Business strategy and big brother

Sure, you know big brother is watching you, but is your business strategy watching big brother?

Geoff Wilson

Bombardier woke up this week to a 220 percent tariff on its high end planes, courtesy of the U.S. Department of Commerce.  The news was a blow to the company’s share price, and probably a bigger blow to those who depend on the company as suppliers and workers.  The background and justification for the tariff are beyond the scope of this post, but it brings to mind a question:

How does your business strategy take into account moves by big brother? You know, big brother…that’s shorthand for the all seeing, all knowing State with a capital S that encompasses all the regulatory regimes your business has to contend with at any point.

Capital intensive industries seem to be the recipients of constant regulatory scrutiny because, well, they are capital intensive–marginal revenue makes a LOT of difference there.  It takes a lot of time and money to bring a new airplane to market, or a new car, and it usually costs very little to make an incremental plane or car compared to the development costs.  Examples are everywhere.

China has been very clear on impending goals for electric cars within its borders.  California is getting in on the game, too.  The Trump administration has been unabashed in its willingness to push for new tariffs on lumber, steel, solar, and the aforementioned airplanes, among other things.

You may look at this and think “thank goodness I’m not competing in these markets,” but you probably are.  You just don’t know it. That steel maker buys machinery, parts, labor, and other things on many of the same markets you do.  It may be your customer if you sell software, services, or other goods.  The changing regulatory environment for one company or sector has knock-on effects in others.  The business–and regulatory reality–of your customer is very often and very much your business, whether you like it or not.

So, you are not in a vacuum. Your local car wash operator has regulatory burdens that can change over time. So do you.

I have focused on trade regulation here, but taxation and business practice regulations (a good place to start with that one is the Foreign Corrupt Practices Act) matter a lot as well.

How does your business strategy take into account the regulatory pressures that big brother can bring?  Where are there opportunities or risks in those pressures?  How do you prepare for them?

What do you think?  Does your strategy account for the whims of big brother?

 

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