MARKET

Integration
Presented By :GROUP 2
ABALAYAN,GLAIZA MARIE C
BUISING ,JIAN JOSH
GULINAO,MARC JUSTIN
SALCEDO ,PAULINE

 Table of
CONTENT
Define Market Reason for market
Integration integration

Types of Market Advantage and

Integration Disadvantage

01
 Market Integration
• Kohls and uhl have defined market integration as a process which
refers to the EXPANSION OF FIRMS by consolidating additional
marketing functions and activities UNDER A SINGLE MANAGEMENT.

• is a term that is used to identify a phenomenon in which markets of

goods and services that are somehow related to one another being to
experience similar patterns of increase or decrease in terms of the
prices of those products.

• Market integration is state of affairs as a process involving to

combine national economies into larger economic region. -Robson
 Market Integration
• a situation in which separate markets for the same product become
one single market, for example when an import tax in one of the
markets is removed.

Free Trade is when international trade left to its natural

course without tariffs and non-tariffs trade barriers such as
qoutas, embargoes, sanctions or other restriction.
REASON FOR MARKET INTEGRATION

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.
TYPES OF MARKET INTEGRATION AND ITS
ADVANTAGES AND DISADVANTAGES
1.HORIZONTAL INTEGRATION
2.VERTICAL INTEGRATION
3.CONGLOMERATION
Horizontal Integration
Horizontal integration occurs
when two businesses merge or
acquired the produce goods or
services at the same level of
value chain in the same
industry
acquiring or merging with competitors
 Horizontal integrations help companies grow
in size and revenue, expand into new
markets, diversify product offerings, and
reduce competition

WHO USES HORIZONTAL INTEGRATION?

Companies that seek to strengthen their position in the

market and enhance their production.
examples:
facebook (now meta acquired)
instagram in 2012 for a reported $1
billion dollar.

walt disney purchased Pixar

company in 2006 for
approximately $7.4 billion .
 TYPES OF HORIZONTAL
INTEGRATION

There are three primary forms of horizontal integration;

mergers, acquisitions and internal expansion
 MERGER
when two companies combines together to form a one
company,it is termed by merger of companies that exist
and formed new company

example: disney and pixar merged together to

collaborate easily and freely.
AQUISITION
similar to merger, an acquisition occurs when one
company outright stakes over the operation of another
company .

example: Google acquired Andriod for

$50 million in Agusust 2015.
INTERNAL EXPANSION
process of growing a business through the
use of resources within the business ,and not
involving the use of any type of iuitside
activities to solit new customers.
ADVANTAGES
May result in efficiencies, economies of scale, or
synergies .
May reduce company risk through product and
market diversification
May increase profitability.
May result in decreased costs .
Larger customer base.
DISADVANTAGES
May reduce value or synergy if merger is not
performed successfully
Risk of Diseconomies of scale.
May result in a clash of management styles
Significant capital requirements.
VERTICAL INTEGRATION
Vertical integration is a strategy that
allows a company to streamline its
operations by taking direct
ownership of various stages of its
production process rather than
relying on external contractors or
suppliers.
 vertical integration is acquiring or establishing its own
suppliers, manufacturers, distributors, or retail locations
rather than outsourcing them.
TYPES OF VERTICAL INTEGRATION

Forward vertical integration

(upstream integration)
Backward invertical ntegration
(downstream integration)
Balance integration

FORWARD INTEGRATION
Forward integration is a
strategy where the
company gains control
of the business activities
that are ahead in the
value chain.
''removing the middleman''.
EXAMPLES

Apple Inc. opens its retail store

popularly known as Apple store.
Manufacturer --> retailer

Amazon acquired Whole Food to

venture into the brick- and -mortar
business.
 BACKWARD INTEGRATION
backward integration is when a company buys
another company that supplies the products or
services needed for production.
 Mc Donalds

set up its own manufacturing Netfix

plants to produce raw materials
 BALANCE INTEGRATION
aims to merge with companies both
before it and after it along the
supply chain

involves two transactions-

downstream and upstream

rare due to high cost

ADVANTAGES
It allows to invest in assets that are highly specialized
It gives more control over business
It allows positive differentiation
It requires lower costs of transaction
It offers more cost control
It ensures a high level of certainty when it comes to quality
It provides more competitive advantages
DISADVANTANGES
capacity-balancing problems
bring about more difficulties
results in decreased flexibility
create some barriers to market entry
cause confusion with the business
requires a huge amount of money

CONGLOMERATION
 conglomerate merger is a merger between firms that are
involved in totally unrelated business activities. These
mergers typically occur between firms within different
industries or firms located in different geographical
locations. There are two types of conglomerate mergers:
pure and mixed. Pure conglomerate mergers involve firms
with nothing in common, while mixed conglomerate
mergers involve firms that are looking for product
extensions or market extensions.
Air 21
Ayala Group, through its logistics arm AC
Logistics Holdings Corp., has completed its
acquisition of a 60 percent interest in Air21
Holdings Inc. for P6.06 billion, beefing up its
footprint in the e-commerce and logistics
space.
RCBC
one of the oldest and largest conglomerates
in Southeast Asia covering over 60
businesses. It is among the largest private
domestic banks in the country in terms of
assets and has a network of over 462
branches and 2,911 ATMs and ATM Go units
as of end-December 2022.
San Miguel Corporation
San Miguel Corporation is one of the largest
and most diversified conglomerates in the
Philippines by revenues and total assets, with
sales equivalent to approximately 4% of the
Philippine GDP in 2020.
 ADVANTAGES:
The advantages of conglomerate mergers have several
advantages: diversification, an expanded customer base, and
increased efficiency. Through diversification, the risk of loss
lessens. If one business sector performs poorly, other, better-
performing business units can compensate for the losses. This can
also be viewed as an investment opportunity for a company.
DISADVANTAGES:
The disadvantages of conglomerate integration is that often
associated with reward, it also carries risks. Diversification can
shift focus and resources away from core operations,
contributing to poor performance. If the acquiring firm is
inadequately experienced in the industry of the acquired firm,
the new firm is likely to develop ineffective corporate
governance policies, poor pricing structures, and an
inexperienced, underperforming workforce.
REFERENCES:
https://www.investopedia.com/ask/answers/051315/what-difference-between-horizontal-
integration-and-vertical-integration.asp

https://www.investopedia.com/terms/v/verticalintegration.asp

https://dictionary.cambridge.org/us/dictionary/english/market-
integration

https://www.smartcapitalmind.com/what-is-market-integration.htm

https://www.slideshare.net/jpsivam/market-integration