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George Siedel
  George Siedel

Using the Law to Gain Competitive Advantage

12/8/2003 --

ANN ARBOR, Mich.---Managers often start with a mindset that separates legal issues from the strategic and operational concerns of the business. However, in a global economy where goods, services and investments move across political borders, subjecting companies to the growing complexity of regulation and liability in other countries, this conventional approach to legal concerns is no longer very realistic.

In his latest book, Using the Law for Competitive Advantage, George Siedel of the University of Michigan Business School makes the case that so-called "legal problems" arising from product liability, employment relationships and government regulations actually present hidden opportunities for gaining a competitive edge in business.

Managers, he says, who take a proactive rather than reactive approach, and look for the "silver lining" in difficult legal situations, can use the law to reduce costs and develop products that are unique and priced lower than those of their competitors. Siedel, the Williamson Family Professor of Business Administration, provides a four-step process called the Manager's Legal Plan to serve as a roadmap for guiding managers through their decision-making in the increasingly convoluted legal landscape.

"Business law is rapidly changing in response to the globalization of business," says Siedel, professor of business law. "In addition, managers have an increasing appreciation for the importance of law, which touches almost every aspect of their work. This combination of legal change and the ubiquity of law has created new opportunities for competitive advantage."

According to the Manager's Legal Plan, a manager's first step is to understand the law as it pertains to a particular legal situation and then try to gain a broader perspective that can help a company prevent future litigation. Secondly, a manager must gauge the merits of using a fight-or-flight solution, such as contesting a lawsuit, trying to change a law or regulation, or moving the company to an area where legal risks are lower.

In the third step, a manager searches for new business strategies and innovative solutions to legal problems.

"This goes beyond applying business tools to litigation," Siedel says. "A manager confronted with wrongful discharge litigation, for example, would take proactive measures, such as reviewing the company's hiring practices, revising procedural documents and training employees to prevent them from making statements that could result in liability."

Fourth, managers must "climb to the balcony" to gain the broader perspective they need to reframe a legal concern as a business opportunity.

"This can provide a broader perspective of the entire playing field without the blind spots that hinder decision-making when a manager is closer to the action," Siedel says.

His book also addresses nuts-and-bolts issues, such as the legal resources available to companies, the management tools needed for decision-making and dispute resolution, and the role of values in gaining competitive advantage.

Using the Law for Competitive Advantage is part of the University of Michigan Business School Management Series.

For more information, contact:
Bernie DeGroat
Phone: 734.936.1015 or 734.647.1847