TOPIC: LEAST ADMIRED COMPANY
- Integrate the political and legal environments/structures of your 2 countries (domestic and global).
- What barriers exist for a LEAST ADMIRED COMPANY in the context of the domestic and global political-legal environments?
- Write a section of the final paper that details the items above.
- Research requirement: 2 CREDIBLE scholarly sources PLUS something from readings BELOW.
- Page requirement: 2-3 pages in APA format.
- NO GRAMMAR OR APA FORMAT ISSUES
- Please State THESIS STATEMENT
- USE VALUABLE INFORMATION BELOW
The Political-Legal (PL) Environment – Overview
The Political Environment involves government regulation of business at all levels, local, state and federal. State and local government controls all kinds of regulations that are very important to business, in particular: licensing, zoning and land use, health and safety, work rules, business taxes of many kinds (payroll, sales tax, real estate tax, fuel taxes, waste disposal fees, etc.). The PL Environment overlaps every other Environment. Recently Minimum Wage has become a very high profile issue, in part because the Feds think they control it, States think they control it and more recently municipalities have decided they control it. A true “Tower of Babel”. What’s the poor business owner to do? How can they possibly track all these ever changing, often conflicting, rules and regulations?
What do we mean by the Legal Environment? How is that different from the Political and other Environments? One obvious aspect of the Legal Environment that must concern every business is the ever-increasing litigious nature of American society. Citizens know they have the right to sue rather than pursue other, lower cost, remedies like arbitration or Small Claims Court when they think they have a grievance against a business. Who would have thought McDonalds was responsible for someone dumping hot coffee on them? Not many, but a jury of 12 sure did. Many lawyers make a nice living by bundling citizens with similar grievances into “classes” and filing class action suites. This has cost businesses billions, rightly or wrongly (we’d probably agree that sometimes they deserve it), and even forced entire industries out of business (tobacco, asbestos, etc.). Businesses are often required to employ legal counsel to defend themselves, which, besides the actual costs involved, can be highly distracting and also destructive to a company’s brand.
Barriers Imposed on Businesses by the PL Environment
We’ve already noted that dealing with the Political-Legal (P-L) Environment has become more of a core competency that US companies need to master in order to prosper. This has long been true for large, US companies, and they routinely employ law firms and lobbyists, or in some cases create in-house departments, to deal with PL issues. It is becoming more important, even for small and medium companies, even start-ups, to organize themselves and their budgets to handle these issues. This is, in part, a result of increased activism at all levels of society and government, with new regulations being issued by hundreds of agencies on an almost daily basis. So if you plan to become a manager or entrepreneur at some point in your career this is an important topic.PL issues extend beyond compliance. There are also many burdensome reporting requirements to consider. There are myriad routine reporting requirements from many authorities, not just government agencies, and failing to submit required reports in a timely and accurate manner can have devastating results (even jail time for those responsible (see Dodd – Franck Act or The Affordable Care Act – AKA ObamaCare, for examples). Benefit programs require conforming to insurance company contracts, reporting requirements and other administrative tasks. Local requirements to file sales tax collections, process garnishments and court judgments, etc. make even simple accounting processes like payroll extremely demanding. Lenders and accounting boards want periodic reports; localities require zoning and variance apps. It goes on and on, and as they say ignorance of these requirements is no excuse. If you are looking for a secure future, may be best to forget management and get a law degree!
What do Business Theorists Say About the Political-Legal Environment?
Michael E. Porter, Professor at Harvard Business School, is a favorite business theorist of many students. It is well worth your time to review some of his articles and publications, many of which have appeared in the Harvard Business Review journal.
Porter’s primary interest is how businesses develop and execute strategies to achieve competitive advantage. His perspective is largely that of the CEO of large organizations, so students might initially believe that his writings are not relevant to them at this early stage of their business careers, but this is incorrect. Strategy is rarely developed solely by a CEO, and it certainly cannot be implemented by a CEO alone. All levels of managerial and supervisory input and buy-in are necessary, or no strategy or policy will be successful.
Porter seems to take the view that the PL Environment is an important consideration in all strategy and policy formulation, but not the point of these. This perspective might have been true 20-30 years ago, but not today. Consider a CEO like Donald Trump. Much of the strategy and the resultant business policy he formulates is aimed directly at solving the PL issues a real estate developer faces every day. Trump and real estate development is not a one-off example. Consider large, integrated oil and gas producers, large health care insurers, Big Pharma, etc. What keeps these CEOs awake at night? I’d guess its PL issues.
Potential Business Solutions to the Issues Posed by the PL Environment
I’m struggling to find a way to encapsulate, categorize, simplify this topic (the P-L Environment), and propose solutions for businesses. The only real solutions involve what I might describe as “due diligence”. Every company must have a systematic process for identifying compliance issues and reporting requirements and insuring they are meeting them. In spite of the warning, many companies have fallen afoul of these requirements, some accidentally, some through simple complacency, some through outright incompetence, and some because of intentional fraud. Don’t be one of those, you might wind up doing hard time like the folks from Enron and other places.
The only positive aspect is that the P-L Environment is creating new opportunities for those who view compliance as a career opportunity. Most companies employ attorneys, lobbyists, PR people, benefits and payroll administrators, etc. All of these are respectable and somewhat secure careers that pay well. Many people gain experience in these areas by working for a government agency or an in-house corporate administrative/compliance department (e.g. Legal, Governmental Affairs, etc.), then leave to work for a law firm (or lobbying firm, etc.) where their experience and contacts can be very valuable and rewarding.