Market Integration

 Integration shows the relationship of the firm in a market. The extent of integration influences the
a) Conduct of the firms and consequently their b) Marketing efficiency.
 The behavior of a highly integrated market is different from that of a disintegrated market.
 Markets Differ in the extent of integration and therefore, there is a variation in their degree of
Efficiency.
 In each case, there is a concentration of decision making in the hands of a single management.

"TYPES OF MARKET INTEGRATION."

There are three basic kinds of market integration.

1. Horizontal Integration
2. Vertical Integration
3. Conglomeration

1. HORIZONTAL INTEGRATION

 This occurs when a firm or agency gains 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 groups.
 In most markets, there is a large number of agencies which do not effectively compete with each
other.
 This is indicative of some element of horizontal integration.
 It leads to reduced cost of marketing.
 In this reduced competition possible.

2. 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 functions in the marketing process within a single firm or
under a single ownership.
 This type of Integration 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.
 It reduces the number of middle men in the marketing channel.
3 TYPES OF VERTICAL INTEGRATION

a) Forward Integration.

- if a firm assumes another function of marketing which is closer to the consumption function, it is a case
of forward Integration.

b) Backward Integration.

- This involves ownership or a combination of sources of supply.

c) Balanced Vertical Integration.

- the third type of vertical Integration is a combination of the backward and forward vertical Integration.

3. 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.

THE CONTEMPORARYWORLD: LESSON 3MARKET

INTEGRATIONINTRODUCTIONEconomy is the social institution that has the biggest
impact on society. We usually think of economy in terms of numbers – numberof
unemployed, GDP, or how the stock market isdoing today.While we often talk about it in
numerical terms,the economy is composed of people. The peoplei s t h e s o c i a l
i n s t i t u t i o n t h a t o r g a n i z e s everything happening in the society;
production,consumption, and trade of goods.There are many ways in which a product can
bem a d e , e x c h a n g e d a n d u s e d . T h i n k a b o u t capitalism or socialism. These
economic systems– and the economic revolutions that created them – shape the way
people live their lives

WHAT IS MARKET INTEGRATION?Market integrationis the fusing of many markets into

one.Global Market integration means that pricedifferencesbetweencountriesareeliminated as all
markets become one.E x a m p l e - I n o n e m a r k e t a commodity has a
single price such asthe price of rice would be the samei n s o u t h e r n a n d n o r t h e r n
L u z o n i f these areas were part of the same m a r k e t . I f t h e p r i c e i n
S o u t h e r n L u z o n w a s h i g h e r , s e l l e r o f r i c e would move from North to
S o u t h and prices would equalize. The priceof rice in one place to other might b e
d i f f e r e n t , t h o u g h , a n d h i g h t r a n s p o r t c o s t s a n d o t h e r k i n d o f expenses
might mean that it wouldbe uneconomical for other sellers tomove their stocks to other
place ifprices were higher there.------------------------------World Economies have been brought
closerby globalization. It is the reflected in the phrase– “ w h e n A m e r i c a s n e e z e s , t h e
w h o l e w o r l d catches a cold.” It is important to remember though that it is notonly the economy
of the United States but alsoo t h e r e c o n o m i e s i n t h e w o r l d t h a t
h a v e s i g n i f i c a n t i m p a c t o n t h e g l o b a l m a r k e t a n d finance.T h e s t r e n g t h o f a
m o r e p o w e r f u l e c o n o m y brings greater effect on other countries. In thesame manner,
crises on weaker economies haveless effect than other countries.Although countries are heavily
affected by theg a i n s a n d c r i s e s i n t h e w o r l d e c o n o m y , organizations
that they consist also contributeto these events.------------------------------The following are
financial institutions andeconomic organizations that made countriese v e n c l o s e r
t o g e t h e r , a t l e a s t , w h e n i t comes to trade:1.THE BRETTON WOODS SYSTEMBretton
Woods Agreement and System.T h e B r e t t o n W o o d s A g r e e m e n t
w a s negotiated in July 1944 to establish a new international monetary system, the
BrettonW o o d s S y s t e m . T h e A g r e e m e n t w a s developed by delegates from
44 countriesa t t h e U n i t e d N a t i o n s M o n e t a r y a n d Financial Conference
held in Bretton Woods,New Hampshire.Under the Bretton Woods System, gold wast h e b a s i s
f o r t h e U . S . d o l l a r a n d o t h e r currencies were pegged to the U.S. dollar’svalue.
The Bretton Woods System effectivelyc a m e t o a n e n d i n t h e e a r l y 1 9 7 0 s
w h e n President Richard M. Nixon announced thatthe U.S. would no longer exchange gold
forU.S. currency.

Market integration provides a number of social benefits,

including broadening the range of financial services and
investment opportunities available to consumers and increasing
competition in the provision of those services. ... Regulation
certainly plays a highly relevant role in facilitating market
integration.1