Tuesday, November 22, 2005

Can Wal-Mart do business in India?

Age of corporate diplomacy
By ND Batra
From The Statesman

When American Airlines, the second US carrier to start a nonstop service to India, planned its Chicago O’Hare to New Delhi flight, its management realised that open skies do not necessarily mean open hearts and minds, in spite of the excellent business climate and trust between the two countries. In an international business venture of this magnitude, failure is not an option. Competition is knocking at the door.

Cultural sensibilities, such as cuisine, had to be taken into account, especially as competition becomes hot on the lucrative non-stop route to one of the world’s fastest growing economies.

According to company sources, “With assistance from the American Airlines Indian Employee Resource Group, and in conjunction with Indian chefs based in the USA and India, the Americans structured a special menu for the Delhi flights that features Indian, Indian-inspired vegetarian and Western meal selections.No beef or pork will be served on the flights to and from Delhi. Only chicken, lamb and seafood dishes will be featured.”

Another airline, Continental, began its non-stop flight from Newark, New Jersey to Delhi on 1 November; and European and Indian carriers are bound to follow soon.Besides, as US Today reported, the non-stop flight has to fly over Russian airspace, which required agreement between the two governments and further corporate diplomacy. So there is a lesson here. Since the foreign policies of a country could put a damper on its international commerce, multinational corporations must have their own corporate diplomats and protocol officers for business development abroad.

Corporate diplomacy is crucial to the credibility of a company in explaining, positioning and carrying out its business, especially in these times when the image of the USA abroad is not bright.

International commerce depends upon the goodwill of the public, which must be continuously built so that it works as a shock absorber when some unforeseen calamity occurs and crisis communication strategy has to be deployed.

The creation and the development of this intangible and valuable asset, the public goodwill, is the function of corporate diplomacy.

In the 21st century, doing business in a foreign country must be much more than making profits. In his keynote address to Owens Corning Executive Summit at Tampa, Florida, Bill Shireman, President and CEO, Future 500, said: “The world is demanding a lot of the modern corporation.” When a company captures market share, he said, it also captures mind share, the deep support of the people.

When the host population perceives a corporation as a good citizen, it produces collateral benefits for the home country. On the other hand, when the local population perceives a country as hostile, foreign businesses could be hit hard, as it happened in Karachi when KFC was torched for the second time recently.

And ironically it happened at a time when Karen Hughes, US under-secretary for public diplomacy, was leading a delegation to Pakistan and visiting Muzafarrabad (Pakistani Kashmir) to assure the people and the government about the US commitment for the rehabilitation of the people affected by the 8 October earthquake. Accompanying Ms Hughes were some top corporate executives from Xerox, Pfizer and UPS, but the Pakistani public remained unimpressed. The foundation for grassroot public diplomacy, which is more than show-and-tell visits by celebrities, has not been laid in Pakistan.

Resentment against US foreign policy has been contaminating the image of US corporate brands, especially in Arab-Muslim countries, which requires corporate America to do its own public diplomacy.

Doing effective global corporate diplomacy requires local knowledge, competencies and tools for implementing strategic communications to deal effectively with foreign publics.

The overarching goal of corporate diplomacy is to develop an effective corporate voice and to learn to use all available means of persuasion, media and human networks, to shape public opinion as well as policies of the government in the host country.

KFC, McDonald’s and Coca Cola cannot depend upon their international brands to survive in hostile environment. They have to engage in creative business-to-people diplomacy.

Global business needs a new kind of corporate diplomat, one who must be responsive and effective in communicating with different publics, interest groups, activists, governments and stakeholders in international settings by using various media forms, print, radio/television and the Internet.

The corporate diplomat must be able to create a powerful corporate identity that serves the mission of the corporation as a responsible global corporate citizen and at the same time support the culture of the host country.

Developing intercultural sense and sensibility will enable the practitioners of corporate diplomacy to develop culturally sensitive best business practices throughout the supply chain.

Special focus must be placed on: developing strategic communications for foreign media; maintaining brand reputation; developing rapid response crisis communication strategies; developing corporate advocacy for environment, open trade and free markets; using philanthropy and community relations to counter negative sentiments; dealing with foreign bureaucracy, influentials, activists and opinion leaders.

Above all, emphasis must be on maintaining corporate integrity abroad; and being a good global citizen


  1. promoting international biz does not mean globalism.

    Globalism is a tool used by western countries to deprive the third world.

    Each country has its own interest. You have to protect your own, even when you are doing biz wit outside.

    Can Wal-mart make india rich? Never!! It will make every penny from Indian's blood and sweat without any mercy. Can it share its wealth with India? No way, all of its profit will be brought back to US.

  2. Dr. Batra,

    Just wanted to let you know that I posted about this essay on my blog, Beacon, at http://softpowerbeacon.blogspot.com