Tuesday, April 8, 2008

Brand India

Becoming a global brand and keeping it

From The Statesman
ND Batra

It is doubtful if Ford Motor Company would have sold a high-profile brand portfolio like Jaguar and Land Rover to a Chinese auto company. Tata is embedded in a multicultural open society where workers’ rights cannot be easily trifled with. Besides, Tata knows how to communicate in a global environment.

Tata is good because India is good.
Mittal Steel adopted a global corporate diplomacy to persuade Europeans that the Mittals were no carpetbaggers; they’re coming as partners. Mittal Steel’s takeover of Arcelor might have made Tata acquisitions of global brands comparatively smooth.

As corporate India expands globally, it must communicate well. Excellent communication is the key to effective corporate public affairs and global diplomacy. Without a comprehensive communications strategy that embraces all important stakeholders, who interact with the company and form its business environment, global corporate diplomacy cannot be effective. In this age of global transparency enforced by the “always on news cycle”, the Internet, the YouTube, and reporting standards established by global watchdogs like Global Reporting Initiative, multinationals can neither run nor hide.

Companies just cannot afford not to communicate about an issue that concerns stakeholders in their business environment. And since they have to communicate, they must do it efficiently. Corporate communication is essentially persuasion, even when a company is just trying to inform stakeholders.

Power to persuade is the soft power that transnational companies apply to win the hearts and minds of not only consumers but public at large. But to do so in a multichannel-Webbed environment over which they don’t have much control, companies need to be diplomatically smart, especially when a company has to operate in a foreign environment.

There are many reasons for doing so. For example, companies have become de-localised (Tata, Mittal Steel, IBM, Wipro, for example). They are no longer woven into the fabric of local communities only as they used to be in the pre-Internet age. Company employees do their work in a virtual environment and their mobility makes them less concerned with what is happening in their neighbourhood. In an environment like this it would take extraordinary efforts for global companies to communicate and present their position in a persuasive manner.

That’s why Sovereign Wealth Funds are so threatening. They are faceless behemoths and who knows they may have hidden political agendas. Perception is reality and many people perceive global companies as more powerful than the government, which draws enhanced critical scrutiny from the media and NGOs. The image of power, which global companies project, raises expectations as well as fear in the minds of the people. Growing expectations of corporate responsibility create unusual challenges for corporate communications and diplomacy. Because of corporate mismanagement and scandals in the United States (the subprime crisis that has rocked global finance) and Europe (Siemens corruption is the latest), public watch groups expect greater openness and transparency from companies.

A corporation in India may get away with any kind of behaviour, but that may not be acceptable in the United States or Europe. Since expectation of corporate behaviour differs from country to country, corporate communications strategies must take such variables into account. It is necessary to point out that effective communication takes place in a cultural context.

Understanding the host country’s political culture is very important for corporate communication and diplomacy to be effective, a lesson corporate India must learn quickly. Political culture includes the legal system, and the rules and regulations, which must not be violated in the host country. Good corporate behaviour may not be rewarded; bad behaviour is not only punished but also sullies the reputation of the company.

Since each country has its own enduring cultural symbols and icons, doing effective global corporate communication is quite a challenge. What is culturally and politically correct in one country may not be so in another country. Not understanding national cultural differences can create a nightmare for companies doing business abroad. Moreover, global corporate communication in order to be effective must be aimed at specific groups or audiences especially relevant to the company. They are: customers, financial analysts, government authorities, and non-business stakeholders such as NGOs.

Customers are the most important constituency for a company. They are the reason for doing the business and a very important source of a company’s strength. In a competitive environment, where one product may not be qualitatively much different from the other, keeping the customer coming back to the company requires communication at multiple levels ~ product, price, image, trust and most of all reputation the company.

Trust and reputation are the basis of communication with customers. Communicating effectively with market analysts and financial journalists is very important because it is through them that a company manages its image of financial strength and growth.

Raising false expectations for short-term benefits can destroy a company’s reputation. And sometime when analysts and financial journalists instead of being impartial and objective reporters and critics become part of the vicious conveyer belt, they destroy public trust and provoke harsher regulations. Corporate behaviour is regulated by rules and regulations, which are framed in the public interest and in consultation with the industry. But once the rules are in place, not only authorities but also public interest groups, many of which have established global network to monitor compliance, closely watch companies’ errant behaviour.

Recent Microsoft ordeal in Europe for anti-trust violation is a case in point. The US transparency law (Sarbanes-Oxley Act of 2002) was enacted in the aftermath of Enron’s collapse and other scandals.

There are thousands of global NGOs who have made it their business to scrutinise the behaviour of local, regional and multinational companies to protect the public and environment from exploitation. With clear and well-defined demands, global NGOs with huge and broad-based financial and legal support system can swing into campaign mode against a corporation and even a country very quickly and very efficiently.

Think how NGOs are pressuring governments and global corporations to boycott the Beijing Summer Olympics unless China lifts its stranglehold on Tibet. China has yet to understand the power of the shopping cart, especially in Europe which values quality as well as human rights.

(ND Batra teaches communications and diplomacy at Norwich University)

1 comment:

  1. Mittal Steel is owned by an Indian, but it has almost nothing to do with India.

    Tata's main business is not in India too.

    India is nothing comparing to China. Its industry size is only 1/6 of China's or even less.