countries and developed donor countries
3 Membership in regional development banks include

countries around the world as members (not limited
countries from the region)
4. Has it's own independent legal and operational state

ain Objectives
1. IMFs provide temporary financial assistance to member countries
to help ease balance of payment adjustment
2. MDBs provide financing for development of developing countries

through
- long term loans (with maturities up to 20 years)

- very long term loans ( sometimes called credit with maturities
at 30-40 years)
- Grant financing by MDBs for technical assistance advisory service
or project preparation
Global Corporations are
Inseparable from the
phenomenon of globalization
Global
Corporation
-is any company
that operates in
at least a
country other
than the country
where it is
originated
Global Corporation
It is commonly referred to either as the
following;
- Multinational Company (MNC)

- Transnational Company(TNC)
- International Company
- Global Company
International Companies
- are exporters
and importers
with no
investment
outside their
home countries
Pros Cons
• Biger variety of products for • Dependency on other
the local population countries
• Higher level of competition • Countries may be forced

with decreasing prices into conflicts
• Economic interest may

• can expand target market
lead to injustice
• can buy cheap resources • Local unemployment

from companies with weak
currencies • Cultural differences
• Low production cost

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
Pros Cons
• Economies of scale- • Scope for tax
greater efficiency and avoidance and lost tax
lower prices revenue
• Improvement of • Monopoly power lead

products to higher prices for
customer
• Create jobs and wealth
around the world • Monopoly power in
setting lower wages
Transnational Companies (TNCs)
- are more complex
organization that have
investments in foreign
operations,have a central
corporate facility but give
decision-making,
research and
development,and
marketing powers to
each individual foreign
market
Pros Cons
• Create jobs • Lower paid salaries
• Work long hours in

• Get more reliable poor conditions
income than
farming
• Profits made will
return to the home
• Create skilled based countries
worker by offering
training
• Job create aren't
secure and able to
relocate
Global Companies
- have investments
and are present in
many countries.
- they typically
market their
products and
services to each
individual local
market
Pros Cons
• Efficiency • Domestic tension
• Development • Dependency
Characteristics of Global Corporation
• Very high assets and • Sophisticated

turnover technology
• Network of branches • Right skills
• Control • Forceful advertising

and marketing
• Continues growth
• Good quality of
products
Significance
- International operations are therefore a direct result of
either achieving higher levels of revenue or a lower cost
structure within the operations or value-chain. MNC
operations often attain economies of scale, through
mass producing in external markets at substantially
cheaper costs, or economies of scope, through
horizontal expansion into new geographic markets. If
successful, these both result in positive effects on the
income statement (either larger revenues or stronger
margins), but contain the innate risk in developing these
new opportunities.
History of Global
Market Integration
Agricultural
revolution
-people only produce for
their family,and it was
changed when they learned
how to domesticate plants
and animals.They realized
that it was productive than
hunter-gatherer societies.
Industrial
Revolution
- people became more and
more productive in this
period. With the rise of the
industry,there came the new
tools like steam engines and
manufacturing.People began
working as wage laborers
and becoming more
especialized with their skills.
Technological
Revolution
- where the computers
and other technologies
are begin to replace
jobs because of the
outsourcing jobs
options.
Thank you!
Present by:
- Miealee Bonquit Submit to:
- Samantha Joy Agustin Ms.Yna Geronimo

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The Contemporary

- occurs wherein two companies at

- combined company benefits from profit of both

• Balanced integration involves

The most prominent IFIs are

2. Broad country membership to include borrowing

3 Membership in regional development banks include

4. Has it's own independent legal and operational state

2. MDBs provide financing for development of developing countries

- long term loans (with maturities up to 20 years)

- Multinational Company (MNC)

• Higher level of competition • Countries may be forced

• Economic interest may

• can buy cheap resources • Local unemployment

• Low production cost

• Improvement of • Monopoly power lead

• Work long hours in

• Efficiency • Domestic tension

• Very high assets and • Sophisticated

• Network of branches • Right skills

• Control • Forceful advertising

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