1. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-1 Business and Society POST, LAWRENCE, WEBER Managing Business Government Relations Chapter 8

2. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-2 The case for and against political involvement by business Reasons business should be involved  A pluralistic system invites many participants  Economic stakes are high for firms and industries  Business counterbalances other social interests  Business is a vital stakeholder of government Reasons business should not be involved  Executives are not qualified to engage in political debates  Business is naïve about politics  Business is too big and too powerful - It is the “500 pound gorilla”  Business risks its credibility by engaging in partisan politics Figure 8-1

3. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-3 Figure 8-2 Levels of business political involvement Level 1: Financial involvement Level 2: Organizational involvement Level 3: Strategic public policy involvement Formation of political action committee (PAC) Trade association support Lobbying Employee grassroots involvement Shareholder and customer communications Executive participation Involvement with industry working groups and task forces Policy position development

4. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-4 Figure 8-3 The triangle of business government society relationships Government SocietyBusiness Media as a wildcard Role of media in raising issues as a player, in keeping/placing issues in the agenda, and in contributing to their resolution has increased dramatically. Control as previously, but influence and intrusion now go both ways. Government represents society but is not the sole voice in terms of representation. Societal and public interest groups influence government, and government in turn attempts to influence and use societal and public interest groups to influence business.

5. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-5 Motorola’s public policy agenda Figure 8-4 Example Product level Standards for cell phones (Motorola business unit only) Business unit level Foreign competitors’ dumping (Motorola corporate level) practices Industry level Encryption standards/regulation (Motorola and competitors) Multi-industry level (Motorola and non-competitors) * specific proposals U.S. policy on trade sanctions WTO membership for China * general proposals National macroeconomic policies Linking human rights to trade policy

6. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-6 Figure 8-5 Profile of political action committees

7. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-7 Figure 8-6a Financial activity of political action committees (PACs)

8. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-8 Figure 8-6b Financial activity of political action committees (PACs)

9. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-9 Figure 8-7 What other countries do to control money in politics

10. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-10 Politics and money in election 2000 Exhibit 8-A Republican and Democratic parties raised a total of $1.2 billion in “hard” and “soft” dollars for the 1999-2000 election cycle. Republicans raised $447.4 million of federal, or “hard, money.” Democrats raised $269.9 million of “hard money.” Largest percentage increases for both parties occurred in nonfederal, or “soft money.” Republicans raised $244.4 million, an increase of 73% over the same period in 1995-1996.

11. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-11 Democrats raised $243 million, a 99% increase. Congressional campaign spending for the 1999-2000 election cycle grew to more than $858 million, an increase of $240 million, or 39%, from 1997-1998 levels. More than $9 million was spent by candidates in special elections and more than $109 million by candidates who lost in primary elections. Political action committees supported by business, labor, and other special interests accounted for a substantial portion of this fundraising. Exhibit 8-A(continued) Politics and money in election 2000

12. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-12 International Business Government Relations Exhibit 8-B Colonial Mutual Group Geographically diversified company capitalizes on market niches of businesses in which it operates and diversifies their business accordingly. Business strategy and the public affairs strategy must be adapted to market conditions. Colonial's top management defined its geographic markets as falling into three groups in the late 1990s: - Mature markets - Australia, UK, and New Zealand - Existing Asian markets - Hong Kong, Indonesia, Malaysia, Philippines - Potential and new markets - China, Vietnam, India.

13. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 8-13 Exhibit 8-B(continued) International business government relations Mature markets: consumerism, the media, and government relations create conditions that require major public affairs resources focus on media, government rulemaking, product branding, and communications Asian markets: a less aggressive media, non-English speaking staff, government bureaucracy, and cultural diversity relationships managed by local managers of each country top management has little involvement in public affairs China, Vietnam, and India: negotiate government permission to operate in these places decentralize most government and media relations to local managers