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Business Influence on Government and Public Policy

Presented By Suja K. Ravindran 1st Semester MBA (Evening) 11

Introduction
Today, because of the multiple roles it plays in influencing business activity, government poses significant challenges for business owners and managers. Attempts by business to influence government are a major and accepted part of the public policy process in the United States. The U.S. political system is driven by the active participation of interest groups striving to achieve their own objectives. The business sector is, therefore, behaving in a normal and expected fashion when it assumes an advocacy role for its interests. 22

Corporate Political Participation


Participation in the formulation and execution of public policy at various levels of government
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Political Involvement

(continued)
Political involvement is broadly defined as participation in the formulation and execution of public policy at various levels of government. As decisions about the current and future shape of society and the role of the private sector shift from the marketplace to the political arena, corporations, like all interest groups, find it imperative to increase their political involvement and activity. To appreciate more fully the participation of business in the process of public policy formation in the United States, it is necessary to understand the approaches that business uses to influence the government stakeholder.

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(Continued)
The various approaches are: Lobbying Political Action Committees Coalition Building Political Strategy

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Corporate Political Participation


Lobbying PACs Coalition Political Building Strategy
The process of influencing public officials to promote or secure passage or defeat of legislation Instruments through which business uses financial resources to influence government Business and other groups joining forces to achieve common goals To secure position of advantage regarding a given regulation or piece of legislation
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Business Lobbying
Lobbying is the process of influencing public officials to promote or secure the passage or defeat of legislation. Lobbying is also used to promote the election or defeat of candidates for public office. Their goals are to promote legislation that is in their organizations interests and to defeat legislation that runs counter to their organizations interests. Business interests, labor interests, ethnic and racial groups, professional organizations, and those simply pursuing ideological goals they believe to be in the public interest are lobbying at the federal, state, and local levels.
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The Purposes of Lobbying

Gain legislative support or institutional approval for some objective Obtain reinforcement of established policy or the defeat of proposed policy shifts Targets the election or defeat of national, state, and local legislators

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Organizational Levels of Lobbying

Figure 12-1

Umbrella TradeCompanyLevel Organizatio Associations Lobbying ns

Representation

Narrow/ Broad Midrange Specific

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Washingto National Chamber Automob State n and of ile Capital Commer Dealers Offices ce of the Law firms Assn Public US National National Associati affairs Associati of specialists on PACs on of Realtors Manufac Grassroots turers lobbying

Examples

What Business Lobbyists Do for Clients


Get access to key legislators Monitor legislation Establish communication channels with regulatory bodies Protect firms against surprise legislation Draft legislation, slick ad campaigns, direct-mail campaigns Provide issue papers on anticipated effects of legislative activity Communicate sentiments of client on key issues Influence outcome of legislation Assist companies in coalition building around issues Help members of Congress get reelected Organize grassroots efforts
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Figure 12-3

Grassroots Lobbying
Mobilizing the grassroots individual citizens who might be most directly affected by legislative activityto political action Using the Internet to amass grassroots support, and enable grassroots supporters to contact their legislators
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Grassroots Lobbying

Cyberadvocacy

Coalition Building
A coalition is formed when distinct groups or parties realize they have something incommon that might warrant their joining forces, at least temporarily, for joint action. Coalition formation has become a standard practice for firms interested in accomplishing political goals or influencing public policy. If a company or an association wants to pass or defeat particular legislation, it needs to seek the support of any individual or organization that has a similar position on the issue. Coalitions enable members to share their resources and pool their energies when they confront difficult issues.
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(Continued)
To do this, the following steps are recommended: Manage the sequence in which issues are addressed Increase the visibility of certain issues Unbundle issues into smaller subissues

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Political Action Committees


Political Action Committees (PACs) are groups of like-minded businesses using financial resources to influence government.

Golden Rule of Politics: He who has the gold, rules.

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Top 10 PAC Contributors to Federal Candidates (2005-2006)


National Association of Realtors National Beer Wholesalers Association National Association of Home Builders National Automobile Dealers Association International Brotherhood of Electrical Workers Operating Engineers Union American Bankers Association Laborers Union American Association for Justice Credit Union National Association
Figure 12-4

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Political Action Committees


Arguments For PACs Arguments Against PACs
PACs expect something in return other than good government and this can lead to differing treatment for those who give and those who cannot, such as the poor.

PACs are a reasonable means that business may use to organize their contributions to candidates for office.

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Political Action Committees


Conditions Needed for Effective PAC Contributions
1. 2. 3. 4. 5. When the issue is less visible During the early stages of the legislative process When the issue is narrow, specialized, or unopposed When PACs are allied When PACs adapt lobbying techniques to their contribution strategies

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Soft Money
The Hard Facts About Soft Money
A contribution made to political parties instead of political candidates The Bipartisan Campaign Reform Act of 2002 was a sweeping change of U.S. campaign finance The BCRA removed the influence of soft money on candidates running for national office

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Political Action Committees


Strategies for Political Activism

Containment Strategy

Keeps an issue off the public agenda and out of the limelight Helps to define an issue Formation, formulation, implementation, administration and modification of a firms political strategy
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Regulatory Life Cycle Approach

Contingency Approach
Contingency approach considers variables of:
1.

2.

The number of salient issues in a legislative district The amount of information a legislator possesses concerning voter preferences

After considering the above, then determine:


1.

2.

The salience of the issue to the legislators constituency The identification of the expected position of voters on the issue
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Strategies for Political Activism


The political activities are contingent on:

1. Modes of corporate responses


Defensive Accommodative Positive activism

2. Internal corporate conditions 3. Anticipated political risks


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