Module 6: Contemporary World PDF

**MODULE 6: CONTEMPORARY WORLD** **Market Integration: \"A Global Mash Up\"** Market Integration refers to the unification of distinct and often geographically separated markets into a single, more efficient system. This process is driven by globalization, technological advancements, and trade libe...

**MODULE 6: CONTEMPORARY WORLD** **Market Integration: \"A Global Mash Up\"** Market Integration refers to the unification of distinct and often geographically separated markets into a single, more efficient system. This process is driven by globalization, technological advancements, and trade liberalization, allowing for the free flow of goods, services, capital, and labor. Understanding market integration is crucial as it affects personal finance, consumer prices, and entrepreneurial opportunities. 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. A. Horizontal Integration. This type of integration occurs when a company or organization gains control over other companies or organizations that perform similar marketing functions at the same Stage In the marketing process. By merging, these marketing entities form a coalition that reduces the overall number of competitors and lessens market competition. This consolidation benefits the member firms by enhancing their market power and operational efficiency. *So what are the "Effects of Horizontal Integration?"* **5. Buying out a competitor in a time-bound way to reduce competition:** - Quickly purchasing a rival company to lessen the number of competitors. **6. Gaining a larger share of the market and higher profits:** - Increasing control over the market to earn more money **7. Attaining economies of scale:** - Reducing costs by producing more products efficiently. **8. Specializing in the trade:** - Focusing on and becoming very good at specific part of the business **B. Vertical Integration.** This happens when a company handles multiple steps in the marketing process. For instance, San Miguel Pure foods take care of everything \"from farm to platter goodies,\" and Apple controls all stages from design to selling. - **Combining Functions:** It brings together different parts of the marketing process within one company. - **Quality and Quantity Control:** This allows the company to oversee the product\'s quality and quantity from production to when it\'s ready for customers. - **Reducing Middlemen:** It cuts down on the number of middlemen involved in marketing. For example, the meat industry might own all the plants needed to operate smoothly. *What are the types of Vertical Integration?* **4. Forward Integration** occurs when a company takes on a marketing function that brings it closer to the final consumer. For example, if a wholesaler decides to also handle retailing, that\'s a case of forward integration. **5. Backward Integration involves** a company owning or combining sources of supply. For instance, if a processing firm starts to gather or buy products directly from villages that is backward integration. **6. Balanced vertical Integration** is when a company combines both backward and forward vertical integration strategies. C. Conglomeration refers to the merger of different businesses or activities that aren\'t necessarily related, all managed under one umbrella. Think of it as a big collection of various companies under one management. *Examples of Conglomerates:* - 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:** By diversifying into different industries, conglomerates spread out their risks. - **Financial Leverage:** They can acquire more financial power and resources through mergers and acquisitions. - **Empire Building:** Conglomerates often have a drive to expand and grow their business empires. **Operational models** - Companies use the methods, processes, or systems to conduct their day-to-day activities. **Financial stability** - The ability of an individual or organization to manage their financial resources without significant risk or uncertainty **Policy advice** - Recommendations or guidance regarding the best action to address specific issues or challenges are provided. **Poverty reduction** - Efforts or initiatives aimed at decreasing or alleviating poverty levels in societies or countries. **Stakeholders** - are individuals or groups interested in or influencing a company or organization\'s activities or outcomes.