MARKET INTEGRATION

Objectives
• 1. To understand the creation, attributes, and types of global corporations
• 2. To enumerate the functions and importance of global corporations.
• 3.To explain the development processes that occur among global corporations.
• 4. To appreciate the existence of the emerging global corporations
•Introduction
-One of the key features of global financial market integration is
that, wherever they happen to be established, entities are able to offer
financial services in other jurisdictions on terms similar to those
enjoyed by domestic market participants. The degree of integration
could be measured in terms of, for instance, the intensity of cross-
border financial flows or the market quota of foreign entities in
domestic markets.
What is Market Integration?
-Market integration occurs when prices among
different locations or related goods follow similar
patterns over a long period of time. Groups of goods
often move proportionally to each other and when
this relation is very clear among different markets it
is said that the markets are integrated.
 Types of Market
What is Market Integration Integration
example?
-Examples of market integration
There are three basic kinds of
are the establishment of market integration
wholesaling facilities by food
retailers and the setting up of 1. Horizontal integration
another plant by a milk processor. 2. Vertical integration
In each case, there is a 3. Conglomeration
concentration of decision making
in the hands of a single
management.
1. Horizontal Integration
. -Horizontal integration is a business strategy in which one
company grows its operations at the same level in an
industry. Horizontal integrations help companies grow in
size and revenue, expand into new markets, diversify
product offerings, and reduce competition
What is an example of Horizontal integration?
-An example of horizontal integration would be
if two consulting firms merge. One of the firms
offers software development services in the defense
industry; the other firm also provides software
development but in the oil and gas industry.
Advantage and Disadvantage of Horizontal integration
-The advantages include increasing market share, reducing
competition, and creating economies of scale.
Disadvantages include regulatory scrutiny, less flexibility,
and the potential to destroy value rather than create it.
2. 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.
What is an example of Vertical integration?
-Vertical integration involves acquiring or developing one or
more important parts of a company's production process or supply
chain. For example, Netflix's shift from licensing shows and
movies from major studios to producing its own original content is
an example of vertical integration.
Types of Vertical integration
•Forward integration
-Forward integration occurs when a vendor attempts to acquire a
company further along the supply chain (i.e. acquire a retailer).

•Backward integration
-Backward integration occurs when a vendor attempts to acquire
a company prior to it along the STEP1
supply chain (i.e. a raw material
provider).
Advantages of Vertical Integration
1. It allows you to invest in assets that are highly
specialized.
2. It gives you more control over your business.
3. It allows for positive differentiation.
4. It requires lower cost of transaction.
STEP1 STEP2
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.
Disadvantages of Vertical Integration
1. It can have capacity-balancing problems.
2. It can bring about more difficulties
3. It can result in decreased flexibility
4. It can create STEP1
some barriers to market entry
STEP2

5. It can cause confusion within the business

6. It requires a huge amount of money
3. CONGLOMERATION
-The expansion of a firm into a range of different product areas which
leads to its operating in a number of markets rather than a single
market.

Effects of STEP1
Conglomeration STEP2 STEP3
• Risk reduction through diversification
• Acquisition of financial leverage
• Empire - building urge
Reasons for market integration
•To remove transaction cost
•Foster competition
•Provide better signals for optimal generation and consumption
decisions
•Improve
Titlesecurity of supply
Title Title
Contemporary Global Governance

The goal of global governance, roughly defined, is to provide

global public goods, particularly peace and security, justice and
mediation systems for conflict, functioning markets and unified
STEP1 STEP2 STEP3 STEP4 STEP5
standards for trade and industry.
 The Global Governance perspective seeks to examine gaps
in the international system for managing complex issues and to
engage stakeholders on practical steps for collective problem-
solving. It pays particular attention to informing successful
multilateral
STEP1 negotiations
STEP2 on creating
STEP3 or reforming
STEP4 globalSTEP5
institutions, and to engaging more effectively new transnational
actors from the private sector and civil society.
What are the challenges of global governance in the
contemporary world?
-Ethnic conflicts, infectious diseases, climate change, food
insecurity, and other pressing threats, are increasingly threatening
global security and stability, prompting doubts about the ability of the
current
STEP1 global STEP2
governance order to respond to the challenges plaguing
the 21st century.
What is the most important principle of global
governance?
-Effective global governance cannot be achieved without
effective international cooperation. Besides being a manifestation
of international solidarity, international cooperation is a means to
promote common interests and shared values and to reduce the
STEP1 STEP2
vulnerabilities generated by increased interdependence.
The Globalized World Needs Global Governance

Examples include financial market regulation through the Bank for

International Settlements and the guidelines for multinational
enterprises set by the Organization for Economic Cooperation and
Development (OECD).
 Global governance is a means to
manage issues that cut across
national borders - whether it is a
pandemic, a financial crisis,
climate change, or a geo-
economic dispute.
 Activities are undertaken under this theme aim to improve the
global governance of economic factors – including trade,
financial flows, labor, and intellectual property – by fostering
innovation as well as by maximizing these factors to advance
global peace,security, and justice
Fin