Business policy is the study of the functions and responsibilities of senior management, the crucial problems that affect success in the total enterprises, and the decisions that determine the direction of the organization and shape its future. The problems of policy in business, like those of policy in public affairs, have to do with the choice and of purpose, the development and recognition of organizational identity and character, the continuous definition of what needs to be done, the mobilization of resources for the attainment of goals in the face of competition or adverse circumstance, and the definition of standards of the enforcement of responsible and ethical behavior. The problems considered and the point of view assumed in analyzing and dealing with them are those of the chief executive or president, whose primary responsibility is the enterprise as a whole. Throughout most of American history, commercial interests have played a central role in foreign policy, and vice versa. During the next few decades, the interaction between them will become more intense, more important, more difficult to manage, and more complicated for the American public to understand. Foreign policy has reflected an obsession with open markets for American business. The United States has sought outlets for surplus wheat, new markets for autos and airplanes, and access to raw materials like oil or copper. Business expansion abroad was often seen as an extension of the American frontier, part of the nation’s destiny. History even records numerous instances when foreign policy seems to have been made or executed by individual companies; protecting the interests of United Fruit, for example, was once synonymous with Washington's policy toward Latin America. More recently, the big auto companies pushed the first Clinton administration to the brink of a trade war with Japan.
During 1981, U.S. negotiated with Japan to limit its automobile exports to the U.S. to 1.68 millions per year for three years. The U.S. auto industry recovered and by 1984 was announcing record profits. The turnaround was partially due to recovery from the recession, which lifted auto sales. History also shows too much restriction on imports might be a cause of recession. When the United States raised import restrictions to their highest level in history in 1930, in matter of months, Canada, Mexico, France, Italy and Spain countered with limitations of their own. In 1931, India, Peru, Argentina, Brazil and China joined the parade. The United States lost rather than gained jobs as its exports diminished.
The most common type of trade control is the tariff or duty, a government tax levied on goods shipped internationally. Such as export tariffs, transit tariffs, and by far most common the import tariffs. Import tariff serves primary, as a means of raising the price of imported products so that competitively produced domestic goods will gain a relative price advantage. Tariffs also serve as a means of governmental revenue.
Moreover, the nation's motives were never entirely commercial. The United States has not taken mercantilism as far as France or Japan. Americans have associated commerce with open markets, open markets with political freedom, political freedom with democracy, and democracy with peace. During the Cold War, the nation saw an open trading system that included Europe and Japan as helping those societies resist communism and the Soviet Union.
The hallmark of involvement with big emerging markets is that American business depends on Washington's help to liberalize trade, protect intellectual property, remove regulatory barriers, and encourage continued economic reform. It needs the government's help to win major contracts in the many countries where governments award the deals and where French, German, or Japanese firms are getting help from their governments. Millions of jobs depend on export expansion. One of six jobs in manufacturing depends on merchandise exports. The health of the American economy is more linked to foreign markets than ever before. Barring a militarily aggressive Russia or China, odds are that commercial considerations will play an ever-greater role in American foreign policy throughout the second Clinton administration and into the next century. Much of our foreign policy could look more like it did during the nineteenth century and up until Pearl Harbor, when, for the most part, commercial goals were paramount. Government and business should consider the following framework to help them work together for their mutual benefit.
The administration, together with business leaders, needs to build a stronger constituency for open global markets in the business community and in Congress. In short, the globalization of the American economy is weakening the political consensus for free trade. With growing trade deficits, possibly exacerbated by a rising dollar and escalating imports from China and Japan, the situation may get worse. The administration and business leaders should make common cause and get ahead of the political wave of apathy, at best, or protectionism, at worst. This requires a prolonged campaign, not a one-shot strategy aimed at one particular trade agreement. Amid the budgetary issues and scandals in Washington, such plans are not high on anyone's agenda.
Washington and the business community need to make peace regarding the use of unilateral export controls for foreign policy purposes. The first Clinton administration made great progress in reducing the number of products subject to controls, particularly in the area of telecommunications and computers, and more can be done. At the same time, over the last four years there has been a dramatic increase in laws and executive actions authorizing unilateral economic sanctions for foreign policy purposes. Such controls, sanctions, and embargoes are ill advised in a world where American firms no longer have monopolies on capital or technology. Moreover, the administration should prepare an annual report analyzing the impact of sanctions on other countries and American companies.
The administration and business need to work together to deal with congressional and broader public concerns about commercial diplomacy, including charges of undue foreign influence and corporate welfare. Illegal campaign contributions from Indonesians, Thais, and other foreign nationals are a scandal and need to be eliminated by much tougher campaign contribution laws. There are several other ways to ensure that commercial diplomacy is conducted according to the highest standards of integrity.
The administration and business should assist in the design and implementation of political and economic reforms in the big emerging markets. If the global experiment in democratic capitalism goes awry, the international landscape will be ominous for the United States. Washington and American firms should reinforce one another's advice to foreign governments, pooling their efforts in areas like regulatory policy and upgrading education and training. The administration and American firms need a much deeper dialogue on what it will take for businesses to build a presence in the emerging markets, weather the inevitable storms, and deal with the commercial intelligence gathered from public and private sources.
References:
Christensen, C. Ronald, Business Policy Text and Cases. New York: Harper, 1987.
Daniels, John D., and Radebaugh, Lee H. International Business Environments and Operations. New York: Harper, 1985.
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