Examples of Manufacturing Strategies of Fan Making Companies by pwq12627

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									   Week 5: Political
Strategies for Business
   UBGA 107 The Political and
  Social Environment of Business
A few words about case analysis #1

FOLLOW PROF. GERLACH’S FORM
In discussing issues, choose issues that affect
your industry more narrowly than issues that
affect you as much as many other industries
   Examples:
      Trial lawyers – Tort Reform, RPP
      Manufacturing – Closing Tax Loopholes for Outsourcing,
      DPP
      Labor Unions – DPP’s pro-union stance vs. RPP’s pro-right-
      to-not-join-union stance
      Pharmaceuticals – DPP’s desire to bring down drug costs
      Doctors/Medical Professionals – Tort Reform, RPP
         Probably Too Broad
Education
   Very important, but simultaneously affects
    many industries rather than a specific industry
Health Care Costs (as a primary issue)
   Health care policies affect ALL industries in
    which employers help defray medical
    costs/insurance premiums
But you are welcome to convince me
otherwise
                  Review
Analysis of Democratic and Republican
Party Platforms
   What are each party’s primary policies
    affecting business?
   What are their major differences
                  Take away:
Issues are rarely as simple as they appear:
   Tax Cuts  Rising Health Care Costs
   Market-based solution  Governmental regulation
      Pollution vs. health care
      Are market failures removed?
      Are governmental actions necessarily inefficient?
   Protecting American Businesses  Protecting
    American Employees
   Protecting legitimate claims  Encouraging frivolous
    lawsuits
   Und so weiter
                    Today
Political Strategies for Business
   Positioning in political space vs. legal space
   What are the three basic types of political
    strategies?
The Political Strategies of Enron
   What was Enron’s primary goal in engaging in
    political strategies?
             An Edge to Enron’s Lobbying
                  -- from LA Times
WASHINGTON — Jeffrey K. Skilling was visiting Capitol Hill to press the case for energy
deregulation. It was September 1999, and Enron Corp. was the darling of Wall Street.
Skilling, then the energy giant's president, had almost single-handedly imprinted his combative
style on the company's lobbying culture, and he used it now: We're Enron. We're the economy.
Buy it.
But Joe Barton, a Republican congressman from Texas and ordinarily a fan of open markets,
wasn't buying it. As chairman of a House Energy and Commerce subcommittee, Barton didn't
think Enron had the votes then. Skilling told him he was wrong. So Barton kicked Skilling out of his
office.
"There was no foul language, but he got so frustrated that he started telling me how to run my
subcommittee," Barton recalls of their meeting.
"I told him I was no CEO of a Fortune 500 company, but I was not an idiot, and I knew he didn't
have the votes. He told me I was wrong, that I was just being stubborn. I told him there was no
reason to come see me again until things calmed down."
By many accounts, that exchange with Skilling--who subsequently became chief executive of
Enron but resigned in August, before the company's collapse--was typical of Enron's lobbying
efforts. But while the brash and raw tactics ruffled feathers, Enron was generally successful in
getting its way.
    Grassroots Organizing
What are some examples?




Did Enron engage in any grassroots
organization? If so, how?
       Grassroots Organizing
Focus is on influencing voters
   Letter writing
   ―bus-ins‖; ―fly-ins‖; ―knock-around‖
   Mobilization is key
   May be directed at public officeholders or
    constituents
   Special difficulties of business grassroots
    campaigns; rent chains
   Effectiveness of grassroots campaigns:
    grassroots vs. astroturf (e.g, PMA)
Enron’s Grassroots Campaign
Enron did not appear to engage actively in
grassroots campaigns
Why not?
   Lobbying and Testimony
Definition and Examples



Did Enron engage in lobbying and
participate in political testimony? If so,
how?
     Lobbying and Testimony
Lobbying:
   Strategic communication of politically relevant
    information to public officeholders
   Access important
   Most prominent in highly regulated industries
   Technical vs. Political Information
       Supply and demand for information
   Executives as effective lobbyists
Testimony
   Congressional Hearings: to give information or
    mobilize public support
 Legal Controls on Lobbying
US v. Harriss, 347 US 612 (1954)
1995 Disclosure Act
1978 Ethics in Government Act
   Enron’s Lobbying Activities
Both at national and state levels
Dispatched Skilling, chief executive, to meet with utilities commissions,
testify before statehouse committees and call on local politicians
Message: bring lower costs by ending utility monopolies
Called on then governor of Texas Bush to call then governor of
Pennsylvania Tom Ridge
Lined up experts to testify; hired local lobbyists and joined consumer groups
and some local utilities to present a united front for deregulation
Spent money to buy friends very quickly
Hired consultants with political connections, e.g., Ralph Reed; former
utilities commissions officials in California
Skilling testified to the California utilities commission that deregulation could
save $8.9 billion
Hired 83 lobbyists in Texas, bought advertisements in local papers,
contributed to Laura Bush’s book fair.
Helped craft legislation; gave to both sides
Called Governor Jeb Bush of Florida
         Electoral Politics
Definition and Examples



Did Enron engage in electoral politics? If
so, how?
              Electoral Politics
Monetary contribution to campaigns, political
parties
   Subject of your first case analysis
   Tillman Act of 1907
   “Hard money” vs. "soft money."
       Federal law has prohibited corporations from contributing to
       federal candidates since 1907. Labor unions have been
       barred from contributing to candidates since 1943. Soft
       money refers to contributions to political parties' "non-federal
       accounts" that fall outside the legal, "hard money" limits on
       contributions to federal candidates.
   H.R. 2356, the "Bipartisan Campaign Reform Act of
    2002‖
       prevent unions and corporations from making unregulated,
       "soft" money contributions
     Enron’s Electoral Politics
Personal gifts from Lay to Bush
Contributed $1.9 million to more than 700
candidates in 28 states
   e.g., Gray Davis -- $97,500; George Pataki --
    $9,000; $29,350 to legislators in Michigan;
    $19,805 to legislators in Iowa
         VIDEO DISCUSSION NOTES --
ENRON'S OVERALL POLITICAL ACTIVITIES
1. Enron was very active in the political process.
    It was extensively involved in a wide range of lobbying activities.
    It gave considerable money to Senate and House election campaigns.
    It also provided free use of corporate planes to candidate Bush before the 2000
     election.
2. What Enron stood to gain from these activities:
    $254 million tax rebate.
    Influence over energy deregulation policies.
3. As a result of Enron's bankruptcy, politicians were scrambling to do
damage control.
    Wide range of different Senate hearings into the bankruptcy: Governmental
     Affairs; Commerce; Health, Education, Labor, and Pensions; Banking.
    Some politicians and political parties gave donations back.
4. The bigger problem: Enron's widespread campaign donations and
lobbying may have compromised the ability of politicians to investigate
Enron.
         VIDEO DISCUSSION NOTES --
1. Enron's gave widely to both Republican and Democratic candidates.
    This was intended to "cover their bases."
    Republicans were somewhat more likely to be beneficiaries.
2. Enron increased its contributions in the 1990s. This was in anticipation of
energy deregulation legislation, and is typical of any company that is subject
to government regulation.
3. Enron's election contribution strategy was twofold:
    a. First, give to those "close to home" (ie, Texas).
    b. Second, give to those who are on the appropriate Congressional committees -
     - especially energy and finance.
4. Enron's contributions to candidates for the House were smaller than
those for the Senate. This is because there are more members, so must be
spread out.
5. Enron's "soft money" donations to political parties were even larger than
its "hard money" donations directly to candidates.
    Note: "Soft money" donations to political parties are now prohibited as a result of
     campaign finance reform.
       VIDEO DISCUSSION NOTES --

1. The Lobbying Disclosure Act of 1995.
   This requires companies to report their lobbying activities if they
    spend more than a certain amount of time and money.
   The law does not require details on specific meetings, but it does
    require companies to report on general issues they have lobbied
    on.
2. Enron's lobbying activities were extraordinarily broad -
- from energy to derivatives to needle exchange
programs.
3. An example of "the revolving door": a former top aide
to Senator Lieberman worked as an Enron lobbyist.
   This is emblematic of how Washington works. People move into
    the private sector and make multiples of what they made earlier.
   Senator Lieberman later led some of the Enron hearings. Was
    his position compromised?

								
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