SOCSCI032-R02-AP4 June 30, 2023

MARKET
INTEGRATION
THE CONTEMPORARY WORLD

GROUP 2
Illut, Jadraque, Magbanua, Rodriguez, Sayon
MARKET INTEGRATION

Viv Trista Carl Christian John Carlos Kirsten Paige Khylle Christian
Jadraque Illut Magbanua Rodriguez Sayon
Member Member Leader Member Member
OUTLINE
1 Assumptions

Documentary: Undercover Boss

2
(Chiquita)

3 Global Corporations

4 Looking back

5 Role of International Financial Institutions

6 Types of Market Integration

7 Types of Business defined

8 Forms of Business defined

ASSUMPTIONS

Students have a little background on market operations.

Basic economics is a given.

Appreciation on the importance of institutions

(formal and non - formal)

WB and IMF

3
LEARNING OUTCOMES
Narrate a short history of global
Identify the attributes of
market integration in the
global corporations.
twentieth century.

SOCSCI032- Assess the different types

Write identity or Explain the role of R02-AP4 of Market Integration.
international financial institutions
in the creation of a global
economy value here.
Compare and contrast
the different forms and
types of business.
RATIONALE
Since the World Bank and the
International Monetary Fund (IMF) were
launched at Bretton Woods, global
economy has undergone transformation
in several important respects:

Globalization has progressed a great

deal over the preceding quarter
century.

WWII destruction and economic

recovery as well as expansion led to
rise of American corporations.
 RATIONALE
The poor performance of statist models
of development— so popular in the past
—led to a re-examination of the role of
the state, which in turn motivated a
strong shift towards private, market-
based approaches.

THUS, in these transformations, the

private sector and private international
finance have become prime agents of
economic development.
DOCUMENTARY: UNDERCOVER BOSS (CHIQUITA)
https://www.bing.com/search?q=undecover+boss+chiquita&cvid=114d7a480d75422a8b7ed05a250a543a&aqs=edge..69i57j0j69i11004.5456j0j9&FORM=ANAB01&PC=ASTS

5
LOOK BACK

5
Is a situation in which separate markets
for the same product become one single
market.

It occurs when prices among different

locations or related goods follow similar
patterns over a long period of time.
Groups of prices often move
proportionally to each other and when
this relation is very clear among different
markets it is said that the markets are
integrated.

Thus, market integration is an indicator

that explains how much different
markets are related to each other
MARKET INTEGRATION
CONTEMPORARY GLOBALIZATION

1970s-1980s Post War Foreign Direct Investments

Innovations that changed Structural Periods Drivers that extended global
global corporations corporate development
ECONOMIC RECOVERY OF CAPITAL STRUCTURES
AND REENTRY TO GLOBAL MARKETS
Stabilization and Policy
Measures

Innovation and Technology

Adoption

Structural Reforms

Japan & Regional and Global

Europe
Cooperation

Financial Sector Recovery

Resilience and Diversification

Trade and Investment Promotion

STABILIZATION
AND POLICY
MEASURES Involves stabilizing the economy and
implementing policy measures to address
immediate challenges.

Typically includes fiscal stimulus packages,

monetary easing, and liquidity support to stabilize
financial markets, boost consumer and business
confidence, and stimulate demand.
STRUCTURAL
REFORMS Essential for enhancing the competitiveness and
resilience of the economy.

Include liberalizing labor markets, improving

regulatory frameworks, promoting innovation and
entrepreneurship, investing in infrastructure, and
encouraging private sector development.

Aim to create a business-friendly environment

and attract domestic and foreign investments.
FINANCIAL
SECTOR A healthy financial sector is crucial for the efficient
allocation of capital.
RECOVERY
Strengthening banks' balance sheets, improving
risk management practices, enhancing
transparency and governance, and addressing
non-performing loans.

Help restore trust in the financial system and

support lending to businesses.
 TRADE AND
Reentry into global markets involves promoting
INVESTMENT international trade and attracting foreign direct
investment (FDI).
PROMOTION
Governments negotiate and sign trade
agreements to reduce barriers to trade, encourage
exports, and enhance market access for domestic
industries.

Investment promotion efforts may include offering

incentives, improving business regulations, and
facilitating market entry for foreign investors.
INNOVATION &
TECHNOLOGY
ADOPTION Embracing innovation and technology plays a
crucial role in enhancing productivity and
competitiveness.

Governments invest in research and development,

support technology transfer, promote digitalization,
and foster collaboration between academia and
industry.
REGIONAL AND
GLOBAL Engaging in regional and global cooperation can
provide opportunities for economic recovery and
COOPERATION reentry into global markets.

Regional trade blocs, such as the European Union

or ASEAN, offer integrated markets and regulatory
harmonization, facilitating cross-border trade and
investment.

Engaging in international organizations and forums

promotes collaboration, enhances market access,
and supports the development of common
standards.
RESILIENCE AND
To withstand future shocks, economies need to
DIVERSIFICATION build resilience and diversify their sources of
growth.

Involves reducing dependence on a single sector

or market and diversifying export destinations,
industries, and supply chains.

Resilience can be enhanced through measures like

improving disaster preparedness, strengthening
social safety nets, and investing in education and
skills development.
3 INNOVATIONS CHANGED GLOBAL CORPORATIONS
1970s-1980s

Digitalization Global Communications Structural transformation of

global commerce
Adoption of digital Advancements in
From producer driven to
technologies and telecommunications and
consumer driven
computerization information technologies
DIGITALIZATION
Widespread adoption of digital technologies and
computerization of various business processes.

Allowed companies to store, process, and analyze

large amounts of data more efficiently.

Led to improvements in operational efficiency,

data management, and decision-making.

Enabled the automation of tasks, enhanced

productivity, and facilitated the development of
new digital products and services.
 GLOBAL
COMMUNICATIONS Characterized by the development of satellite
(CP) communications, fiber-optic cables, and the
expansion of global communication networks.

Communicate and exchange information more

easily across continents, enabling faster decision-
making, collaboration with international partners,
and real-time coordination of global operations.

Improved global communications played a crucial

role in expanding market reach and establishing
global supply chains.
 STRUCTURAL
TRANSFORMATION OF Involved a shift in focus from mass production and
GLOBAL COMMERCE standardized products to customer preferences
and customization.

Companies started placing greater emphasis on

market research, understanding consumer needs,
and tailoring their products and services
accordingly.

Rise of customer-centric marketing strategies,

brand management, and the development of new
product categories to meet evolving consumer
demands.
3 STRUCTURAL PERIODS
Post-war

1950-1970 1970-1995 1995-onwards

Investment based Trade-based globalization Digital globalization

INVESTMENT BASED
(1950-1970) Governments played a significant role in
promoting economic development through
policies that encouraged domestic investment,
including infrastructure projects, manufacturing
capacity expansion, and research and
development initiatives.

Rise of large corporations and the emergence of

multinational companies (MNCs) as they
expanded their operations and invested in foreign
markets.
TRADE-BASED
Liberalization of trade policies and the rapid
(1970-1995) growth of international trade.

Trade barriers were lowered, and international

trade agreements, such as the General Agreement
on Tariffs and Trade (GATT), facilitated the
expansion of global trade.

Rise of global supply chains as companies sought

to take advantage of cost differentials and access
larger consumer markets.
 DIGITAL
(1995 - ONWARDS) Emergence of the internet, mobile technologies,
and digital communication tools transformed the
way businesses operated and globalized.

Revolutionized communication, lowered

transaction costs, and facilitated the seamless flow
of information, goods, and services across borders.

Rise of e-commerce, online platforms, and digital

services, enabling companies to engage in global
business transactions more efficiently and reach a
wider customer base.
FOREIGN DIRECT INVESTMENTS
Major driver of extended global corporate development

What is FDI?

-Refers to the investment made by a company or

individual from one country into a business or project
located in another country.
FOREIGN DIRECT INVESTMENTS
Contributions to the growth and development of global corporations

Market Expansion
Access to Resources and Expertise
Technology Transfer and Innovation
Access to New Customers and Distribution
Networks
Strategic Alliances and Partnerships
FOREIGN DIRECT INVESTMENTS
Industries that are part of FDI in the Philippines

Manufacturing
Business Process Outsourcing (BPO)
Real Estate and Infrastructure
Energy and Utilities
Retail and Consumer Goods
Banking and Finance
PROFOUND CHANGES OVER THE LAST FEW DECADES
World financial markets have witnessed profound changes over the last few decades

Strong growth of private capital flows to

developing countries

2001 was a turbulent year for the global

economy and the global financial markets
GROWTH OF PRIVATE
CAPITAL FLOWS Economic Growth and Potential

Market Liberalization and Reforms

Access to Global Financial Markets

Low Interest Rates and Search for Yield

Investment Promotion and Public-Private

Partnerships
YEAR OF TURBULENCE
IN GLOBAL ECONOMY Collusion of foreign investors with bureaucracies in
search of competition restraints and privileges.

Downgrading of value-added components in

enterprises acquired by foreigners.

Foreign direct investment (FDI) contributing

positively to development and growth.

Reform process opening opportunities for

profitable investment and impacting risks and
returns.
INTERNATIONAL FINANCIAL INSTITUTIONS

What is IFI?

-Refers to organizations that provide financial and

technical assistance to countries for development
purposes.
INTERNATIONAL FINANCIAL INSTITUTIONS
Objectives

Poverty alleviation/mitigation

Economic growth

Protection of the environment

INTERNATIONAL FINANCIAL INSTITUTIONS
Types of IFI

Multilateral development bank (MDB)

Bretton Woods institutions

Regional Development Banks

Bilateral development banks and agencies

INTERNATIONAL FINANCIAL INSTITUTIONS
Some of the main IFIs

International Monetary Fund (IMF)

World Bank Group (WBG)

Regional Development Banks

 ·World Bank
·European Investment Bank (EIB)
MULTILATERAL ·Islamic Development Bank (IsDB)
·Asian Development Bank (ADB)
DEVELOPMENT BANKS ·European Bank for Reconstruction and
Development (EBRD)
·CAF - Development Bank of Latin America
(CAF)
·Inter-American Development Bank Group
(IDB, IADB)
·African Development Bank (AfDB)
·New Development Bank (NDB)
·Asian Infrastructure Investment Bank (AIIB)
·Arab Petroleum Investments Corporation
(APICORP)
·Eastern and Southern African Trade and
Development Bank (TDB)
BRETTON WOODS IMF International Monetary Fund
IBRD International Bank for Reconstruction and
INSTITUTIONS Development
IFC International Finance Corporation
IDA International Development Association
ICSID, International Centre for Settlement of
Investment Disputes
MIGA Multilateral Investment Guarantee
Agency
GATT General Agreement on Tariffs and Trade,
basis for the creation of World Trade
Organization (WTO) in 1995
 BILATERAL
DEVELOPMENT BANKS
AND AGENCIES Netherlands Development Finance Company
FMO

DEG German Investment Corporation or

Deutsche Investitions

French Development Agency

CDC Group
OBJECTIVES The objectives of IFIs align with the broader
OF global development goals, such as the
United Nations Sustainable Development
IFI
Goals (SDGs), which aim to eradicate
poverty, promote inclusive growth, and
protect the environment. IFIs work in
collaboration with governments, civil society,
and other stakeholders to mobilize resources,
provide financial support, and offer technical
expertise to foster sustainable development
and improve the well-being of communities
around the world.
ASESSMENT
Parts of an iPhone

Where does my iPhone come from?

Has iPhone brought benefits to the

workers who make it?
ASESSMENT
Parts of an iPhone
 TYPES OF
MARKET
INTEGRATION
1. Horizontal Integration

2. Vertical Integration

-Forward Vertical Integration

-Backward Vertical Integration

3. Conglomeration
HORIZONTAL
INTEGRATION
Also known as lateral integration.
The merger of two or more
companies that occupy similar
levels in the production supply
chain.

The primary objective of

horizontal integration is to
achieve economies of scale,
enhance market power, and gain
a competitive advantage by
expanding the company's market
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share.
 HORIZONTAL INTEGRATION

ADVANTAGES DISADVANTAGES

• Lower Costs •Tough transition change

• Higher power in the market •Lack of competition

• Reduced competition

• Increased differentiation
 VERTICAL
INTEGRATION
A competitive strategy by which a
company takes complete control
over one or more stages in the
production or distribution of a
product.

TYPES:

-Forward Vertical Integration

-Backward Vertical Integration

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 FORWARD
VERTICAL
INTEGRATION
Business activities are expanded
to include control of the direct
distribution or supply of a
company's products.

This can involve acquiring

distributors, wholesalers, or
retailers to gain direct access to
customers and exert greater
control over the distribution and
sales of its products.
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 BACKWARD
VERTICAL
INTEGRATION
Process in which a company
purchases or internally produces
segments of its supply chain.

By backward integration, a
company aims to secure reliable
sources of inputs, ensure quality
control, reduce costs, and have
greater control over its supply
chain.
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 VERTICAL INTEGRATION

ADVANTAGES DISADVANTAGES

• Doesn’t have to rely on suppliers •Expense

• Gives a company economies of scale •Reduces flexibility

• Retailer can know, what is selling well •Loss of focus

• Low price •Cultural diversity in the workplace

CONGLOMERATION
A conglomerate is the combination
of two or more business entities
engaged in entirely different
businesses that fall under one
corporate group, usually involving a
parent company and many
subsidiaries.

The main characteristic of

conglomerates is their
diversification across various
industries. Unlike companies that
focus on a single industry or sector,
conglomerates expand their reach
by acquiring or merging with
businesses operating in unrelated
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fields.
TYPES AND FORMS OF BUSINESS

BUSINESS ENTITY
It is an organization that uses economic resources or inputs to provide goods or
services to customers in exchange for money or other goods and services.
TYPES OF BUSINESS
SERVICE BUSINESS
A service type of business
provides intangible products
(products with no physical
form). Service type firms offer
professional skills, expertise,
advice, and other similar
products.
This type of business buys
products at wholesale price
and sells the same at retail
price. They are known as "buy
MERCHANDISING BUSINESS and sell" businesses. They
make profit by selling the
products at prices higher
than their purchase costs.
A merchandising business
sells a product without
changing its form.
TYPES OF BUSINESS
Unlike a merchandising Nonetheless, these
business, a manufacturing companies may be
business buys products with
classified according to
the intention of using them as
materials in making a new HYBRID BUSINESS their major business
product. Thus, there is a interest. In that case,
Hybrid businesses are
MANUFACTURING transformation of the
companies that may be restaurants are more of
BUSINESS products purchased. classified in more than
one type of business. A the service type – they
A manufacturing business restaurant, for example,
provide dining services.
combines raw materials, combines ingredients in
making a fine meal
labor, and factory overhead
(manufacturing), sells a
in its production process. The cold bottle of wine
manufactured goods will (merchandising), and fills
then be sold to customers. customer orders (service)
 FORMS OF BUSINESS ADVANTAGES DISADVANTAGES

Ease of starting and Unlimited liability •

going out of
The owner faces unlimited
business Difficulty in raising
liability; meaning, the
financial capital
creditors of the business Control over profits
may go after the personal and business
Responsibility for all
SOLE PROPRIETORSHIP operations
assets of the owner if the losses
business cannot pay them. Management
A sole proprietorship is a Pride of ownership
knowledge may be
business owned by only
The sole proprietorship limited
Lower taxes (no
one person. It is easy to
form is usually adopted by corporate income
set-up and is the least taxes)
small business entities
costly among all forms of
ownership.
 FORMS OF BUSINESS ADVANTAGES DISADVANTAGES

Better decision can Unlimited liability •

be made. Tax like corporations
In general partnerships, all

partners have unlimited You share the

Limited life
business risk and
liability. In limited
responsibility.
partnerships, creditors You don’t keep all
PARTNERSHIP
Is easier to form than the profits.
cannot go after the
cooperative and
A partnership is a business
personal assets of the corporation. Making business
owned by two or more
limited partners. decisions may give
persons who contribute Lower extent to the
rise to conflict
resources into the entity. government
among the partners
The partners divide the regulation
profits of the business
among themselves. Greater capital than
some proprietorship.
FORMS OF BUSINESS

CORPORATION LIMITED LIABILITY COMPANY COOPERATIVE

A corporation is a business Limited liability companies (LLCs) A cooperative is a business

organization that has a in the USA, are hybrid forms of organization owned by a group of
separate legal personality business that have characteristics individuals and is operated for
from its owners. Ownership in of both a corporation and a their mutual benefit. The persons
a stock corporation is partnership. An LLC is not making up the group are called
represented by shares of incorporated; hence, it is not members. Cooperatives may be
stock. considered a corporation incorporated or unincorporated.
SOURCES:
Introduce textbook: Manfred Steger, Paul Battersby, and Joseph M. Siracusa, eds. 2014.

The SAGE Handbook of Globalization. Two vols. Thousand Oaks: SAGE.

Steger, M. (2015). Approaches to the Study of Globalization. United Kingdom: Blackwell

Publishing.

World Systems Analysis: An Introduction. Durham & London: Duke University Press, pp. 23-41.

https://www.youtube.com/watch?v=P5xwuY87Yu0&t=856s

https://www.youtube.com/watch?v=X0apvSB791I

https://www.slideshare.net/sakthivelRamar/market-integration80094070?qid=0bdf2ac1-

2910-41c8-94b3- a6163065c282&v=&b=&from_search= 3
GOT QUESTIONS? :)

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