The Role of Government RelationsGovernment relations are playing more and more of role as businesses become more and more industrialized. The regulation and influence of governments on both local and international businesses indirectly created a complicated relationship between them. Governmental regulation of monopolies has not prevented large corporations, however, from wielding impressive political and social power. When the government began to involve heavily in commercial affairs, businesses eventually realized that, instead of fighting regulation, a more effective approach would be to advocate their own positions to key political decision makers. Companies began to protect their interests with well-crafted lobbying and negotiating tactics, particularly when they were facing substantial opposition from consumer and community groups whom politicians were eager to appease.
How does Globalization affect businesses’ Relations with Government?
On the other hand, the complexity of globalization and the ever-increasing speed of information flows require businesses to devote attention and resources to actively manage their relationships with the government and its lawmakers. It is important for organizations to recognize the importance of staying abreast of what is happening within the government. New regulations may affect businesses directly or indirectly. That is why organizations should always be up-to-date with the latest actions by the government. Different agreements have been incorporated such as NAFTA. This agreement is between Canada, the United States, and Mexico. The agreement has made it less complicated to trade among the countries involved which has led to better productivity.
Other arrangements are involved such as the anti-dumping clause to protect the home countries concerned. Regulations like REACH, have made it more difficult for trade to flow between countries. This regulation has strict rules of substances manufactured or imported in the European Union in volumes larger than one ton per year must be registered in a central database managed by a new European Chemicals Agency. Such a strict rule makes it difficult for small and medium businesses to compete with larger organizations because of the challenging regulations to meet. The program affects companies’ supply chains which will lead to greater expenses with less productivity.
Examples and personal experience...The government has also made regulations domestically which hinders companies. Examples of such are regulations on pollution, advertising, workplace safety, patents, and labor laws. These laws are built to promote safety and equality in the business environment. Much of the ruling has now become bureaucratic and businesses have found it beneficial to invest in government relations. This is being done by the hiring of lobbyists to communicate with politicians in Washington. Evidence has shown this to be highly valuable. By hiring lobbyists, it enables businesses to be heard resulting in regulations that show more favor for the companies having a voice with the lawmakers.
One other example is the relationship between government and business in China. Although China's economic development is fast in the last 10 years, the government has directly contributed to the nation's prosperity. Its actions have helped initiate new industries, cushion the effects of economic depression, create a sound economic infrastructure, and protect the living standards of the citizenry. Indeed, so pervasive has government influence in the economy seemed that many foreign observers have popularized the term “Collective Chinese Company” to describe its alliance of business and government interests. The government agencies continue to influence Chinese economy through a variety of policies. However, the nature of the relationship between government and business varies in different countries.
My personal experience involving government relationship in regards of a business negotiation with a Nigerian company. Nigeria was blessed with abundant natural resources, particularly oil, from which the country earned over $400 billion between 1970 and 2005. Despite this, Nigeria remains one of the poorest countries in the world. In 2005, I worked in a company from Hong Kong and one of our projects was to negotiate with Nigeria government to build a plant in Nigeria. During our negotiation process, we found that the corruption in Nigeria is a big problem that impeding the country’s economic development. The high cost for our company to build plants in Nigeria was widely interpreted to reflect the bribes that had to be paid to local politicians. The country’s oil revenues were being “stolen or wasted” by the politicians and government. I think the problems lies with Nigerian government relationship with businesses are transparency problem and riddled with corruption.
Conclusion
Government relations are becoming more and more important in today’s society. Whether the relations are foreign or domestic, each still have a heavy impact on businesses in all over the world. It is important for businesses to continually engage in positive relations with governments and abiding by such rules. If a company off-shores, it must be aware of what regulations and rules the foreign country has and pay attention to such to be successful.
Links involved with information:
http://www.hbs.edu/units/bgie/
http://www.ifk-cfs.de/fileadmin/downloads/events/conferences/2006-Public_Du.pdf
http://www.worldtrademag.com/Articles/Column/25ea07fc6aaf7010VgnVCM100000f932a8c0____
http://www.business.gov/
http://www.ehow.com/about_5427693_relationship-between-government-business.html
http://www.business.gov/expand/government-contracting/
http://en.wikipedia.org/wiki/Corruption_in_Nigeria
http://www.africaeconomicanalysis.org/articles/gen/corruptiondikehtm.html
Video: A business looks at the relationship with local government
I enjoyed all of the links and the video that included additional information on the topic. I think it is great that we have certain rules and regulations to help protect the environment, etc. However, sometimes I think government can be too strict with certain rules and regulations, and actually hurt businesses instead of helping them.
ReplyDeleteI was not aware of how much businesses should be paying attention to government and lobbying. I did not even know what lobbying was until we discussed this chapter in class. Overall, I find it really interesting, and once again feel that government has too much power.
I agree completely that the government can be too strict. They can hurt businesses and many times it is the small businesses that suffer. I think that exceptions can be made to make it easier.
ReplyDeleteI also did not know what lobbying was before discussing the chapter. I am definitely learning a lot about business and government and I have taken a interest in the news for a change.
Companies need to be up to date when it comes to all of the new regulations and policies in our country because the government is very strict on these rules and laws. If a company does not follow the regulations, they can be fined or even be in danger of losing their company.
ReplyDeleteThe links and video included was definitely a plus point because it explained the scenario more clearly. I think government relations are definitely important to have in the current scenario. This is because government carries out different activities to maintain law and order in the country as well as continue the process of development in the country .It is just how we look at it. For example, it provides a constant monitoring in the drugs industries which definitely is a good strategy as it assures constant quality of the proposed drugs over time. It also restricts the buy and sell of products which have been manufactured under different illegal means like child labor, violation of human labor etc. Also government has bailed big companies like AIG, GM etc. These companies were already bankrupted and it was necessary for the government to bail them out because if such big companies had collapsed, it would certainly have a negative impact on the economy. At that point of them, there was no alternative than bailing them out. Bailing is definitely not a good idea because companies can take negative advantage of it. Rather than acting sensibly, and handling the situation by themselves, these companies rely too much on the government. So looking at it from one side, government relation is definitely advantageous. But in some instances government can become a pain if it intervenes too much in the company. This is because the companies cannot carry out their normal procedures on their own freely and without any outside pressure.
ReplyDeleteOne thing that scares me is how few times lawmakers actually read bills. Instead, they rely heavily on their staff or worse lobbyists to persuade them on how to vote for a bill. I believe that corporations do need a voice on capital hill, but more importantly, I believe our elected officials should take the time to do their job!
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