Business and Government

Sessions 1-2
 Grading Plan
• Quiz – 30%

• Class Participation – 30%

• End-term – 40%
 Environment for Business
• Market environment – firms, workers, investors,
consumers, suppliers etc. governed by contracts.

• Issues relevant in market environment – market access,

production and cost efficiency, revenue and profits, data,
data security etc. (mostly positive analysis)

• Typical decision-making in a firm – Hierarchical,

secretive, selective in participation, firm-specific and for
private gain.
 Environment for Business
• Non-market environment –
– Public institutions such as Government and other public
institutions (e.g. central bank)
– Private institutions such as media, NGOs, interest groups, think
tanks etc.

• Issues relevant in non-market environment –

sustainability, security, health and safety, regulation and
deregulation, rights, ethics etc. (mostly normative
analysis)

• Typical decision-making in a government – wide

participation, majority rule, under public scrutiny,
involving collective action and for public welfare
 Environment for Business
• Are non-market issues and the knowledge of their
decision-making relevant for business?
– It depends on the business and time

• If a non-market is relevant for a business and if it is not

managed the issue will manage the business

• There are multiple stages of decision-making in a non-

market environment, especially in the case of a
government, with different non-market participants taking
part in it and with different actions relevant for
businesses to consider
Non-market Strategy and the
Control of Opportunities
 Non-market Positioning
• Firms may choose to position themselves
in businesses in such a way that they are
able to manage their market and non-
market strategies better
• RIL is into industries such as oil and gas,
petrochemical, retail, telecom etc.
• Infosys is primarily into IT catering to
private businesses (unlike TCS)
 Environment for Business
• Stage 1
– Issue identification
– Active non-market participants – public, media, NGOs etc.
– Relevant strategies for business – effective communication
through media

• Stage 2
– Interest group formation
– Active non-market participants – political parties, interest groups
etc.
– Relevant strategies for business – lobby (Japan, India), activate
favourable interest groups
 Environment for Business
• Stage 3
– Legislation
– Active non-market participants – political parties, legislature etc.
– Relevant strategies for business – lobby (US), participate
(testify) in legislative enquiries
• Stage 4
– Administration
– Active non-market participants – executive
– Relevant strategies for business – lobby (EU), negotiate, advise
• Stage 5
– Enforcement
– Active non-market participants – public servants
– Relevant strategies for business – abide