This paper will describe the political strategies HP is using to deal with the three main market issues namely Labor Issues in China, Privacy Issues and Free Trade.
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Hp's political strategy to address non market issue sumaya shakir
1. Sumaya Shakir
Sumaya.shakir@gmail.com
10/3/2012
Political Strategies to address nonmarket Issues – Hewlett Packard
Introduction
HP has been actively involved in political policies and civic engagements, numerous political processes
and global public policy debate on a number of issues. HP believes getting involved in the political
process and policy is important and appropriate for conducting its business. HP has a dedicated team
called “HP Government Affairs” that is committed to participate actively in any government public policy
according to laws and its business conduct standards. HP reaches out and builds relationship with key
officials and political leaders to discuss emerging issues and understand the Government‟s stand and
offer HP‟s expertise. HP is also member of almost every national and regional trade/industry associations
in countries where it has a significant product and market presence.
HP also forms partnerships with various standard bodies and other industries to develop industry
standards for various issues like energy utilization, carbon footprint, supply chain responsibility, etc.
HP is committed to make a difference in people‟s lives, to foster innovation and to strengthen the global
economy for which it focuses on being part of political policies. More information about HP‟s government
affairs can be found at http://www.hp.com/hpinfo/abouthp/government/index.html
This paper will describe the political strategies HP is using to deal with the three main market issues
namely Labor Issues in China, Privacy Issues and Free Trade.
Labor Issues in China
Summary Background HP‟s main line of business is selling Information Technology hardware products
to consumers as well as businesses. Foxconn, one of HP's key suppliers came under fire for violating
human ethics and labor laws.
Issue Fair Working conditions for Laborers in China
Interest Groups Students and Scholars Against Corporate Misbehavior (SACOM)
China Labor Watch (CLW)
Fair Labor Association (FLA)
China Labour Bulletin (CLB)
Institutions Chinese Government
International Labor Organization
Information Poor unethical Labor treatment and violation of labor law in Chinese
factories that make products for US companies
Students being exploited at Foxconn factories to make iphones
Issue Life Cycle Issue is in late interest group formation and early legislative phase
Media Attention This is going to be fully blown and will be covered by various media
2. both in China and rest of the world.
What’s next? Issue will receive more widespread media attention and will
eventually call for better working conditions for labor in China and will require
companies to mandate the code of labor ethics to its vendors/suppliers. The
Chinese Government and various labor groups will pass a few labor
legislations and put audits in place.
The various labor rights group both within China and internationally have criticized and called for action
against Foxconn and the major companies that source from it.
HP’s Business Strategic Political Actions
HP has a zero tolerance towards unethical humane treatment. HP being a large organization and
operating in international scope follows a proactive public policy shaping approach. Even prior to
Foxconn issue HP had described its code of business conduct while dealing with suppliers and vendors.
HP has been very involved in shaping the policy about labor practices across its supply chain. HP always
followed an integrated market strategy addressing its economic and political environment.
Forming Coalitions
Electronic Industry Citizenship Coalition (EICC)
HP formed coalition with other companies like Apple, Microsoft, Nokia, Ericson and other big tech
companies called the Electronic Industry Citizenship Coalition (EICC). The primary purpose of this
group is to set labour guidelines amongst other things.
The EICC is established as a longstanding and formalized coalition and using this coalition HP can
increase the effectiveness of the individual stakeholders on an issue by combining their numbers
and resources.
HP is working with EICC to establish standards to ensure that working conditions in the electronics
industry supply chain are safe, that workers are treated with respect and dignity, and that business
operations are environmentally responsible. The HP Suppliers Code of Conduct is based on the EICC.
HP is collaborating with the EICC to continue to work with other industries and nongovernmental
organizations to identify best practices and to collect key performance indicator (KPI) data in order to
3. improve and simplify data collection methods of managing working hours within their supply chains. HP
is working with coalition on how to best implement reduced working hours initiative‟ .
Details of each of the standards that HP has been working with EICC can be found at
http://www.hp.com/hpinfo/globalcitizenship/environment/pdf/supcode.pd
4. Global e-Sustainability Initiative (GeSI)
HP has also formed another major coalition called Global e-Sustainability Initiative (GeSI) with 30
leading Information and Communication Technology (ICT) companies and organisations around the
globe.
Through the GeSI coalition, HP is working towards „Responsible Supply Chain‟ initiative. HP is
engaged with the coalition to promote human rights and responsible business practices, labour and
environmental standards by implementing educational programs and assessment tools for suppliers to
identify potential corporate responsibility risks. HP is actively working with the coalition to promote
privacy and freedom of expression, UN Guiding Principles on Business and Human Rights and other fair
labour treatment initiatives.
By being part of the coalition, HP as part of GeSI holds a seat on the European Commission‟s ICT
Sector Advisory Group that is leading the development of human rights guidance.
United Nations Global Compact
HP is also a main signatory to the United Nations Global Compact coalition. The Global Compact is a
set of voluntary commitments for companies that pledge to improve the 4 categories namely human
rights, labor conditions, the environment, and anti-corruption controls.
What is the UN Global Compact? Principle 2: make sure that they are not complicit
“The Global Compact asks companies to in human rights abuses.
embrace universal principles and to partner with
the United Nations. It has grown to become a Labour
critical platform for the UN to engage effectively Principle 3: Businesses should uphold the freedom
with enlightened global business.” – UN of association and the effective recognition of the
Secretary-General Ban Ki-moon right to collective bargaining;
The Ten Principles of the Global Compact Principle 4: the elimination of all forms of forced and
Human Rights compulsory labour;
Principle 5: the effective abolition of child labour;
Principle 1: Businesses should support and and
respect the protection of internationally proclaimed
human rights; and
5. Principle 6: the elimination of discrimination in Principle 9: encourage the development and
respect of employment and occupation. diffusion of environmentally friendly technologies.
Environment Anti-Corruption
Principle 7: Businesses should support a Principle 10: Businesses should work against
precautionary approach to environmental challenges; corruption in all its forms, including extortion and
Principle 8: undertake initiatives to promote greater bribery.
environmental responsibility; and
As part of the Global Compact collation, HP has a solid ethics and compliance governance structure that
exclusively takes care of ethical issues occurring along its supply chain process. Foxconn has violated
the first 6 principles of the UN Global Pact and HP being a big signatory is responsible for Foxconn's
conduct. HP is actively investigating the allegations against Foxconn and committed to take action to fix
the violations. HP is working with China Labor Watch to audit and investigate if Foxconn has violated
any laws while manufacturing HP‟s products.
Public Advocacy
HP has started advocating responsible global sourcing practices by achieving greater supply chain
transparency by posting the full list of its outsourcing suppliers on its website for public scrutiny. HP has
made available to the public the results of its supply chain audits to provide to the public the message
that HP takes it supply chain responsibility seriously. HP has also provided all details of its ‘Supply chain
Responsibility Program‟ to the public to show it cares for global labor rights. Amongst other things,
HP has openly published its Global Citizenship Report to show to the public the different initiatives
and measures it is working on. HP is keen on advocating that it is in to advance humane globalization
by working with the ILO and other global institutes toward building a better community.
HP has also shared its annual goals publicly to show its commitment on achieving higher standards
of supply chain responsibility.
Awareness Raising
HP with its global reach has greatest impact protecting and promoting human rights and demonstrate to
the rest of the world how it treats its employees and how it manage its supply chain. HP has worked with
other groups and associations to raise awareness of human rights issues.
HP continues to drive its labour rights awareness training program for all its Chinese supplier factories
and also has set up workers’ hotline and providing labor issues resolution and tailor-made training to the
workers‟ representative committee.
HP was a key player in raising awareness and advancing the mission of the Business Leaders
Initiative on Human Rights (BLIHR) by developing the „The Guide for Integrating Human Rights into
Business Management’. This is an excellent online tool to educate and offer practical guidance to
business leaders around the world.
Section Summary
HP’s Political Strategy for addressing Labour Issues in China
Coalition Electronic Industry Citizenship Coalition (EICC)
Global e-Sustainability Initiative (GeSI)
United Nations Global Compact
Public Advocacy Supply chain Responsibility Program
Global Citizenship Report
Raising Awareness „The Guide for Integrating Human Rights into Business
Management’
Global Citizenship Report
Worker’s Hotline
6. Section Conclusion
How good is HP's response?
HP is on the right track by proactively engaging and forming coalitions to address labour rights. HP is also
working with various labor groups to ensure better standards and working conditions. All the steps that
HP has been implementing and pursuing are appropriate in accordance to its business and to the
industry. Not only HP but HP-like industries are all impacted by same labor conditions in China and HP is
ahead of the game by merging its core values on being a good global corporate citizen with its economic
environment. HP in this case has been a true example of an integrated market strategy. As Human Ethics
and Rights are a very important issue, HP did not risk the potential cost of not participating in the political
process that decides how the issue will be resolved.
Is there anything it should be doing?
Yes HP should lobby more internationally governments about protecting its international supply chain
labour‟s rights.
Cloud Computing Security Risks
Issue Summary
Issue Security vulnerabilities in Cloud Computing
Interest Groups Cloud Security Alliance
Consumer and Enterprise Business using Cloud Services
Banks, Payments Card Industry(PCI)
Government Organizations like US Military
Institutions UK Government Digital Service,
Federal Financial Institutions Examination Council ( FFIEC),
European Network and Information Security Agency (ENISA)
Information Jurisdictional issues of data storage
Cloud Computing conflicting laws and regulations between borders and
countries needs to be resolved
Safety of hosting cloud services from China
Issue Life Cycle Late issue identification, early interest group formation
Media Attention Currently the story is published by a few technology magazines. Main
stream media is yet to pick up the story but eventually in the next few
months, this issue will be a hot topic.
HP’s Business Strategic Political Actions for Security Risks
Lobbying
HP, Microsoft and other internet companies who are offering services on the Cloud have been lobbying
for safer cloud computing laws since 2010. Microsoft general counsel Brad Smith insisted on electronic
privacy laws being updated during a Senate Judiciary Committee in Washington in 2010. Since then,
there have been continued lobbying efforts for cloud security.
HP as part of the Cloud Security Alliance group has been lobbying against the Cybersecurity Act of
2012 and has been successful in protecting the cloud initiatives.
7. The above graph shows HP‟s spending on lobbying for various causes including trade legislations, cloud
security, data security and privacy regulations, patent approvals, free trade, broadband subsidies and
defense funding. HP is one of the biggest spenders on lobbying efforts. It hires lobbying firms like
Palmetto Group, Mehlman Vogel Castagnetti Inc, Sternhell Group, Innovative Federal Strategies and
Akin, Gump et al. HP has spent $3,750,000 so far in 2012 on various lobbying.
There are a number of individual cloud computing legislations that HP along with Microsoft, Google,
Facebook and other companies have been lobbying like the policy issues in cloud computing, Electronic
Communications Privacy Act (ECPA) and the number of other policies as below -
Cloud Physical Location and Access Issues Jurisdictional issues affecting the Cloud.
Example: “safe harbor law - a European law enacted in reaction to the U.S. Patriot Act. Another
example is the Trade Agreements Act of 1979 (TAA) prohibits government contractors from using
cloud services that are set up in countries that don‟t have trade agreements with United States.
Privacy, Security and the Cloud Concerns around data stored in the Cloud is less protected
than other in other contexts. Fundamental concern about the security of essential business and
government information and processes maintained in the Cloud.
Law Enforcement and the Cloud Concerns with privacy issues in law enforcement context and
legal protections against unreasonable search and seizure of data stored in a Cloud context.
Example: Congress is currently reviewing a proposed update to the Electronic Communications
Privacy Act
Intellectual Property (IP) and the Cloud Concerns regarding valuable intellectual property,
trade secrets or copyrighted material in a Cloud environment. Example: The Digital Millennium
Copyright Act provides a safe harbor to cloud service providers from infringement liability for
copyright violations if they adhere to guidelines and immediately block access or remove copyrighted
materials from their website upon notification.
Global Competition and the Cloud: U.S. companies can compete for a share of global cloud
market but U.S. put them at a competitive disadvantage. Example: U.S. Patriot Act
Sen. Amy Klobuchar has introduced a new bill called the “Cloud Computing Act of 2012” (S.3569),
which is supposed to “improve the enforcement of criminal and civil law with respect to cloud computing.”
The proposed bill‟s main purpose is to give “cloud computing services” protections under the CFAA. HP
as part of the CSA alliance is lobbying for this bill.
Eric Goldman, Internet Law professor from Santa Clara University has written an article on forbes.com
regarding the Cloud Computing Act. The article can be found at
http://www.forbes.com/sites/ericgoldman/2012/10/02/the-proposed-cloud-computing-act-of-2012-and-
how-internet-regulation-can-go-awry/
8. Forming Coalitions
HP is part of the Cloud Security Alliance group to promote the use of best practices for providing
security assurance within Cloud Computing. All the top companies like Google, Microsoft and even US
Department of Defense are members of this alliance group. The Alliance aims to provide education on the
uses of Cloud Computing. The Cloud Security Alliance is led by a broad coalition of industry practitioners,
corporations, associations and other key stakeholders.
HP along with the CSA has developed a number of useful and valuable resources like the secure best
practices for cloud computing, tools for managing governance, risk and compliance, cloud user
certification and cloud security knowledge certification, registry of cloud services amongst other cloud
security standards.
Public Advocacy & Awareness Raising
For the last 8 years, every year HP has used events like “HP Protect” to raise awareness and increase
visibility on security infrastructure, security risks and breaches, security landscape, cloud security
information, security and compliance standard. HP raises awareness in the industry by hosting a two day
event where it invites experts, architects, and gurus under one roof. It also makes the event open to
anyone to participate. It then makes public all the lectures, information shared during the summit to the
general population.
HP along with CSA has provided a number of toolkits, handbooks, standards, guides to educate various
businesses and public interested in cloud security. HP provides this information on its website and also
on CSA website.
HP also attends other security conferences like the RSA and shares its knowledge/research with the
community. HP has also set up community forums, knowledge base, FAQs, social media and blogs to
reach out the general public on its efforts on Cloud Computing Security.
Section Summary
HP’s Political Strategy for addressing Cloud Security Issues
Lobbying Cybersecurity Act of 2012
Cloud Physical Location and Access Issues
9. Privacy, Security and the Cloud
Law Enforcement and the Cloud Electronic
Communications Privacy Act
Intellectual Property (IP) and the Cloud The Digital
Millennium Copyright Act
Global Competition and the Cloud: U.S. Patriot Act
Cloud Computing Act of 2012
Coalition Cloud Security Alliance
Public Advocacy & Protect 2012
Raising Awareness RSA
HP website – community groups, forums, blogs, social
media
Section Conclusion
How good is HP's response?
HP is taking cloud computing security seriously and is using every avenue to be as close as possible to
meeting the mandates of the Cloud Security Alliance and the various Government policies in order to
avoid any costly mistakes. It is staying close by lobbying to the various legislations and forming coalitions
related to cloud computing. HP is has done a good job in securing its political position on the issues and it
should continue the momentum.
Is there anything it should be doing?
HP is already doing everything and is in fact ahead of the game and top of the issues since this is its
chance to re-launch itself in the market to gain its position as a silicon valley leader.
The one thing that it should focus more on is to form coalliation with its international partners specifically
European and Asian entities to make sure it covers itself on all International laws.
Is there anything it should not be doing?
HP should watch that it is not violating the US Patriot Act and Trade Agreements by offering cloud
services that are set up in countries that don‟t have trade agreements with United States.
HP Free Trade Market Access
HP advocates free trade policies and is involved in negotiations with several of the trade agreements in
order to benefit from a positive outcome from IT liberalization. HP has already been working and stating
its position on free trade through various coalitions, lobbying, advocating and engaging in social
dialogues. It has an entire department „Office of Global Government Affairs’ that addresses concerns
of Free Trade with dedicated organizational resources.
HP’s Business Strategic Political Actions for Free Trade Market
Access
Lobbying
HP has been an active lobby participant for free trade issues for several years. It lobbies both directly and
through its numerous trade coalitions and associations to voice its stand on trade agreements. HP has
also met with congressional and federal leaders to promote its agenda on free trade policies.
10. The above graph shows HP‟s spending on lobbying for various causes including trade legislations, cloud
security, data security and privacy regulations, patent approvals, free trade, broadband subsidies and
defense funding. HP is one of the biggest spenders on lobbying efforts. It hires lobbying firms like
Palmetto Group, Mehlman Vogel Castagnetti Inc, Sternhell Group, Innovative Federal Strategies and
Akin, Gump et al. HP has spent $3,750,000 so far in 2012 on various lobbying.
Currently HP is lobbying for the International Service Agreement. The U.S. coalition members including
the European Union are now actively building and strategizing the case for an International Service
Agreement and launch an open ground for successful talks. Emerging countries have shown positive
signs to the proposal. There is enough pressure now to go ahead and the goal is to come to a pact in 12
months. All involved countries have expressed interest for a speedy agreement. The 20 countries are
planning to meet in Geneva in October 2013. . The talks will cover all service sectors and will aim to
liberalize the sectors from trade limitations. More details and latest information can be found at
http://www.reuters.com/article/2012/09/19/wto-services-idUSL1E8KJ8Q520120919
Forming Coalitions
HP believes its position on trade policy are better communicated through coalitions and collaborating with
organizations, which enables it to reach government officials more efficiently and in line with other
industry partners. Hence HP has formed industry coalitions to advance its business trade objectives.
National Foreign Trade Council (NFTC)
HP has formed coalition with 300 other companies and formed the National Foreign Trade Council
(NFTC). HP is one of the board of the directors of the NFTC coalition. The NFTC is focused on
advocating a rules-based world economy and supports an open world trading system. Through this
coalition, HP has its Trade and Investment Agenda set and reaffirming its role regarding international
trade and investment issues. Through this coalition, HP has been able to represent and voice on various
political trade agreements and roundtables.
11. Washington International Trade Association
HP has also formed coalition with the Washington International Trade Association (WITA). The WITA is a
non-profit, non-partisan organization which acts as a neutral for the open and robust discussion of
international trade policy issues. Currently WITA has 1800+ members. The coalition with WITA allows
HP access to Congressional Trade Agenda, and Governors and Ambassadors World Trade Reception.
This coalition strengthens HP‟s position and enables it to pursue its strategic political actions.
12. The Federation of International Trade Associations
HP‟s biggest coalition at the international level is with the Federation of International Trade Association
(FITA). FITA has over 450 association members and 450,000 linked company members. FITA is
dedicated to promote international trade, import-export policies, international logistics management, and
international finance among several other international trade related policies. Through FITA, HP has
access to resources, benefits and services to the international trade community and business community.
This enables HP to engage in social dialogue regarding its political stand on Trade issues and hence able
to drive its political agenda for its benefits in free trade.
Other International Trade Coalitions
HP has partnered with several international trade associations to promote its agenda on free trade
policies based on the countries. The full list of HP‟s coalitions and associations can be found at
http://www.hp.com/hpinfo/abouthp/government/ww/assoc.html
More recently, HP has supported U.S. coalition members to advance the International Service
Agreement . The goal is to set high-standard of market openness such that trade commitments will be
"multilateralized" among all WTO members. The talks will cover all service sectors and will aim to
liberalize the sectors from trade limitations.
Public Advocacy & Awareness Raising
HP has published and made publicly available a comprehensive report in May 2011 called „HP in Global
Capitals” about its initiatives as it works with stakeholders involved with Government Affairs on free
trade. HP has dedicated a permanent home on its website addressing this and has made this one of the
more important agendas of HP's global citizenship report.
HP has also created „HP Public Policy’ that is available to the public where it advocates the benefits of
free trade and its benefits to the consumers and HP.
13. Section Summary
HP’s Political Strategy for addressing Free Market Trade
Lobbying Meeting with congressional leaders
Lobbying via coalition associations
Coalition National Foreign Trade Council (NFTC)
Washington International Trade Association
The Federation of International Trade Associations
Public Advocacy & HP in Global Capitals Report
Raising Awareness HP Government Affairs website
HP Public Policy
Section Conclusion
How is HP’s response ?
HP has stood by Free Trade legislation for a long time ever since Doha Agreements surfaced 11 years
ago and is still in the game to ensure its agenda is met as it hopes to benefit from liberation of free trade.
What it should be doing?
Trade agreements are a very complex issue and most of the trade agreements address the issues of all
trades in general. HP should lobby to separate out issues specific to its domain in order to get IT
liberation from trade laws. The International Service Agreement is a first step towards it, HP should
lobby not just within the US but also other governments through its international coalitions.
References:
http://www.integrating-humanrights.org/
http://www.hp.com/hpinfo/globalcitizenship/environment/pdf/supcode.pdf
http://www.hp.com/hpinfo/globalcitizenship/society/supplychain.html