LESSON 3:

MARKET INTEGRATION

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Historic Rise of Global Corporations:
Historical Globalization Approach:
Based on arrangements in trade and
exchange (Bentley, 2003; Gills &
Thompson, 2006; Moore & Lewis, 2000).
Before, globalization was stimulated
by the leading technologies in shipping
and navigation (Harvey, 1990).

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Post World War II Era:
Economic recovery and
growth were spearheaded by
American corporations followed
by the re-entry of Japanese and
European companies which
later on were regarded as
MNCs (Barnet & Mueller, 1974).
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How Do Global Corporations Function?
What Constitute a Global Corporation?
According to Iwan (2012), the
current international corporations may
be called as any of the following:
A. International Companies
B. Global Companies
C. Multinational Companies
D. Transnational Companies

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A. International Companies:
1. Import and export raw materials
2. NO other investments outside
the country of origin
3. NO branches overseas
4. Business functions &
headquarters remain in the
country of origin
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Examples:
1. Apple:
Produces consumer electronics (computers,
tablets, mobile phones, etc.). Products are
sold around the world, but the headquarters and
all product development are located within the
U.S.A.
2. Nike:
Started as an international business.
Decisions for the brand are all made within the
US, and Nike products are exported to other
nations.
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https://www.logaster.com/blog/apple-logo/
https://thelogocreative.medium.com/nike-logo-evolution-the-35-swoosh-54bea24fee43

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B. Global Companies:
1. Have investments and business in other
countries
2. Have subsidiaries (business sites/branches)
in many nations
3. Branches can personalize the marketing of
products
4. Keeps “one company culture” and “one set of
goods”

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Examples:
1. McDonald’s Restaurants:
Serve the same menu in all their
locations with some customized
menus depending on the location.
2. Hyatt and Hilton Hotels:
Have rooms which are all the
same no matter what nations the
hotels are located.
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https://logos-world.net/mcdonalds-logo/
https://loyaltylobby.com/2020/02/24/coronavirus-hotel-status-waivers-extension/

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C. Multinational Companies:
1. Invest in foreign countries
2. Do NOT possess coordinated commodity
offerings in every nation (related with #4).
3. Have fewer countries of interest than a
global company
4. Different countries are in charge of localizing
the products and marketing to fit the culture.
5. They offer tailored products within different
nations

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Examples:
1. Starbucks:
Most of the menu are the same. Offerings
change based on local tastes. It also localizes
seating and set-up to make local customers
more comfortable.
2. Honda:
HQs are in Japan, but has established
branches all over the world. The product line-up
varies by country (i.e., Honda trucks were
developed for the US market).

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https://fabrikbrands.com/honda-logo-history-honda-symbol-meaning-and-evolution/
https://logos-world.net/starbucks-logo/

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D. Transnational Companies:
1. Are complex corporations and have
investments in foreign nations.
2. Possess fundamental commercial facilities
3. Give decision making, research and
development (R&D), and marketing
authorities to every individual overseas
market.
4. Each local branch has its own decision
making power, own markets, and own
product selection
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Examples:
1. Nestle:
Has HQs, but international branches
make their own decisions regarding
operations and product offering.
2. General Electric:
Has branches across the globe, many
of which make their own decisions on
policy and business direction

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https://1000logos.net/nestle-logo/
https://1000logos.net/ge-logo/

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NOTE: The term “global corporation” refers
to ALL of the four classifications.

TNC or MNC:
Defined by the United Nations Center on
Transnational Corporations (UNCTC) as a
business organization that involves itself in
activities which add value (manufacturing,
extraction, services, marketing, etc.) in
more than one nation (UNCTC, 1991).

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The post-war period can be
delineated in three structural periods
(Geriffi, 2001):
(a) Investment-based globalization
(1950-70);
(b) Trade-based globalization
(1970-95); and
(c) Digital globalization
(1995 onwards)
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Sources of Foreign Direct
Investment (FDI) by MNCs/TNCs:
According to Hedley, in
1900 only European
companies were principal
investors.
Later on, American firms
started to follow in the 1930s.
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What is an FDI?
Defined as the influx of private
capital from a foreign source into
a receiving nation.
FDIs are the principal
components of international
economic development for third
world countries (TWCs).

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 The bulk of FDIs in the
1990s came from nations
of the industrialized
world (i.e., North
America, Europe, and
Japan) (Geriffi, 2001).
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 According to Gilpin (2000), the
investment-based era was led by
“producer-driven” commodity or
value chain dominated by
companies possessing massive
amounts of capital using
extensive and capital-intensive
manufacturing strategies.

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 Many companies in the
United States that operate
via the “producer-driven”
commodity chain were
structured based on the
“Fordist” management
principles.
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The “Fordist” Management Principles:
1. Signifies modernity during the
1920s
2. Mass production of standardized
goods on a moving “assembly line”
using machinery and semi-skilled
labor
3. Involves mass production and mass
consumption
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Assembly Line:
An arrangement of machines,
equipment, and workers in which
work passes from one operation to
another via a direct line until the
product is assembled (i.e.,
production of automobiles,
appliances, and other electronic
goods).
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4. Workers accept
management authority in
return for rising wages
5. Presence of
“monopolistic competition”
6. Centralized financial
capital
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 The advent of Japan as a
principal producer of
automobiles and consumer
electronic products since the
1970s introduced new
prototypes of effective
manufacturing strategies which
centered on quality and flexible
production.
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 These are seen by American
companies as challenges to their
dominant positions on
commodity design,
manufacturing efficiency, and
quality which resulted to an
advanced reinvention of the US
corporate model, especially in
the industrial sector (Risi, 2005).
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Corporate Brands:
Signify a company’s
corporate activities and
evaluate a corporation’s
prominence in the
international arena based on
the value of its commodities
and services.
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 This is also recognized as
“Brand Finance”, a current
trend which ranks global
companies on the value of
their brands, aggregate
revenue, earnings, etc.
(Brand-Finance, 2012).
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 GLOBAL 500 2022 RANKING
Source: https://brandirectory.com/rankings/global/table

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 “Producer-driven Commodity
Chain” reduces the effects of time and
distance in terms of design, finance
and accounting, advertising and brand
development, legal services, inventory
control etc.
Digitalization is innovating the
usual value chain of manufacturing
centered on improvement along the
following (Capgemini, 2012):
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1. Product Design and Innovation are
replaced with innovations via digital
product design;
2. Labor Intensive Manufacturing is
substituted by digitizing the factory shop
floor making it more capital-intensive;
3. Supply Chain Management is changed
by digital supply chain management; and
4. Marketing Sales and Service is
innovated by digital customization.

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 “Buyer-driven Commodity
Chain” gradually becomes
digital with companies’
specialization in Internet
marketing of products and
services to increase market
share over traditional marketing
and retailing.
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 The last 30 or more years
observed the revolution of the
apparel industry motivated by
digital processes from design, to
ordering, factory processing,
inventory control, delivery,
branding, marketing, and
advertising (Capgemini, 2012).

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 The developing economies of Brazil,
Russia, India, China, and South Africa
(BRICS) became the region of
international corporate growth, as
reflected by their FDIs over the past 30
years.
The number of MNCs from the BRICS
(listed in the Fortune Global 500 that
ranks companies in terms of revenue)
rose from 47 companies in 2005 to 95 in
2010.
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 Capital flows now originate from China
and India. China's Lenovo company
purchased IBM's PC business and India's
investment in British companies (i.e.,
Jaguar Land Rover) (Economist, 2011).
China is the leading outward investor
among developing economies with
projected assets in 2009 of approximately
US$1 trillion (OECD, 2010).

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 Wolfsensohn, suggested a “four-speed
world” categorization which distinguishes
economies as: (1) Affluent, (2) Converging,
(3) Struggling and (4) Poor, with the BRICS
dominating the growth of the “convergent”
group (#2).
With 40% of the globe’s inhabitants,
the BRICS signifies a major power in both
worldwide production and consumption
(Wolfsensohn, 2007).

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 “2023 World Population (Top 14 Countries)”
Updated on July 16, 2023 with the latest July 2023-July 2024 estimates from the 2022 U.N. Revision
(Source: https://www.worldometers.info/world-population/population-by-country/)

Source: https://www.statista.com/statistics/262879/countries-with-the-largest-population/

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OF THE TOP 14 COUNTRIES:

a. ASIA: 8 Countries
b. AFRICA: 3 Countries
c. AMERICAS
(N & S): 3 Countries

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 BRICS Population (July 2023)

COUNTRY POPULATION
INDIA 1,428,627,663
CHINA 1,425,671,352
BRAZIL 216,422,446
RUSSIA 144,444,359
SOUTH AFRICA 60,414,495
BRICS’ TOTAL: 3,275,580,315
(PERCENTAGE): (40.62% of the World’s Population)
WORLD POPULATION 8,064,528,500
Source: https://www.statista.com/statistics/262879/countries-with-the-largest-population/

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 According to the Boston Consulting Group
(2009), the following are some “Emerging
Market Global Corporations”:

1. Basic Element (Russia): world leader in

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NOTE:
Forging is a manufacturing
process which involves the
shaping of metal through
compressive forces such as
hammering, pressing, or rolling.

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4. CEMEX (Mexico): developed into one
of the world's largest cement
producers
5. China International Marine
Containers Group (China): world's
largest manufacturer of shipping
containers.
6. Cosco Group (China): one of the
largest shipping companies in the
world.
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7. Embraer (Brazil): surpassed
Canada's Bombardier as the market
leader in regional jets.
8. Galanz Group (China): has a 45 %
share of the European and a 25 %
share of the US microwave market.
9. Hisense (China): number one
supplier of flat-panel TVs to France.

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10. Johnson Electric (China): world's
leading manufacturer of small electric
motors.
11. Nemak (Mexico): one of the world's
leading suppliers of cylinder head and
block casings for the automotive
industry.
12. Sistema (Russia): a conglomerate
with a focus on telecommunications.

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13. Tata Chemicals (India): an inorganic-
chemicals producer with a significant
global market share of soda ash.
14. Techtronic Industries Company
(Hongkong, China): the number one
supplier of power tools to Home Depot.
15. Wipro (India): the world's largest
third-party engineering services
company.

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NOTE:
Over half of all Soda Ash
production is used in glass
manufacturing; powdered
detergents and soaps;
rechargeable batteries,
cosmetics; and in
pharmaceutical industry.
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 SUMMARY
COUNTRY NO. OF CORPORATIONS PERCENTAGE

BRAZIL 1 7%
CHINA 7 47 %
INDIA 3 20 %
MEXICO 2 13 %
RUSSIA 2 13 %
TOTAL 15 100 %

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 In 2009, China was the primary trade partner
of Brazil, India and South Africa.
Tata Company of India was the most
dynamic investor in sub-Saharan Africa.
Government-owned and controlled
corporations (GOCCs) or state-owned
corporations in which the government possesses
control (full, majority, or significant minority),
whether or not registered on a stock exchange
play an important part in these emerging or
developing economies (UNCTAD-WIR, 2011).

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 Another description of
China's state-owned MNCs
affirms that these are legacy
institutions (relics) of China's
command-socialist system
that propagates in its revised
neo-capitalist economy.

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 Companies that lack
economic efficiency and
competitive discipline are in
effect subsidized or funded by
the Chinese state which gives
them market leverage to become
globally competitive (Woetzel,
2008; Greenacre, 2012).

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REFERENCE:

Neubauer, D. (2014). “The rise of the global

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