by Alex Roldan
Finally, we now have a new government. But, the whole country is faced with the more compelling question of whether, indeed, the Noynoy government can turn the tide of pessimism among the populace by instituting meaningful political reforms to a cluttered bureaucracy and a feeble economy.
But, while many are hopeful that the new government will make good on its campaign promises, I am more concerned about how political changes will affect the business sector. It is a fact, that a shift in political fortunes can also have an immediate effect on the country’s business sector. This reality often results to disagreements between the government and business as the latter tries to adjust to the new government’s policies and plans.
My post-graduate study thesis early in this decade attempted to determine the awareness level of the business sector of impending political changes. I tried to understand their personal views, but most importantly their awareness of how these changes might influence a business’ management style. Sad to say, many (particularly small and medium enterprises which were the samples in the study) did not seem to care about whoever runs the government. Meaning, they didn’t seem to be aware of the implications of these changes to their business, or they just didn’t care!
It seems like a lonely advocacy – to make business aware of the implications, so that they are better prepared to meet any eventuality with minimal effect on their operations.
One of the surest things that the change in political power can have on business management has to do with taxation. I bet only very few among the business people are now making projections of their business operations, what may be called “scenario-building” if taxes are increased. Let us remember that businesses have very little, if any, say on what taxes the government will levy on them. This will certainly influence business management as it forces a change in budgeting. Businesses need to comply with the law, and if that means that they have to pay more or higher taxes, so be it.
The screaming newspaper headlines in the past months informing everyone that the government’s yearly deficit had swelled by almost 20% of its budget should have been warning enough to businesses that the new government will eventually look at the possibility of raising new taxes as one of the immediate solutions. You don’t need to be sophisticated to understand the implications of this to your business!
A new government means new people at the helm (though with some recycled names) who make decisions for the nation. They come from different political parties, may have different ideas for the economy and put different policies in place.
Sometimes their policies tend to improve the investment climate and strengthen the stock market. But some may prove to be detrimental to the economy.
Business management will again be affected since shares of big industries and financial companies are sold in the stock market. They use the money to, hopefully, enhance their business. Therefore, with less money, they will have to figure out new ways to make their business survive.
But, not all political changes are bad for business management as they may also usher in new opportunities for businesses. I believe in the saying that it is during a financial crisis that businesses and their managers find new opportunities presented to them to make it through or develop new strategies to make their operations more efficient and profitable.
It is surprising how much political change can influence business management. Businesses and their managers need to pay attention to political changes, both in their local government as well as in the national level.
For comments, e-mail to: roldanalex@yahoo.com
