Corporate planning in the age of Du30
In two weeks, we shall bid farewell to 2019. For businesses that went through some difficult times this year, its end cannot come sooner. By this time, many domestic companies would have had preliminary discussions with their staff on their plans for the coming year.Ideally, those plans should be in place by year’s end so they can be implemented at the start of the new year. This way, the company can hit the ground running on the first working day of 2020.The saying “failing to plan is planning to fail” applies to the business community in these times of volatile changes in tastes and preferences and the strong influence of cyberspace technology on consumers’ spending habits.
For companies that do not foresee serious threats to their viability or growth, corporate planning would be a breeze. They can do it internally or without engaging the services of consultants.Except for some changes in the organizational setup to make it more responsive, tweaks in operational expenses to reduce costs and retooling of marketing strategies, the systems and procedures that have proven effective before would likely be maintained.
Those plans, however, should not be etched in stone. They should be capable of quick adjustments if certain events in the future require such action.
But for companies with government contracts, or need a franchise to operate, or whose sources of revenue are passed upon by regulatory agencies, corporate planning can be challenging.Under normal circumstances, transacting with the government should not be a problem. If the terms and conditions of the relationship are spelled out clearly in a contract, it is reasonable to assume the parties would faithfully comply with their duties and responsibilities.
Based on this assumption, companies can confidently plan the manner by which they will comply with their contractual obligations and fairly predict their potential revenue streams for the coming year.
These operational and financial projections would enable them to plan ahead on, among others, the allocation of funds for capital expenditures, negotiation for funding arrangements with financial institutions, or hiring of additional employees to meet possible increase in business activities.
That level of confidence may, however, have to be tempered if the counterparty in the business transaction is a government office.
In theory, when a government entity enters into a contract with a private party, the former waives whatever special rights or privileges it enjoys by virtue of such status.
This means, the contracting parties are presumed to be on an equal footing. No one is considered superior to or dominant than the other.
Their contractual relationship shall be governed by the terms and conditions of their agreement and any law that applies to it. Signing the agreement means the parties know what they are getting into and will abide by it.The reality on the ground, however, is the contracting parties do not stand on equal grounds. In spite of written affirmations of parity in standing, the government has the upper hand in any contractual relationship.Well and good if it faithfully complies with the agreement. But if it does not want to (or worse, wants to unilaterally cancel it) and invokes grounds or causes other than those provided for in the contract, such as “public welfare, safety and interest,” to justify its action, there is little the private party can do about it.
Forget about going to court to compel the government to comply with the agreement. Our judicial system is so hopelessly slow and inefficient that getting relief from it would be an exercise in futility.
As the saying goes, “you cannot fight City Hall.” Thus, the aggrieved party has no choice but bite the bullet and lick its wounds quietly.
In light of the recent experience of Manila Water Co. and Maynilad Water Services Inc., planning for 2020 would be a tough task for companies that are in the same boat or are otherwise fair targets for public criticism. INQ
