GEC 8

REVIEWER
THE CONTEMPORARY WORLD
PISA RESULTS
The Philippines ranked 77th out of 81 countries globally in the student assessment conducted by the OECD for 15- year-old
learners. In the 2022 student assessment, the country scored approximately 120 points lower than the average scores, with scores
of 355 in math, 347 in reading, and 373 in science.

STRUCTURES OF GLOBALIZATION
WHAT IS GLOBALIZATION?
 Economically, it also refers to the unprecedented scope, shape, number, and complexity of business relationship conducted
across international boundaries.
 Can be defined as a process of rapid economic, cultural, and institutional integration among countries.
 This unification is driven by the liberalization of trade, investment and capital flow, technological advances, and pressures for
assimilation towards international standards,
 Globalization makes the world more accessible to everyone.

CAUSES OF GLOBALIZATION
 Trade liberalization.
 Improvements in technology.
 Reduced cost/improvement of communications and transportation.
 Deregulation of financial markets.
 Increased significance of TNCs (transnational corporations)

WHAT IS GLOBALIZATION?
 Taken together, these three facets of globalization emphasize the unprecedented lineup and complexity of relationship that
confront the contemporary society.
 The phenomenon of globalization according to Stoner et al. (1995), as cited by Abelos, et al. (2006, pp. 78-81) consists of
three interrelated factors proximity, location, and attitude.

PROXIMITY

 This proximity, a function of the "shrinking globe," is partly a matter of time, as today's
telecommunications technology allows people around the world to share voice, video,
and facsimile information in minutes.

LOCATION

 Second, the location and integration of an organization's operations across several international
boundaries is part of globalization.
 This new organizational scheme is termed transnational management to describe this growing
practice of spreading an organization's operations across many nations (Barlett and Ghoshal,
1995 as cited by Abelos et al., 2006, p.79).

ATTITUDE

 This combines a curiosity about the world outside national borders with a willingness to develop the capabilities for
participating in the global economy. Ohmae (1990) as cited by Abelos, et al., (2006) makes this point clear in the simple
statement, "Nothing is 'overseas' anymore."
 In the academe under the new General Education Curriculum, the best scholarly definition of globalization is provided by
Manfred Steger (2014, p. 184). He described globalization as "the expansion and intensification of social relations and
consciousness across world-time and across world-space.
 The first key word expansion may refer to the creation of the international marketplace including the international cultural
environment where education, social institutions, material elements are connected and occur at different levels.
 We can see these through non-governmental organizations, international organizations such as those involved in global
warming and "Save the Earth" movements. On the other hand, intensification refers to the expansion, stretching and
acceleration of the networks of the former (Claudio, 2018, p8)

GLOBALIZATION LED TO INCREASE IN COMPETITION

COMPETITIVENESS- Refers to the relative standing of one competitor against other competitors
HOW GOVERNMENT INFLUENCE COMPETITIVENES?
Competitiveness has become a prominent business and government concern in the era of global business.

These different interpretations of competitiveness are used by government officials around the world who are aggressively
scrambling to adjust to the global economy.

MEASURING GLOBALIZATION
There is no doubt we now live in a global marketplace. In scores of countries around the globe, the same products and
services are available to consumers and organizations. These range from McDonald's restaurants to Sony electronics to Nokia and
Samsung cellular phones.
  Economic globalization measures long-distance flow of goods, capital, and services as well as information and perception
that accompany market exchanges;
 Social globalization measures the spread of ideas, information, images, and people
 Political globalization measures the diffusion of government policies in terms of the number of embassies and consulates in
a country, membership in international organizations, likewise participation of a country in United Nations peace mission and
similar advocates.

ADVANTAGES OF GLOBALIZATION
1. Cheaper goods for Consumers and Better product quality
 Increased competitiveness may also lead to decline in the price of goods, improvements in quality of goods and
choices of goods.

2. Increase in skilled workers

 Increased international labor mobility has led to an increase in skilled workers.
3. Improvement in Education
 The spread of the internet has helped to improved education.
4. Cultural Diversity
 Increased movement of labor leads to an increase in the spread of different cultural ideas.
5. Poverty reduction
 GDP of the developing countries has increase twice as much as before.
6. Transportation
 Globalization has led to tremendous increase in transportation services across the globe.
 Diageo world's largest spirits company having most popular brands like Johnnie Walker, Smirnoff, baileys purchases
55% stake in the india’s largest liquor company United Spirits.

DISADVANTAGES OF GLOBALIZATION
1. Increased Commodity Price
 Prices then and now have increase tremendously.
2. Exploitation of cheap labor
 Workers working day and night to produce goods for very little money
3. Causes of Diseases
 It is the cause of every serious health problems all over the globe.
4. Increased relative poverty and inequality
 We have everything by globalization. We have nothing by globalization.
5. Increased vulnerability and instability
 The international coffee chains are causing a serious threat to local coffee shops.
6. Disparity
 The economic system that has generated tremendous wealth disparity that really seems unfair.
7. Uneven wealth distribution
 The rich are getting richer and the poor are getting poorer.

People are ready to shell out extra money for a product that may be available at a lower price. This is because of modern marketing
techniques like advertising and branding. The local players suffer huge losses as they lack the potential to advertise or export their
products on a large scale. Therefore, the domestic markets shrink.

MARKET INTEGRATION
Market integration involves the unification of different segments of an economy into a single market, leading to increased
coordination and interdependence.

INTRODUCTION TO MARKET INTEGRATION

Market integration is the process of harmonizing and unifying diverse markets into a single, cohesive entity. This complex
undertaking involves a myriad of economic, social, and cultural factors that impact trade, commerce, and investment.
• The fusing of many markets into one.
• Integration shows the relationship of the firm in a market.
• The extent of integration influences the conduct of the firms and consequently their marketing efficiency.
• The behaviour of highly integrated market is different from that of a disintegrated market.
• Markets differ in the extent of integration and therefore, there is a variation in their degree of efficiency

HISTORY OF MARKET INTEGRATION

1. Ancient Times
Market integration traces back to ancient trade routes, fostering exchange between civilizations.
2. Colonial Era
Colonialism played a pivotal role in merging diverse markets under the dominion of imperial powers.
3. Post-World War Period
Efforts to rebuild global economies led to collaborative market integration initiatives

HISTORY OF MARKET INTEGRATION

1. Early Beginnings
Market integration dates back to ancient trade routes connecting diverse diverse civilizations.
2. Post-War Efforts
After World War II, initiatives like the European Coal and Steel Community laid the foundation for economic integration.
3. Globalization Era
In recent decades, globalization has accelerated the pace of market integration through trade agreements and technological
advancement

BENEFITS OF MARKET INTEGRATION

Economic Growth
Market integration fosters economic growth by facilitating the efficient allocation of resources.
Enhanced Competition
It promotes competition, leading to increased innovation and improved consumer choices.
Stability
Integration can provide stability by diversifying economic risks across a broader market.

DEFINITION AND IMPORTANCE OF MARKET INTEGRATION

Definition
Market integration refers to the seamless integration of markets to facilitate trade and economic growth.
Importance
It enhances economic efficiency, fosters innovation, and promotes global economic stability

FUNCTIONS OF MARKET INTEGRATION

1 Harmonization
Standardizing regulations and policies to create a level playing field for market participants.
2 Facilitation
Streamlining trade processes, logistics, and infrastructure to enable smooth market operations.
3 Cooperation
Promoting collaboration among businesses and governments to address common market challenges

TYPES OF MARKET INTEGRATION

1 Horizontal Integration
2 Vertical Integration
3 Conglomeration

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 with a view to reducing their effective number and the
extent of actual competition in the market.
• It is advantageous for the members who join the group.
• Some marketing agencies combine to form a union to reduce their effective number and the extent of actual competition in the
market.

EFFECTS OF HORIZONTAL INTEGRATION

•In most markets, there is a large number of agencies which do not effectively compete with each other
•This is indicative of some element of horizontal integration
•It leads to reduced cost of marketing
•It reduces the competition as possible

ADVANTAGES AND DISADVANTAGES OF THE HORIZONTAL INTEGRATION

• Lower costs • Increased market power • Economics of scale
• Higher efficiency • Reduced competition • Economics of scope
• Increased differentiation • Access to new markets • International trade

DISADVANTAGES OF THE HORIZONTAL INTEGRATION

•Destroyed value •Legal repercussions •Reduced flexibility

VERTICAL INTEGRATION
• This occurs when a firm performs more than one activity in the sequence of the marketing process
• It is a linking together of two or more functions in the marketing process within a single firm or under a single ownership
• Makes it possible to exercise control over both quality and quantity of the product from the beginning of the production process until
the production is ready for the consumer
• Some marketing agencies combine to form a union to reduce their effective number and the extent of actual competition in the
market.

THREE TYPES OF VERTICAL INTEGRATION

I. FORWARD INTEGRATION
• takes activities close to the consumption function
II. BACKWARD INTEGRATION
• combination of sources of supply
• Assumes the function of purchasing and assembling
III. BALANCED VERTICAL INTEGRATION
• combination of Forward and Backward
Integration
EFFECTS OF VERTICAL INTEGRATION
• More profits by taking up additional functions
• Risk reduction through improved market coordination
• Improvement in bargaining power and the prospects of influencing prices
• Lowering costs through achieving operational efficiency

ADVANTAGES OF THE VERTICAL INTEGRATION DISADVANTAGES OF THE VERTICAL INTEGRATION

• Allow to invest in assets that are highly specialized •Capacity-balancing problems
• More control over the business •Can bring about more difficulties
• Allows for positive differentiation •Result in decreased flexibility
• Requires lower costs of transaction •Create some barriers to market entry
• Offers more cost control •Can cause confusion within the business
• Ensures a high level of certainty when it comes to quality •Requires a huge amount of money
• Provides more competitive advantages

CONGLOMERATION
• A combination of agencies or activities not directly related to each other may
operate under a unified management.

EFFECTS OF CONGLOMERATION
•Risk reduction through diversification
•Acquisition of financial leverage
• Empire-building urge

ADVANTAGES OF CONGLOMERATION DISADVANTAGES OF CONGLOMERATION

•Diversification •No experience in other industry
•Cross-selling products •Focus shift on business operations
•Investment opportunity •Hard to merge cultural values

DEGREE OF INTEGRATION
OWNERSHIP INTEGRATION
• This occurs when all the decisions and assets of a firm are completely assumed by another firm.
CONTRACT INTEGRATION
• This involves an agreement between two firms on certain decisions, while each firm retains its separate identity

TYPES OF MARKET INTEGRATION

1 Free Trade Area
Agreement to reduce or eliminate tariffs and quotas between member countries.
2 Customs Union
Harmonization of external tariffs and a common trade policy towards non-member nations.
3 Common Market
Customs union with provisions for the free movement of goods, services, and people.

BENEFITS OF MARKET INTEGRATION

Economic Growth
Expanded markets lead to increased investment and economic prosperity.

Innovation
Exposure to diverse markets fosters creativity and technological advancements.
Collaboration
Encourages countries to work together, forging stronger international ties

EXAMPLES OF SUCCESSFUL MARKET INTEGRATION

 European Union North American Free Trade Agreement (NAFTA)
 Association of Southeast Asian Nations (ASEAN) Caribbean Community (CARICOM)

CHALLENGES AND BARRIERS TO MARKET INTEGRATION

1. Regulatory Hurdles
Varied regulations and bureaucratic obstacles hinder seamless integration.
2. Cultural Differences
Diverse cultural practices can lead to conflicting business norms and values.
3. Political Resistance
National interests and protectionism can impede cooperative integration efforts

CHALLENGES AND RISKS OF MARKET INTEGRATION

1. Resource Redistribution
Uneven distribution of benefits across regions.
2. Loss of Sovereignty
Nations may have to cede some decision-making powers to supranational bodies.
3. Trade Disruptions
 Potential disruption of local industries due to international competition

CASE STUDIES OF SUCCESSFUL MARKET INTEGRATION

 European - Union Integrated common market and currency.
 ASEAN - Facilitated free trade and reduced tariffs.
 NAFTA - Enabled seamless trade across North American borders.

STRATEGIES FOR SUCCESSFUL MARKET INTEGRATION

1. Policy Coordination
Effective coordination of fiscal, monetary, and trade policies among member states.
2. Capacity Building
Investing in infrastructure, education, and skill development to enhance market participation.
3. Regulatory Flexibility
Adaptable regulations to accommodate diverse market conditions and emerging challenges

STRATEGIES FOR ACHIEVING MARKET INTEGRATION

Policy Alignment
Harmonizing legal and regulatory frameworks across markets.
Capacity Building
Empowering nations with tools for inclusive economic participation.
Public-Private Partnerships
Fostering collaborations for joint economic initiatives and investment

KEY CONSIDERATIONS FOR MARKET INTEGRATION

1. Market Access
Ensuring equitable access to markets for all participants, including small businesses.
2. Impact Assessment
Conducting comprehensive impact assessments to minimize adverse effects on any involved parties.
3. Transparent Governance
Establishing transparent and inclusive governance frameworks for decision-making

FUTURE TRENDS IN MARKET INTEGRATION

5 - International Cooperation
Enhanced collaboration among nations for integrated economic progress.
3K - Digital Transformation
Shift towards digital economies altering traditional market dynamics.

CONCLUSION AND KEY TAKEAWAYS

1. Global Interconnectedness
Market integration fosters global unity and economic interconnectedness.
2. Ongoing Challenges
The journey towards successful integration is filled with complexities and hurdles

CONCLUSION
1 Continual Evolution
Market integration remains an evolving process, shaped by global dynamics and regional aspirations.
2 Socioeconomic Impact
Its broader socioeconomic impact influences industries, livelihoods, and geopolitical relationships.
3 Future Prospects
As markets continue to interconnect, innovative approaches and adaptive frameworks will be crucial

THE GLOBAL ECONOMY

Economic Globalization is the expansion of national economies, the global market driven by modern technologies and
institutional setups that promote a faster and easier flow of goods and capital (Sugden and Wilson, 2005)
Global Economy denotes that the economies of various countries are more interconnected from extraction, production,
distribution, and consumption, to disposal of goods and services (Carfi and Schiliro, 2018)
International financial institution are global financial institutions that support a country’s economic growth through
support(i.e loans, technical assistance) to governments and now other private sectors (Wood, 2019)
International Monetary Fund is an international organization with 190 member countries that promotes international
monetary cooperation and exchange stability to foster economic growth and high employment and to provide short-term financial
assistance to countries to help ease balance of payment adjustments (IMF, 2019)
 PHILIPPINES December 27, 1945 (Member of the IMF)

GLOBAL CIVIL SOCIETY

is a system of nongovernment institutions that operate across geographical borders and organize and mobilize for a
common issue or cause (Keane,2003:8)
GLOBAL CORPORATION
is an “enterprise that engages in activities that add value (manufacturing, extraction,services, marketing, etc.) in more than
one country” (UCTC, 1991)
WORLD SYSTEM
is based on the theory of Wallerstein (1974) that recognizes that social and economic change is not only endogenous to a
county, but is affected by its interaction to exogenous institutions, thus the focus on world-systems (Chase-Dunn, 2018)
ECONOMIC INTEGRATION
is a process of combining or increasing the interconnectivity
of national economies to the regional or global economies
(Clark et al., 2018)

GLOBAL ACTORS
 Multinational Corporation
 The International Fund
 North Atlantic Treaty
 World Bank
 Transnational Corporations

MULTINATIONAL CORPORATION
A multinational corporation is a business organization whose activities are located in more than two countries and is the
organizational form that defines foreign direct investment. This form consists of a country location where the firm is incorporated and
of the establishment of branches of subsidiaries in foreign countries (A.A Lazarus, 2001 p. 10197)

THE INTERNATIONAL MONETARY FUND

founded at the Bretton Woods conference in 1944, is the official organization for securing international monetary cooperation.
It has done useful work in various fields, such as research and the publication of statistics, and the tendering of monetary advice to
less- developed countries. It has also conducted valuable consultations with the developed countries.

NORTH ATLANTIC TREATY

is based on the North Atlantic Treaty, which provides the organization with a framework. The treaty provides that an armed
attacks against one or more NATO's member nations shall be considered an attack against them all.
NATO is headquartered in Brussels, Belgium. The organization was formed in 1949. Many joined NATO-- even Iceland, the
only member without a military force.
The organization is originally formed out of fear that the Soviet Union would Eastern European nations, i.e. the Warsaw Pact,
and thus become a threat to Western Europe and the United States

GLOBAL GOVERNANCE
Global governance refers to the system of international cooperation that aims to address and manage global issues and
challenges that transcend national boundaries. It involves the participation of various actors, including states, international
organizations, non-governmental organizations, and more.

HISTORICAL CONTEXT OF GLOBAL GOVERNANCE

1. World Wars -The aftermath of the World Wars led to the establishment of institutions like the United Nations, shaping early global
governance
2. Cold War Era -The ideological divide and geopolitical tensions during the Cold War significantly influenced global 3 governance
efforts
3. Decolonization -The process of decolonization and the birth of new nation-states shaped the dynamics of global governance

CONTEMPORARY CHALLENGES TO GLOBAL GOVERNANCE

Climate Change
Addressing the global threat of climate change poses complex challenges for global governance structures.
Security Threats
Security issues such as terrorism and cyber threats require coordinated global responses for effective governance.
Migration
The management of large-scale human migration demands innovative and human

THE ROLE OF INTERNATIONAL ORGANIZATIONS IN GLOBAL GOVERNANCE

UN & WTO
The United Nations and the World Trade Organization play influential roles in shaping global governance policies and
regulations.
IMF & WHO
The International Monetary Fund and the World Health Organization contribute to global economic and healthcare
governance, respectively.

THE IMPACT OF GLOBALIZATION ON GLOBAL GOVERNANCE

1. Trade Integration
Globalization has intensified economic interdependence, requiring enhanced global governance mechanisms for trade.
2. Cultural Exchange
Cultural globalization has introduced new complexities that demand creative global governance strategies.
3. Technological Advancements
Rapid technological progress necessitates global governance frameworks to address digital and cyber issues.
CASE STUDIES OF SUCCESSFUL GLOBAL GOVERNANCE INITIATIVES
1. Paris Agreement
The Paris Agreement exemplifies successful multilateral cooperation to combat climate change at a global scale.
2. Global Health Initiatives
Collaborative efforts like the Global Fund have notably improved healthcare governance and disease control worldwide.
3. Internet Governance
The multi-stakeholder model for internet governance showcases effective collaboration among diverse entities

CRITICISMS OF GLOBAL GOVERNANCE AND PROPOSED REFORMS

Democratic Deficit
Critics argue that global governance lacks democratic legitimacy and transparency, necessitating reforms.
Power Imbalances
The influence of dominant powers on global institutions prompts calls for equitable governance reforms.
Global South Marginalization
Concerns persist about the marginalization of developing nations in global governance decision-making processes

CONCLUSION AND FUTURE PROSPECTS FOR GLOBAL GOVERNANCE

 2030 Agenda for Sustainable Development
 Over 1.5K International Treaties
 4 Framework for the Future -Collaborative efforts are crucial to develop a comprehensive framework for future global
governance