Government in Business: Conflicting Pressures make Business Decisions Tougher
That business and governance are inter-connected was always taught in business schools. That’s when business ethics and social responsibility used to be introduced to budding managers as a concept that deserved respect and different participants as stake holders. But how integral is politics to business decisions? And how much attention should business chieftains be willing to pay to vested interests and political considerations?
We saw this conflict arise in the Nortel auction at Canada when political parties and ministries raised nationalist sentiments and arguments that were tinged with national pride and honour, trying to stall the auction process where Nortel was all set to land in foreign hands despite best efforts by compatriot Research in Motion. Amidst much uncertainty, Ericsson managed to walk away with its prized possession in next generation networking.
Then again, there was the curious case of General Motors where it tried to wash its hands off Opel in Germany. GM was (and still is) interested in selling its Opel assets to RHJ Investors with the unspoken agreement being that RHJ would keep Opel, nourish it for a few years till GM got back on its feet and then return Opel back to its parent. However, the German Government’s preferred bidder happened to be Magna and the chief considerations in this case were promises of jobs being kept intact, with elections around the corner. Talks among the parties involved are still on with no ends in sight.
Now, California has come up with its appeal to Toyota not to withdraw from NUMMI – New United Motors Manufacturing Inc – a partnership venture between GM and Toyota. With GM in a bad shape and deciding to focus on what mattered the most to its survival, Toyota said it was parting ways and leaving NUMMI to its fate. What’s at stake? Jobs and pride in a volatile economic climate! That’s why the provincial government has come to pitch for Toyota to stay on and not forsake the Joint Venture.
Yes – society, politics, governance and business are all intertwined inextricably in a growingly complex business environment. But in such a tough climate, how many options would business leaders be left to juggle with, amidst terrific pressures to boost the sagging bottom lines? That’s something that the board and the Chief Executives should be fretting about, rather haplessly.
