GE007: Market Integration (W3)

Market

a means by which the exchange of goods and services takes place as a result of buyers and sellers being in contact with one another, either directly or through mediating agents or institutions

Market (Market Integration)

A mechanism, location, or economic space where buyers and sellers exchange goods, services, or information, with integration resulting in separate markets for the same product merging into a single, cohesive entity.

Market Integration

It refers to the relationship between firms in a market and how they connect to influence efficiency and competition

Market Integration

• Architect of Business.

• A________ connects those islands through bridges (partnerships), tunnels (contracts), or by merging the islands entirely (ownership)

Ownership Integration

This occurs when all the decisions and assets of a firm are completely assumed by another firm. You buy the company completely

Contract Integration

This involves an agreement between two firms on certain decisions, while each firm retains its separate identity. You sign a tight agreement but stay separate

Horizontal Integration

• "The Merger of Rivals"

• This occurs when a firm gains control of other firms performing similar marketing functions at the same level in the industry. Essentially competitors become partners or one swallows the other to reduce competition.

Vertical Integration

• "Owning the Ladder"

• This occurs when a firm takes control of multiple steps in the production or marketing sequence. Instead of paying a supplier or a distributor, the firm becomes the supplier or distributor.

Forward Vertical Integration

• Owning the Store”

• Taking control of distribution/retail. It takes activities close to the consumption function

Backward Vertical Integration

• Owning the Source

• Taking control of suppliers. Simply involves the business taking ownership/ control over its suppliers

Combined or Balanced Integration

a combination of the backward and the forward vertical integration.

Conglomeration

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