International Business and Trade Marketing Assignment

International Business and Trade: Business Diplomacy
Name
Institutional Affiliation
International Business and Trade: Business Diplomacy
Introduction
The approach to the management of multinational corporations (MNCs) has changed significantly due to the current globalization of markets. In the backdrop of increasing foreign direct investments (FDIs), MNCs experience a variety of local requirements and pressures as they continue expanding to foreign countries. Additionally, MNCs are subject to a number of multilateral agreements and national laws, which are negotiated through various international bodies, including the World Trade Organization (WTO) and the International Labor Organization (ILO) (Christian, 2014). The survival of MNCs is largely dependent on their ability to manage their multifaceted relationships with both non-governmental organizations (NGOs) and governments. Particularly, foreign governments play a key role in affording MNCs with the requisite opportunities for their survival. As a consequence, MNCs with access to such opportunities have a competitive edge over their rivals in the industry. Thus, MNCs need legitimacy or ‘license to operate’ in the foreign markets. According to Brink (2011, p. 217), legitimacy refers to the generalized assumption or the perception that a particular entity’s actions are appropriate, proper, and desirable in a given socially constructed systems of definitions, beliefs, values, and norms. A firm that adheres to the legitimacy constructs will gain social acceptance in a particular social context. In the same sense, business diplomacy is critically important in today’s complex and increasingly globalized business environment (Saner et al., 2000, as cited in Wolters, 2012, p. 1). It is important for business diplomats to negotiate with their respective local authorities while being sensitive to both the demands and wishes of international and local NGOs responsible for monitoring the global firms’ business conduct. They should put into consideration the employment practices, environmental standards, and working conditions in order to avoid the potential conflicts that could destroy their reputation of their respective MNCs. In other words, building diplomatic competency is of great importance to global companies. Business diplomats can enhance the legitimacy and power of their companies through active involvement in business diplomatic activities. This research paper seeks to define the concept of business diplomacy while evaluating the factors that compel global companies to participate in diplomatic activity.
The Concept of Business Diplomacy
Business diplomacy is integral to the international business management field, although the concept is largely in its infancy. It entails creating as well as sustaining positive interactions between a company’s executive management or its representatives with non-governmental stakeholders and government representatives in the foreign countries (Christian, 2014). Business diplomacy is mainly aimed at building and sustaining the legitimacy of a given global firm. In other words, it is aimed at safeguarding the firm’s reputation and corporate image within the context of a foreign business en...