StockMarkets.com » Strategies » Associations

Associations

It is not uncommon in stock market circles to hear murmurs of protest about company executives spending time and money on Association activities. Industry bodies do not produce tangible or direct results every quarter! It is true that significant resources can be lost in doing work for an Association on individual company time, and perhaps all members may not contribute in equal measure, except for nominal subscriptions. Accounting for money spent on an Association’s work is difficult because executives typically combine business trips with time spent for industry meetings. Stock market investors are often aghast at time and money expended, apparently for common good shared with competitors, while key issues within individual corporations seem to wait.

Such stock market misgivings are generally misplaced. Regulation is a massive issue for major sectors of industry. Cost structures are obviously affected by tax proposals during annual budgets, and the composition and nature of incentives for new projects can determine competitiveness between affiliates of major international corporations. It has become a common practice to designate country sites as hubs for major manufacturing processes, and no company can present its case in this regard alone to national governments. Labor laws are another sticky issue in countries which had earlier affiliations with the Soviet bloc. All industry members in a sector need to present their side of flexible deployment needs and productivity imperatives in a unified manner. Intellectual property rights, feasible environmental conservation standards, and pro-active action against controls on selling prices, are other key issues which affect the fundamental well-being of industries, and which require association-level interaction with politicians and with bureaucrats. Therefore, stock market skeptics wherever they exist, should be reassured that time spent for an industry body is a worthwhile investment with certain, though covert, returns.

The Confederation of Indian Industry (CII) is a prime example of how business and national interests can converge through an association. India’s remarkable program of reforms would not have been possible with such speed and ease had the CII not been an active participant. No individual company, domestic or subsidiary to a group abroad, could have made such impacts in areas of cutting back on import tariff barriers, infrastructure development, and new stock market issues. All stock market operators, which discount companies for the resources their people spend on an association, can benefit by reviewing the extraordinary contribution of the CII.