NonMarket Strategy

Question 1

what do lobbyists do?

Answer 1

Bertrand et al 2014

lobbyists maintain political connections and provide firms with access to political influence

Question 2

Revolving door:

Answer 2

Bertrand et al 2014

movement of federal public employees into the lobbying industry

Question 3

lobbyists premium fee

Answer 3

Blanes et al 2012

lobbyists having colleagues in office demands a premium fee

Question 4

which way does the door swing?

Answer 4

Houston & Ferris 2015
former politicians to corporate directors are 2.5x more likely than reverse to bring in significantly positive long-term abnormal returns

Faccio 2006
from businessmen to politicial brings more corporate value than reverse

Question 5

Competitive Advantage in NonMkt/Mkt

Answer 5

Bach & Allen 2010
there are important differences between market and nonmarket environments but taking an integrated strategic approach can lead to a

Question 6

Synthesis example for competitive advantage

Answer 6

Bach & Allen 2010
Toyota successfully lobbied in Cali to allow Prius in carpool lane with one person because of low emissions, got support from enviro groups and then got free meter parking in LA - serious competitive advantage

Question 7

mergers and non market strategy

Answer 7

Holborn & Van Den Bergh 2014
firms looking to merge will invest more in political activities in the months leading up where there is a great risk of the government crowding out the value of the merger

Question 8

how much of a firm’s profitability may come from non market forces?

Answer 8

Firman 2001

a large % of a well-connected firm’s profitability may come from political connections rather than market forces

Question 9

politically-connected companies in Indonesia

Answer 9

Firman 2001
study connecting politically-connected companies in Indonesia with then president suharto found that companies with a strong connection to the president experienced a fall in the value of companies when there were rumours of his illness

Question 10

nonmarket strategy starts with:

Answer 10

Bach & Allen 2010
the recognition that there are issues beyond the market and economy that affect the bottom line and they can be managed just as strattegically as conventional core business activities

Question 11

legal question - JP Morgan

Answer 11

New York Times 2014
legal question of whether JP Morgan hired children of prominent Chinese officials to make connections that can win favor and business

Question 12

congressmen abnormal returns

Answer 12

Key 2013

companies with relationship to congressmen see Abnormal returns in stock prices of 2-6% when US congressman elected

Question 13

preferential treatment

Answer 13

Faccio 2006

political connections can get you preferential treatment by the government owned entities

Question 14

how political connections is a resource

Answer 14

Wu et al 2013
CEO political connections reduces uncertaintiy and increases access to government resources and the ability to raise capital

Question 15

BP

Answer 15

Bach & Allen 2010
acknowledged global warming and pledged to become more sustainable which increased CSR reputation and gave more political access to BP

Question 16

study that found improved relationships between management and government needed

Answer 16

McKinsey 2010

Question 17

engaging with governemnents in secondary markets

Answer 17

McKinsey 2010
companies are less effective at engaging with governemnents in secondary markets than primary and multinational companies need to develop this capability to expand

Question 18

NGOs … engage?

Answer 18

Vaziji 2004
avoid tricky situations by partnering with NGOs: they have legitimacy, awareness of social forces, technical expertise, and networks (Shell does this in the evaluation stage of projects)

Question 19

social media:

Answer 19

McKinsey 2012
companies that use it to understand and influence stakeholders appear to be better at (1) reputation management (2) proactively engaging with stakeholders (3) coordinating external affairs activities

Question 20

example Jared Kushner

Answer 20

The sister of jared Kushner, Donald Trump’s son in law and top aid, appeared at a Beijing sales event in early May to pitch investors on a real estate project. The pitch touted the Kushner name and ‘government support.’ (FT 2017)