PUBLISHER'S LETTER: Do Your Plans Face Political Risk?
We have lots of partnerships (with the UAE). This issue that came up was a firestorm more out of the ignorance of all the facts than anything else,’’ Senator Johnny Isakson said.
Four U.S legislators visiting Dubai, all Republicans from Georgia, said the controversy over the ports deal was largely a result of lack of knowledge about the transaction, and political expedience according to an Associated Press article.
This is despite a growing recognition that the United Arab Emirates is one of America’s strongest allies (and one of our most prolific military arms customers).
As we have all recently learned, a merger gave the UAE-based Dubai Ports World control of six U.S. ports. That led to a political, media and public outcry in America forcing Dubai Ports World to withdraw.
Similarly, about a year ago experts at Wharton School of Business noted that there appeared to be no sound reason why the U.S. government should block the acquisition of Unocal (the ninth largest U.S. oil firm at the time) by China National Offshore Oil Corporation (CNOOC). After all, analysts pointed out that China had a large financial interest in the U.S. already as China held billions of U.S. Treasury securities.
However, CNOOC’s bid raised concern in Congress and U.S. Treasury Secretary John Snow first hinted at and then led a Bush Administration review of the takeover bid on national security grounds. “We will look at anything that raises national security issues,” said Snow. CNOOC rescinded its bid for the oil company due to political pressures.
Might this happen to you?
Regardless on which side of these events you may stand, these are just two recent stories that received worldwide attention when politics, perception and public outcry forced seemingly sound business plans to be abandoned.
Unseen politics or hidden relationships are an important blind spot to keep in mind when setting strategy, selecting vendors or specifying products. The UAE and Unocal stories reached the public eye and created a maelstrom of controversy and talk show fodder. But might these types of events occur privately and on a smaller scale in enterprises and happen to you? The answer is, “Yes, they could.”
Perhaps the security guard services company to whom you outsourced your staffing has been acquired by an organization of which your board would disapprove. Would you be blindsided by this news? Do your RFPs ask about ownership? Do your contracts require vendors to notify you of ownership changes? What is your company’s procurement policy both in asking the right questions as well as managing new information that emerges after a deal has been struck?
Perhaps a product specified into your system is made by a division of your company’s largest competitor? Might your VP of Sales or Division General Manager accuse you of abetting the enemy or ala John Snow; might she “hint” that someone look into it – effectively removing the decision process and control from your hands?
Many companies have created “quid pro quo” liaison departments designed to leverage existing buyer/seller relationships. For example, if our magazine buys its security systems and services from Company A, then our liaison would have an express channel for selling advertising to Company A. Become aware if these programs exist in your organization as they can be opportunities or obstacles. There are several large security companies using these programs to make certain vendors are also their customers. While it is obvious that if you work at the bank where Company B does all its banking, choosing Company A's competitive product may ruffle feathers. But it may not be obvious unless you ask. While this may not seem "fair" on the surface. Well, business decisions are not about being fair.
While being proactive, be realistic: The procurement policies within your organization are one thing but what happens when a blind spot is unearthed is yet another. Understand the purchase policies your organization has in place and rely on procurement for sound contracting and procedures. Go further to build a positive relationship with procurement so if things change or go awry you have that ally with unique and vital expertise to guide you in place.