Multinational companies ("MNCs") have existed for many years, but today there are many more of them and their importance to all economies has become much greater. Their example, and their success, has led many businesses to change their strategic objectives and their management thinking, ‘thinking globally but acting locally’ is now much more common; many businesses used to almost ignore what went on elsewhere. The following main factors have fuelled the speed of globalization:

1.      International trade. The world has moved irrevocably toward economic integration and free trade since 1945 through the efforts of the General Agreement on Tariffs and Trade (GATT, a United Nations agency) until 1995, and since that time, through GATT’s replacement, the World Trade Organization (WTO).

Approaches to economic integration may be:

Bilateral integration-two countries cooperate closely, usually in the form of tariff reductions.

Regional integration-a group of countries located in the same geographic proximity decide to cooperate, i.e. the European Union.

Global integration-countries worldwide cooperate through the WTO

2.      Technology and global media. The advent of satellite, computer, and Internet technologies has transformed worldwide communications and facilitated information flows among nations, companies, and individuals. Companies now have superior abilities to coordinate activities, products, and strategies across markets, and individuals have increased access to new ideas, philosophies, products, and lifestyles.

3.      Transport is much cheaper and faster. This is not just aircraft, but also ships. The development of containerization in the 1950s was a major breakthrough in goods handling, and there have been continuing improvements to shipping technology since then.

4.      Trade blocs. For some countries, the worldwide liberalization of trade and commerce did not occur fast enough, and countries got together to form trade blocs to facilitate commercial interactions among members. Examples include the European Union, North American Free Trade Area, the Mercosur and Andean Pact groups (South America), East African community, ECOWAS, etc.

5.      Foreign direct investments (FDI) occur when international companies make investments in factories, plants, and machinery in nondomestic markets.

6.      Global movements toward capitalism. The demise of communism in the 1980s and 1990s left little competition for capitalism to be the world’s dominant economic and political philosophy.

7.      Deregulation. Many rules and regulations in business were removed, especially rules regarding foreign ownership. Privatization also took place, and large areas of business were now open to purchase and/or take-over. This allowed businesses in one country to buy those in another. For example, many UK utilities, once government businesses, are owned by French and US businesses. In Uganda, Posta Uganda and NIC.

8.      Removal of capital exchange controls. The movement of money from one country to another was also controlled, and these controls were lifted over the same period. This allowed businesses to move money from one country to another in a search for better business returns; if investment in one’s own country looked unattractive, a business could buy businesses in another country.

9.      Consumer tastes have changed, and consumers are more willing to try foreign products. The arrival of global satellite television and the internet, for example, has exposed consumers to global advertising. Consumers are more aware of what is available in other countries, and are keen to give it a try.

10.  Emerging markets in developing countries. There has been high growth of incomes in these countries, which makes large consumer markets with money to spend. Both India and China are very poor countries, but there are small middle classes who are doing very well and have money to spend. Although these groups are small in the context of the country, the overall populations are so huge (over 1 billion) that a small middle class adds up to many millions of consumers. Other examples BRICS Nations (Brazil, Russia, India, China, South Africa) and MINT nations (Mexico, Indonesia, Nigeria, Turkey).