IT Outsourcing and Business Process Outsourcing to China/Asia

How business interacts with government: McKinsey Global Survey results

A variety of government actions in addition to laws and regulations powerfully affect companies’ finances, executives say. But executives also indicate that companies’ processes to manage their relationships with government are generally less robust than are the ones used to manage relationships with other stakeholders.

JANUARY 2010 • Andrea Dua, Kerrin Heil, and Jon Wilkins

Government is likelier to affect companies’ economic value than any other group of stakeholders except customers, say executives in response to a new McKinsey survey. The results also indicate that most executives expect government involvement in their industries—which in most cases has skyrocketed since the global economic crisis began—to continue increasing. The survey asked executives about their companies’ relationships with the government of the country or region that is their primary market: how government affects their companies’ economic value, how their companies interact with the government, how effective those activities are, and who spearheads the companies’ relationships with the government.

The results show that government actions have a significant effect on companies’ economic value: 34 percent of respondents say 10 percent or more of their operating income is at stake. Some government actions, such as providing infrastructure and access to capital, are likelier to have a positive than a negative effect on company finances. However, passing laws and setting policies—the actions executives say most often affect their companies’ economic value—have an overall negative effect. Respondents whose primary markets are in developing economies are more positive than others, however, about the effect of government actions, such as the passage of laws and enforcement of rules.

A strong majority of executives say business must proactively and regularly engage with government, even though many find that dealing with government is often frustrating and consider government officials to be uninformed about the economics of their industries. Yet companies aren’t doing as much to counter those problems as they could; for example, only a third say their companies are “extremely” or “very effective” at building strong relationships with key government stakeholders. In fact, despite the variety of practices that can help a company successfully manage its relationship with government, a majority of companies aren’t effective at even one of them.

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http://www.pland.gov.hk/pland_en/misc/great_prd/outline_e.htm