The Importance Of Trade Secret Protection: Reasons And Methods" Essay.

Reasons for Keeping Strategic Planning Secret

Question:

Critically analyze and discuss reasons why the chosen firm may prefer to conduct strategic planning in secret and keep its strategies hidden from all but the highest-level executives.

The essay discusses the reasons why many companies conduct their strategic planning secret from all but the executives of their firms. In this world of increasing competition and litigation, privacy on the part of a company is a mandatory issue. Failure for securing and protecting confidential information of the organisation may lead to danger for the health of the company (Smither, Houston and McIntire 2016). In the evil hands, the confidential information may be misused to commit any illegal activities such as fraud and discrimination. Many countries have laws for protecting the organizational secrecy and confidentiality of certain information in the workplace. Revelation of any sensitive issue associated with an employee led to loss of loyalty and confidence which eventually led to lagging in productivity.

Olympic group is a group of companies operating in Egypt. It mainly operates in the fields of domestic appliances. It also trades on IT fields and real estates. The company’s 98% products are of their own manufacture (Electroluxgroup.com 2017).  The key international suppliers, partners and licensors of the company are Electrolux, Philips and Merloni internationals. The company maintains high secrecy regarding its business policy. The reasons are:

New technology- the reason for ascendency of the company’s trade secret is that the technology has made the access and misappropriation easier. Previously the companies used to store the information physically (Siponen, Mahmood and Pahnila 2014). They used to hide the blueprints of their new products in a locked room. Now in this digital world the companies store blueprints in the digital files on the computer networks. They encrypt the file and keep it password protected but for a disgruntled worker it is easy for him to download, e-mail or post on internet (Leonardi, Huysman and Steinfield 2013). He can also save the file his mobile and leaves office undetected. Therefore, it can be said that digital world does not provide benefit to the trade secrets.

Changing work culture – with the growth the company, the prosperity increases. In this process, many current as well as former employees get fired for misappropriation of the trade secret of the company. Now this changing work environment employees no longer are loyal to one company. They leave one organization whenever they get better opportunities. They value for entrepreneurism and mobility (McGrath 2013). These employees carry their previous employers’ trade secrets at the time of leaving the company. The research reveals that layoffs, automations, outsourcing, shortening contracts have given rise to the employee disloyalty. This increasing mobility of the workers is one of the most important reason why the companies keep secrecy about their future plans.

Importance of Trade Secrets in Digital World

The perception of secrecy is different in different age groups.  The IP law bases on the idea of information ownership. The law associated with trade secrets bases on ownership of confidential information (Wade 2013). The recent file sharing culture has decreases the value of secrecy in any aspect. The changing social norms for protection important information as well as privacy can be the reason of increasing trade secret misappropriation.

Increasing value of business secretes- as the international al companies shift to service and knowledge based economy, the competitiveness of the firms has started to depend on their intangible assets. The trade information has become intellectual properties of the companies. The importance on maintaining secrecy about the trade has resulted in growing laws to criminalize the trade secret misappropriation (Luftman et al. 2012). The current knowledge based economy is quite different from the previous one where the physical assets like natural resources, capital goods were protected. The value of trade secret in recent time has replaced these physical assets. Data leaks can cost a company more than $2 trillion.

Laws- with the increased threat of data misappropriation, the body for trade secrets act has been strengthened. According to the researchers, the growing awareness about the trade secret law and its adoption has indirectly manipulated the misappropriation of business privacy (Smither, Houston and McIntire 2016). The incidents in USA discloses the fact that more the companies protect their valuable information as their trade secrets, more they are vulnerable to the theft. It is evident that the growth of secret litigations may have created an optimistic feedback loop. More organizations relying for protecting their information, the plaintiffs are bringing more cases of information theft in the court (Lu et al. 2014).

Flexible scopes- one of the chief reasons of increased trade secret litigation is flexibility of trade secrets. Any secret information derives economic value for its privacy therefore material falling associated with secret theft is increasing. These secrets are mainly laboratory formulas, methods, source codes, prototypes budgets, pre-release prices, business plans, contract terms market analysis, engineering specification and recipes. The definition of the trade secret in so dynamic that it can be applied on the company’s knowledge, training and experience. According to Smither, Houston and McIntire (2016), trade secrets have been gaining importance due to the continuous changes in technology. It is outstripping existing laws to encourage and secured invention as well as innovation.

Changing Work Culture and Employee Disloyalty

International threats- Misappropriation of the trade secrets has a very dangerous aspect. According to Cummings and Worley (2014), the misappropriation of trade secrets will be empowering foreign powers. The companies that work internationally, employ workers from various countries. For tapping the supply chains, they need to rely on the foreign capital markets or employ foreign manufacturers. As a company ventures the foreign markets, take their own trade secrets with them therefore, these secrets become more vulnerable for misappropriation by the foreign parties. Major issues regarding the misappropriation is that the hackers can copy data of the trade secrets from any company in the world. They no longer need to abscond physically and harm the organizational growth.

The most important aspect of trade secrets misappropriation acts is that they cannot be enforced properly (Zuiderwijk et al 2012). In different countries, jurisdiction varies and laws are different therefore, though the major countries have laws to protect trade secrets, there are difficulties to enforce them efficiently.

The methods used by Olympic group of Companies for continually surviving in a competitive market are-

Identifying and prioritizing:

The firm knows the process of protecting confidential data. The start categorising the types of information according to its value as well as its confidentiality. The company prioritizes data according to its value (Wade 2013). They begin with the customer information and employee record as they are the easiest information for securing. These data need only few and specific systems for updating this information. The structured information like personal identification, account numbers, social security data and financial transaction are then protected. The contracts, customer correspondences and financial releases are important and rolled out in a departmental basis.

Determination of access, usage and distribution policies of the company:

The company assesses the current workflows and identifies the major departments that involve private information (FORCE and INITIATIVE 2013). It determines the risk of data leakage. Based on the assessments the company crafts its distribution policies quickly. Through these policies, the authority can govern the people who are accessing data, receiving and using which type of contents and when. The company can also supervise the enforcement actions for contravention of these policies. The company’s distribution policies emerge for their customer information, intellectual property, executive communications and employee records. After defining the distribution policies, implementation of monitoring the actions and enforcements are essential steps.

Implementation, observing and enforcement of systems:

Olympic group of companies monitors and enforces the policies. The company’s adherence of policies is crucial for the protection of the trade secrets. These are the company’s confidential assets. Control points are established for monitoring the information usage and trafficking, verifying the compliances associated with its distribution policies and executing enforcement action against violation of these policies (Pearson, S., 2013). The company’s monitoring systems accurately identifies the threats and bar them from passing the control points.

Perception of Secrecy in Different Age Groups

As the company deals with immense amount of information which are digital, its monitoring system has strong powerful identification capabilities for avoiding false alarms and preventing unauthorized traffic. The organization uses various software products to monitor the electronic communication channels to secure sensitive information.

Reviewing progress periodically:

For the maximum effectiveness Olympic group regularly reviews their systems, trainings and policies. They use the visibility offered by the monitoring systems for improving the employees’ trainings, expand deployment as well as eliminate vulnerabilities systematically (McGrath 2013). The company reviews the system extensively to analyse the suspicious activities and system failures. They also utilize their external audits for checking the vulnerabilities.

The company has employed the security system to review the arising incident reports and extend coverage beyond initial implementation. It protects all types of information by system benchmarking regularly. It also helps the company in extending security to the various communication channels like web posts, messaging, e-mail including security to additional departments (Siponen, Mahmood and Pahnila 2014).

Therefore, it can be concluded that protection of the confidential trade assets of a company is a long journey rather than a single day event. It requires systematic procedure of identifying sensitive data, understanding current business methods, designing proper access, utilization and distribution policies finally monitoring the external and internal communication. Olympic Group of Companies have employed all these methods successfully in their business to face the competitive environment.

References:

Cummings, T.G. and Worley, C.G., 2014. Organization development and change. Cengage learning.

Electroluxgroup.com (2017). Electrolux acquires Olympic Group. [online] Electroluxgroup.com. Available at: https://www.electroluxgroup.com/en/electrolux-acquires-olympic-group-10956/ [Accessed 13 Nov. 2017].

FORCE, J.T. and INITIATIVE, T., 2013. Security and privacy controls for federal information systems and organizations. NIST Special Publication, 800(53), pp.8-13.

Leonardi, P.M., Huysman, M. and Steinfield, C., 2013. Enterprise social media: Definition, history, and prospects for the study of social technologies in organizations. Journal of Computer?Mediated Communication, 19(1), pp.1-19.

Lu, R., Zhu, H., Liu, X., Liu, J.K. and Shao, J., 2014. Toward efficient and privacy-preserving computing in big data era. IEEE Network, 28(4), pp.46-50.

Luftman, J., Zadeh, H.S., Derksen, B., Santana, M., Rigoni, E.H. and Huang, Z.D., 2012. Key information technology and management issues 2011–2012: an international study. Journal of Information Technology, 27(3), pp.198-212.

McGrath, R.G., 2013. The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.

Pearson, S., 2013. Privacy, security and trust in cloud computing. In Privacy and Security for Cloud Computing (pp. 3-42). Springer London.

Siponen, M., Mahmood, M.A. and Pahnila, S., 2014. Employees’ adherence to information security policies: An exploratory field study. Information & management, 51(2), pp.217-224.

Smither, R., Houston, J. and McIntire, S., 2016. Organization development: Strategies for changing environments. Routledge.

Wade, R., 2013. The art of power maintenance: How western states keep the lead in global organizations. Challenge, 56(1), pp.5-39.

Zuiderwijk, A., Janssen, M., Choenni, S., Meijer, R. and Alibaks, R.S., 2012. Socio-technical Impediments of Open Data. Electronic Journal of e-Government, 10(2).