Chapter
8
Managing Business
Government Relations
8-1
Business
and
Society
POST, LAWRENCE, WEBER
McGraw-Hill/ Irwin
© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.
Figure 8-1
The case for and against
political involvement by business
8-2
Reasons business
should be involved
Reasons business
should not 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
McGraw-Hill/ Irwin
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
© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.
Figure 8-2
Levels of business political involvement
Level 1: Financial involvement
• Formation of political action committee (PAC)
• Trade association support
8-3
Level 2: Organizational involvement
• Lobbying
• Employee grassroots involvement
• Shareholder and customer communications
Level 3: Strategic public policy involvement
• Executive participation
• Involvement with industry working groups and task forces
• Policy position development
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Figure 8-3
The triangle of business
government society relationships
8-4
Government
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.
Government represents society but is not
the sole voice in terms of representation.
Societal and public interest groups influence
Control as previously,
government, and government in turn
but influence and intrusion
attempts to influence and use societal and
now go both ways.
public interest groups to influence business.
Business
McGraw-Hill/ Irwin
Society
© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.
Figure 8-4
Motorola’s public policy agenda
Product level
(Motorola business unit only)
Example
Standards for cell phones
8-5
Business unit level
(Motorola corporate level)
Foreign competitors’ dumping
practices
Industry level
(Motorola and competitors)
Encryption standards/regulation
Multi-industry level
(Motorola and non-competitors)
* specific proposals
* general proposals
McGraw-Hill/ Irwin
U.S. policy on trade sanctions
WTO membership for China
National macroeconomic policies
Linking human rights to trade
policy
© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.
Figure 8-5
Profile of political action committees
8-6
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Figure 8-6a
Financial activity of
political action committees (PACs)
8-7
No. of PACs
Contributions from
reporting some
PACs 1/1/99 to
activities (1999-2000) 6/30/00 (millions)
Money spent on
U.S. Senate
Races
All PACs
4,393
$430.6
$41.6
Corporate
PACs
Labor PACs
1,703
119.3
18.2
348
95.7
5.4
888
102.9
10.4
1,293
99.7
6.1
161
2.8
1.3
Trade
membership/
health org.
PACs
Nonconnected
PACs
Other
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Figure 8-6b
Financial activity of
political action committees (PACs)
8-8
Money spent on U.S.
House of Rep. Races
(millions)
All PACs
Corporate
PACs
Labor PACs
Trade
membership/
health org.
PACs
Nonconnected
PACs
Other
McGraw-Hill/ Irwin
PACs donations to
Democratic Senate and
House candidates
(millions)
PAC donations to
Republican Senate and
House candidates
(millions)
$122.9
$80.2
$86.3
41.0
20.5
40.2
28.7
40.2
2.8
34.7
17.8
27.5
14.8
8.4
12.8
3.6
2.2
2.8
© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.
Figure 8-7
What other countries do to control
money in politics
Limits on
Public financing fund raising
or spending
U.K.
No
Yes
France
Reimburse
candidates based
on votes received
Yes
Japan
No
Yes
Reimbursement to
Germany parties according
to votes received
McGraw-Hill/ Irwin
No
8-9
Television
Free time based on
party's strength in
previous election
Free and equal time to
candidates
Candidates given some
free time for speeches;
no negative advertising
Free time to candidates
on public stations
© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.
Exhibit 8-A
Politics and money in election 2000
8-10
• 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.
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Exhibit 8-A(continued)
Politics and money in election 2000
• Democrats raised $243 million, a 99% increase.
8-11
• 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.
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Exhibit 8-B
International Business
Government Relations
8-12
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.
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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
8-13
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
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