Political & Economic Influences with Multinational Business Ron Smith Commercial Contracting Conference 2003

Fundamental “Multinational” Challenge An International organization or an American company with a big travel budget?

Political & Economic Influences Constitutional authorities Statutory and regulatory environments Local custom and urban legend Economic realities Seminar assignment: compare/contrast –US Federal –US State & Local, Education –US Commercial –International Commercial markets –International Government markets Multinational Business: common themes; universal rules

US Federal Constitutional authorities –Congressional authorization & appropriation –Executive regulation & implementation Statutory and regulatory environments –Acquisition law & regulation –Business law & regulation, e.g. SAB 101, environmental, labor, anti-trust Local custom & urban legend –Agency/agency –Users/purchasers –Policies, procedures, initiatives Economic realities –Regulated markets and business practices –Annual funds

US State & Local Constitutional authorities –Parallel universes: 50 states times infinity –Separation of powers: state/federal; agency/agency; central/local Statutory and regulatory environments –State laws, local ordinances, micro-customs –Competition = seal bidding assumption –Heritage of commodity purchasing vs systems/projects –Cooperative purchasing +/- Local custom and urban legend –Inter and Intra Agency rivalries –Changes in Administration –Local preferences exponential –Scandals, crises, cause celebre Economic realities –Mix of Federal/state funding –Annual funding –Macro-economic vulnerabilities (e.g. sales taxes) –Shifting tax bases (e.g. impact of the Internet)

US Education Constitutional authority –School boards, Boards of Regents –Oversight and approval processes Statutory & regulatory environment –Local mandates –State & Federal overlay Local custom & urban legend –Administrative force majeure –Established internal constituencies –The ultimate in relationship marketing Economic realities –Local volatility –Short-term horizons: funding & execution

US Commercial Constitutional authority –Civil statutes –Overlay of enforcement & regulation Statutory & regulatory environment –Regulation by industry type, not by contract type (e.g., telecom, utilities) –Specialized regulatory agencies (EPA, OSHA, SEC) Local Custom & urban legend –Transaction based –Relationship based –No standard T&Cs or req’d formats –Celebrity Death Match: salesmen vs lawyers Economic realities –Global macroeconomics –Customer-centric microeconomics

International Commercial Constitutional authority –Border to border; moment to moment –Defined macro-environments: USA, EU, Japan, China Statutory & regulatory environment –Country-specific laws –Cultural mandates –Institutional behaviors Local custom & urban legend –Social traditions, assumptions, mandates –Language: the body language of the spoken word Economic realities –Currency conversions –Tariffs & trade –Import and export regulations –Ethics, customs, traditions –Show me the money

Foreign Governments Constitutional authorities –National laws and regulations –Political volatility –US foreign policy overlay Statutory and regulatory environments –Customs; import/export –Local preferences Local custom and urban legend –Language & culture –Culture & language Economic realities –Volatility of availability –Volatility of commitment –Volatility of relationships

Issues & Challenges Language & culture Ethics Security Economics: both macro & micro Politics, influence, representation Command & control