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Corporate Diplomacy world-wide

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Sunday, 27. August 2017 - 17:55 Time
Why Corporate Diplomacy is important for business

Since the turn of the millennium, globalization has been strongly advanced. New framework conditions were created and entire branches of industry had to face unusual challenges. Trade agreements, the Internet, geopolitical challenges, economic crises all have an impact on the daily business of any enterprise. The market has become more complex. Hardly an industry has been spared and companies are confronted with a growing and even global competition. In order to continue to be successful, new methods have to be developed and applied. The most efficient of these is Corporate Diplomacy.

Relatively few companies know what Corporate Diplomacy is and consequently even less have used this tool deliberately. Corporate Diplomacy has not yet really gained a foothold in general management practice. Gradually, however, it is gaining in importance. Already, leading management schools offer courses all over the world. It is more than just a trend; it is a necessary development, as is confirmed by the growing number of specialized literature.

What is behind the concept of Corporate Diplomacy? In general, Corporate Diplomacy is defined as the ability to develop business interests through the creation of strategically significant alliances with external key figures, including government, analysts, media, non-governmental organizations (NGOs), interest groups and stakeholders, thereby efficiently and successfully implementing corporate goals.

Corporate Diplomacy is a further development, a combination of already existing resources. What is known as public relations, networking, relationship management or corporate social responsibility, all form the basis of it. In simple terms, the principle of Corporate Diplomacy is a company-oriented, diplomatic tool or vehicle which helps the corporations to consolidate their position, to gain influence, to implement company objectives and to achieve an increase in value by using tried and tested methods.

A key component of Corporate Diplomacy is the focus on strategic alliances. It is increasingly building on the establishment and expansion of significant partnerships with external stakeholders, which should form a professional, reliable and, above all, far-sighted network that supports the business activities. Key figures, decision-makers and opinion leaders must be involved. Corporate Diplomacy can be applied independently of industry. Depending on the company, industry, and country, the influence of certain key figures will vary and the strategy will have to be adapted accordingly. In general, however, one should keep close and good connections with governments and authorities. The group of opinion-makers, which can include non-governmental organizations, the media, interest groups, analysts, but also individuals, is decisive as well. If these groups are opponents it could turn out to be a serious disruption to the day-to-day business process or even the cessation of business activity. The task of Corporate Diplomacy is to define these groups and to develop strategies that promote the communication with the different groups.

Perhaps, however, the utility of Corporate Diplomacy for certain branches is more obvious than elsewhere, especially in the raw material processing or the financial industry. Therefore, there are companies that seem to be more vulnerable because of the nature of their activity. The impression that the size of a company plays a role deceives, as multinational corporations are simply more often mentioned in the media. Consequently, it would be a fatal mistake if smaller firms or other industries were to ignore the importance of Corporate Diplomacy. Alliances and partnerships with external stakeholders have a strategic importance for every company. A non-existent or badly placed network can mean the end of a company in an out-of-control situation, especially for smaller companies, since here mostly the financial resources are missing in order to compensate for losses.

Good deals and loyal, reliable customers belong to the most important, if not the only source of a company income. Corporate Diplomacy ensures that this source does not fail and even continues to grow. However, it must be taken into account that Corporate Diplomacy cannot be equated with public relations, marketing or sales. Where the products are praised on the one hand, Corporate Diplomacy has an acting role and integrates key figures, external stakeholders, and develops solutions that will lead to a sustainable win-win situation for all parties involved.

The comparison of a business management with the government of a country might seem to be bold, and yet it is not entirely absurd. Roughly described, the structures are very similar. From a Corporate Diplomacy perspective, individual tasks can be compared with one another. In simple words, the government of a country is, among other things, responsible for protecting its citizens against foreign powers and external threats. It should create an advantageous environment for its economy and ensure that its industry can export its products without any trouble. To achieve this, alliances and partnerships must be created, bilateral agreements must be concluded and private initiatives such as chambers of commerce should be actively supported. In doing so, the government reverts to its diplomatic network to negotiate, unite opposing interests and realize partnerships. This creates a network that serves security and paves the way for its own economy to grow and expand.

The success-oriented manager will try to behave similarly in order to promote strategic partnerships with key figures in the respective market. He, too, has to take care of the "well-being" and the (economic) security of the company. Abroad, a branch can and should also assume possible diplomatic tasks, a kind of a “diplomatic mission of the company", the private version of the diplomatic service. It is highly likely that this activity will be similarly important, or even strategically more important, than many strategies to promote pure sales. The goal is the so-called influencing the influencers, a network that supports the strengthening of the corporation’s market position and the company itself.

There are many examples where the lack of a well-functioning strategy of Corporate Diplomacy in foreign countries led to massive difficulties. Too often, managers of internationally active companies see themselves as a sort of external institution that has little or nothing to do with the local business and civil environment. The foreign market is, to a certain extent, degraded to a pure source of revenue. This behavior is risky. Political and economic changes, environmental problems, displeasure among the population, non-governmental organizations calling for boycott are all problems that can suddenly be faced. Negative campaigns in social and print media can have disastrous economic consequences. But it does not even have to be the extremes, because strikes or other forms of personal mobilization can also seriously disturb and weaken business activities. A good reputation can be destroyed in a very short time. The lack of strong partnerships with external key figures can lead to a fatal end, caused even by small political or economic changes. If the managers show in addition to that an "undiplomatic behavior," retreat is often the only solution. This would be the time to give a serious consideration to Corporate Diplomacy. By the way, a retreat should be well organized, too.

So, there is a lot that favors Corporate Diplomacy. It was interesting to note that during and shortly after the last economic crisis a rethinking of the management took place. Suddenly many people realized that a customer base and normal business relationships had not been enough to get back into a profitable zone. Professional strategic partnerships with opinion-leaders or decision-makers and other key figures were only rarely present, if at all. Corporate Diplomacy is now increasingly being used to prevent such a situation in the future.

Corporate Diplomacy is, therefore, much more than just a distinctive form of polite communication, although this is presumed to be the case. The right form of communication and the building of strategic partnerships with external key figures are necessary factors to be able to act successfully in the long term. Thus it can be confirmed that Corporate Diplomacy opens doors and gates and increases the chance that they remain open. Regardless of size, industry, legal form or nationality, whoever wants to remain successful in the long term will have to refer to Corporate Diplomacy, sooner or later. Corporate Diplomacy adds value, strengthens the market position, increases influence and promotes and consequently secures sales and profits.

Darwin has caught up the economy and its industries: it is the survival of the fittest. And the fitter one will also be the smarter one. In the future, it will not be the size of a company that will decide about success or failure. The one who has the best professional network, reliable relations and who is able to work with stakeholders, environmental activists, NGOs, decision-makers and opinion-leaders, has the best chances to become and remain successful. Sustainable strategic alliances are crucial. Corporate Diplomacy fosters alliances with external key figures in order to implement corporate goals efficiently, successfully and sustainably.

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