GEN 005: The Contemporary World

Module #6 Student Activity Sheet

Name: _____________________________________________________________ Class number: _______

Section: ____________ Schedule: _____________________________________ Date: _______________

Materials:
Lesson Title: Global Economy and Market Integration Activity Sheets
References
Learning Targets: At the end of the lesson, students should be https://en.wikipedia.org/wiki/Wor
able to: ld_economy
1. explain the types of market integration; https://www.thestreet.com/mark
2. differentiate concepts of the global economy from market ets/what-is-vertical-integration-
integration. and-what-are-the-benefits-
14671684

A. LESSON PREVIEW/REVIEW

Introduction (2 min)

Hello! How are you today! Again, welcome to Contemporary World! Are you ready for our new lesson
today? Today’s topic is about market integration in a globalized economy. The past lessons related to
globalization were also part of today's lesson, which is the market integration in the global economy. Today we
will discuss how the global economy works through these factors.

Please read the learning targets before you proceed to the succeeding activities. The learning targets are
your goals. Remember, you need to achieve your learning targets at the end of the lesson.

Before we proceed to our topic today, please answer the lesson review to check your understanding of the
lessons last meeting.

Lesson Review: Read the statement, and answer it with True or False. Write True if the statement is
correct, and write False if it is incorrect.

______ 1. Developing countries with pollution will suffer the most from climate change.
______ 2. Part of military globalization is the nuclear age and weapons of mass destruction
______ 3. Globalization prohibited international terrorists from achieving their crime/terrorism goals.
______ 4. People move all the time, mixing and integrating different societies and their cultures.
______ 5. Terrorists and criminals used the instruments of globalization to achieve their objectives.

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 GEN 005: The Contemporary World
Module #6 Student Activity Sheet

MAIN LESSON

Activity 1: Content Notes (13 mins)

Our topic for today is the global economy and market integration. Does anybody here know somebody
who became a millionaire because of his small business that gets bigger over the years? What is your idea of
how SM Supermalls became a big business firm out of the small shoe stall, and now SM is into banking,
Condominiums near their Supermalls everywhere? We also have other business tycoons that operate our very
own Philippine Airlines and Cebu Pacific International flights. What did they do in the business that made them
successful? We will learn about these through our topic today, which is market integration. Are you ready? Let’s
begin.

Market integration

Market integration refers to how easily two or more markets can trade with each other. Foreign trade
helps the Integration of markets because it reduces barriers to trade and increases fluidity between
markets. *For example, Facebook buys out WhatsApp and Instagram.

Reasons for market integration:

● To remove transaction costs

● Foster competition
● Provide better signals for optimal generation and consumption decisions.
● Improve the security of supply

Market integration occurs when prices among different locations or related goods follow similar
patterns over a long period. Groups of goods often move proportionally to each other. When this
relation is apparent 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. A
marketer plays the role of an integrator in the sense that he collects feedback or vital inputs from other
channel members and consumers and provides product solutions to customers by coordinating
multiple organization functions.

What is market integration, for example?

1. Establish wholesaling facilities by food retailers and set up another plant by a milk processor.
2. Facebook buyout of Instagram and WhatsApp to have a bigger market for image sharing.

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 GEN 005: The Contemporary World
Module #6 Student Activity Sheet

Types of market integration

1. Horizontal Integration
2. Vertical Integration: Forward, Backward and Balanced 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 to reduce their effective
number and actual competition in the market.
● It is advantageous for the members who join the group.

Effects of Horizontal Integration

● Buying out a competitor in a time-bound way to reduce competition.

● Gaining a larger share of the market and higher profits.
● Attaining economies of scale. ● Specializing in the trade.

Advantages of Horizontal Integration

1. Lower costs. (2)Higher efficiency. (3)Increased differentiation. (4)Increased market power. (5)Reduced
competition. (6)Access to new markets. (7)Economies of scale. (8)Economics of scope. (9)International
trade. Examples: Companies using horizontal Integration: Hp, Compaq, Facebook, WhatsApp, Google
Motorola

2. Vertical Integration. This occurs when a firm performs more than one activity in the sequence of
the marketing process. Example: San Miguel Purefoods says “from farm to platter goodies”; Apple

• It links two or more functions in the marketing process within a single firm or under single
ownership.

• This type of Integration makes it possible to exercise control over the product's quality and
quantity from the beginning of the production process until the product is ready for the
consumer.

• It reduces the number of mediators in the marketing channel. Example Meat industry buys all
the functioning plants needed for running this meat industry.

3. Forward Integration. Suppose a firm assumes another function of marketing that is closer to the
consumption function. In that case, it is a case of forwarding Integration. Example: wholesaler

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 GEN 005: The Contemporary World
Module #6 Student Activity Sheet

considering the role of retailing

4. Backward Integration. This involves ownership or a combination of sources of supply—for example:

when a processing firm assumes the function of assembling/purchasing the product from the villages.

5. Balanced vertical Integration The third type of vertical Integration combines the backward and the
forward vertical Integration.

Advantages of Vertical Integration

1. It allows you to invest in highly specialized assets.

2. It gives you more control over your business.
3. It allows for positive differentiation.
4. It requires lower costs of the transaction.
5. It offers more cost control.
6. It ensures a high level of certainty when it comes to quality.
7. It provides more competitive advantages.

Effects of Vertical Integration

• More profits by taking up additional functions

• Risk reduction through improved market co-ordination
• Improvement in bargaining power and the prospects of influencing prices
• Lowering costs through achieving operational efficiency

6. Conglomeration A combination of agencies or activities not directly related to each other may be
termed a conglomeration when it operates under unified management.

Examples:

SM Group of Companies, Lucio Tan Group of Companies, Gokongwei Group of Companies, PHINMA
Group of Companies, Manuel Villar Group of Companies

Effects of Conglomeration

• Risk reduction through diversification

• Acquisition of financial leverage
• Empire–building urge.

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 GEN 005: The Contemporary World
Module #6 Student Activity Sheet

What are the effects of market integration?

Both producers and consumers gained, but welfare gains were inversely related to the size of the
country and positively to the level of openness to trade. We infer that welfare gains from international
market integration were equivalent to substantial shares of economic growth in the 'long 19th century.

Activity 2: Check for Understanding (18 mins + 2 mins checking)

Exercise 1: Fill out the blank boxes with your definition of Global Economy and Market Integration based
on your notes. In the second box, give the facts/ characteristics of globalization. In the 3 rd box, you can
list down some examples of globalization. In the 4th box, you can list down the non-examples of
globalization.

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 GEN 005: The Contemporary World
Module #6 Student Activity Sheet

Exercise 2: Read the statement, and answer it with True or False

_____ 1. The world economy or global economy is the economy of all humans of the world.

_____ 2. The system of trade and industry across the world emerged due to globalization.

_____ 3. Countries' economies have been developing to operate collectively as one system

_____ 4. Increasing costs through achieving operational efficiency

_____ 5. Integration of markets reduces trade barriers and increases fluidity between markets.

Exercise 3: Business tycoon like Gokongwei, Henry Sy and Lucio Tan has been making a lot of money

from conglomerates, do you think it is because they are Chinese and would you like to be one of them?

Yes/No/Why?

_____________________________________________________________________________________________________________

_____________________________________________________________________________________________________________

_____________________________________________________________________________________________________________

Check your answers against the Key to Corrections found at the end of this SAS. Write your score on your
paper.

C. LESSON WRAP-UP

Frequently Asked Questions (FAQs)

Question 1. What are the effects of vertical Integration on the market?

Answer: There are benefits for companies to integrate vertically, including being more in control of their supply
chain, offering their goods at lower prices, and having increased market control. One factor is creating an
economy of scale. There is a reduction in the cost of production brought about, especially if the size of
production facilities increased. The larger the company gets, the more cost-effective it is to produce its goods
and services.

Question 2. What are the benefits consumer will get from vertical Integration?

Answer: Having a larger market share or marker power is the benefit of vertical Integration. When the two

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 GEN 005: The Contemporary World
Module #6 Student Activity Sheet

companies merged, they also combined the product-based technology and services available in the market.
With more products under one name, the new company can increase its position among consumers. Big
firms/companies pursue vertical Integration for the obvious reasons, the advantages it offers like having greater
control over the supply chain and offering lower prices with high-quality products to consumers while
increasing market control.

Thinking about Learning (5 mins)

My Learner Tracker
What module# did you
do? What were the What were your scores in
What’s the date today?
learning targets? What
activities did you do?
What contributed to the
quality of your
performance today?
What will you do next
the activities?
session to maintain your
performance or improve
it?

Directions: Since you are done with today’s lesson, please carefully read the question below and give
your honest answer to it.

What was the most important thing you learned during this class?

_____________________________________________________________________________________________________________

__________________________________________________________________________________________________________

What important question remains unanswered?

_____________________________________________________________________________________________________________

_____________________________________________________________________________________________________________

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 GEN 005: The Contemporary World
Module #6 Student Activity Sheet

KEY TO CORRECTIONS
Lesson Review: 1. True 2. True 3. False 4. True 5. True
Answer for Exercise 1 See TG Frayer model
Exercise 2: 1. True 2. True 3. True 4. False 5. True
The rubric will be used in checking the answers to the essay questions.

Scoring Rubric for Essay

4 3 2 1 0 SCORE

Content Write-up is Write-up is accurate Write-up is not Write-up is Questio

comprehensive, but not complete. completely stated. incomplete. Key ns are
(50%) accurate, and Key points are Key points are not points are lacking. not
complete. Key stated but not addressed and not It does not answer
ideas are clearly supported. Include supported. It does incorporate ed.
stated and some pertinent and not include information from
supported. Include detailed pertinent class discussions
pertinent and information from information from
detailed class discussions. class discussions.
information from
class discussions.

Organiz Well organized, Mostly clear and Inadequate Organization and Questio
ation developed, and easy to follow. organization. The structure draw ns are
easy to follow. Usually maintains structure of the away from the not
(30%) Maintains focus on focus but answer is not easy answer. Provides answer
the topic. occasionally to follow. Presents no information ed.
presents information that is that can be
information that is sometimes unclear. understood.
different from the
topic.

Spelling Grammar, spelling, Contain few Contain substantial Contain enough Questio
and punctuation, and distracting distracting distracting ns are
Gram- sentence structure problems. There problems. There grammar, spelling, not
mar have no errors. are one or two may be three to punctuation, and answer
errors in grammar, four errors in sentence structure ed.
(20%) spelling, grammar, spelling, problems to make
punctuation, and punctuation, and it substantially
sentence structure. sentence structure. incomprehensible

TOTAL SCORE

Teacher’s Signature: __________________

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