EconomIcs ProJecT
=== Integration
Introduction
In this project, we are going to
present the concept of integration.
We will use THE BANK OF CHINA as
an example to illustrate this concept.
Are u ready? Let’s start the journey!!!
-The 1st station
Type of integration
What is horizontal integration???
Horizontal integration—
Horizontal integration takes place when firms
producing the same product or at the same
stage of production combine together.
Bank of China VS Integration (Ⅰ)
Bank of China enjoys a leading position
among local banks, with a broad customer
base and an extensive branch network. It
is also one of the three note-issuing banks
in Hong Kong, and assumes the role of
Chairman Bank of the Hong Kong
Association of Banks on a rotational basis.
The ultimate controlling shareholder is
Bank of China.
Bank of China VS Integration (Ⅱ)
In order to enlarge the scale of
production and produce a larger
output, Bank of china integrates with
other banks.
Wait... Wait… how did they integrate?
-The 2nd
station
Method of integration
Merger—
A merger occurs when a merging firm
purchases all the assets of a merged firm.
After the merger, the merging firm grows
bigger in size but the merged firm is
dissolved.
Bank of China VS Merger
Do u remember the news…
Established on 1 October 2001, Bank of
China (Hong Kong) Limited was a Hong Kong
incorporated licensed bank which combined
the businesses of ten of the twelve other
banks in Hong Kong originally under the
Bank of China Group.
Let me show u who are they….
The ten
mergered banks
 Bank of China Hong Kong Branch
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The Kwangtung Provincial Bank
Sin Hua Bank Limited
The China & South Sea Bank Limited
Kincheng Banking Corporation
The China State Bank Limited
The National Commercial Bank Limited
The Yien Yieh Commercial Bank Limited
Hua Chiao Commercial Bank Limited
Po Sang Bank Limited
-The 3rd station
Motives For integration
1.Benefiting from economies of scale
As the size of Bank Of China
becomes bigger, integration
helps to enjoy the scale of
production. The bank then
benefits from economies of
scale. Its average cost will
decrease.
2.Closing down some plants to reduce loss
Bank of China is planning
to close some plants to
reduce loss. It can save
labour costs as less
manpower is needed.
Inefficient plants can be
closed to save rental and
equipment costs.
3.Turning competitors into partners
Banks are direct competitors
as they provide similar
services. Through horizontal
integration, it often enables
BANK OF CHINA to turn
competitors into business
partners.
Conclusion:
The establishment of the Bank and their
d e c i s i o n t o r e g i st e r i n Ho n g K o n g a r e
significant in the development history of the
local banking sector. It will certainly sustain
and enhance the stability and growth of the
local financial markets and the role of Hong
Kong as an international financial center.
Hence, the restructuring project of the former
Bank of China Group has received the
encouragement of the Government and the
support of the people in Hong Kong.
Do u guys enjoy the journey?
Thank you very much!
The enD
By:
5A Michelle Yau
5D Antonia Cho
Janet Yu
Maria Tai