Introduction
Strategy formulation is at the core of any firm which is willing to sustain in its environment, rather than being taken by surprise with an unfavorable turn of events, which could threaten its survival. The environment depicts all the forces that interact with and influence a firm in its operations. These forces are more or less important and threatening to a company. They range from the customers to the competition, through laws and environmental regulations and encompass a very broad number of actors in any competitive environment.
Political activity is perhaps one of the most important forces to monitor and manage for companies. It relates to the laws and regulations that shape the competitive environment, and companies have numerous opportunities and ways to influence them.
In this regard, this paper will address the ways that firms have to manage the uncertainty of their environment through corporate political strategies. The analysis will start by clarifying the relations between the firm and its political environment, in order to see which topics deserve a stronger focus when developing a corporate political strategy. Then, a distinction will be drawn between corporatist political systems and pluralist ones, so to give an indication on which kind of strategy to choose. Finally, it will be possible to give more details about the means that companies have to pursue their corporate political strategy, considering that their relevance depends on the political environment at hand.

I) The links between business and politics
From Hillman and Hitt (1999, p.826) it can be said that politics set the grounds for business activities. By developing and implementing laws and regulations often applicable to the society at large, they directly affect firms by making them comply with new standards.
First of all is the competitive environment. Governments have the ability to monitor and control the competition in their country. A common example of government’s intervention in the competitive environment is the antitrust regulations regarding a merger. If a government suspects that the ends of a merger are anti-competitive, it will inform the companies of its refusal and the merger will not take place. On the other hand, this situation highlights an opportunity for small national firms, who can request a certain level of protectionism or help from the state as discussed by Hillman and Hitt (1999, p826) about Pepsi.
Second, in line with the statement of Hillman and Hitt (1999, p.825-826), governments have influence regarding environmental standards and resources. The environment encompasses all the resources and locations that are under the control of the government, and changes in this area often require companies to take huge investments in order to comply with the new standards. Companies disposing of toxic waste have to follow strict regulations, and failing to do so results in high financial and reputational penalties. In the same vein, companies willing to fish in national waters have to comply with quotas and strict rules regarding living species.
Last but not least, governments have influence on the supply and demand in their country through many parameters (Hillman and Hitt, 1999, p826). Governments have the ability to rise or lower taxes imposed on industries. In turn, these taxes alter the demand because of a price increase or decrease at the consumer level. The current debate about the level of taxes per liter of gasoline in European countries is at the heart of such an issue. On the other side of the exchange, supply can be limited or controlled by closing or opening the borders.

II) Political structure, Corporatism versus Pluralism
The government can reach and have an impact on anyone in the market, but the opposite does not often hold. Based on their complex history and the way that they dealt with business in the past, countries have more or less formal channels to reach and influence the government. Fundamentally, two types of governments exist, corporatist and pluralist. These two alternatives are then further differentiated by the country in which they are visible; nowadays it can be said that there is no such thing as a pure corporatist or a pure pluralist country, these are more tendencies than strict labels. (Siaroff, 1999, p.175)
The main distinction between these two systems is in the channels that give access to policy makers. On the one hand, corporatist countries have formal and official means of communication to reach the government, however, it also means that these channels are limited in number and receive great attention from the society at large. On the other hand, pluralist countries offer an opportunity to anyone to reach them, given that they have the necessary resources to do so. Indeed, pluralist countries do not have any official communication channel between companies and the government (Siaroff, 1999, p.177),
For corporatist countries (or at least countries with a corporatist influence), companies that wish to influence governments have to go through representatives of their function who will take into account the requests of all companies within a common group.. (Siaroff, 1999, p.179) Once a common ground is reached amongst the demands, the representatives will negotiate directly with policy makers in order to obtain as much as possible from them. In pluralist countries, these representatives may arise, but they will not take the form of the institutionalized ones that exist in corporatist countries.

III) The communication channels in their setting
Once companies have information about their environment and about the specific goals of their corporate political strategy, they can determine the best way of attaining these goals. Following a very intuitive framework from Hillman and Hitt (1999, p837), companies have to choose whether they will engage in negotiation and lobbying on a continuous basis or simply whenever it becomes necessary.
As mentioned earlier, politics affect business at many levels, from the competitive environment to the control of environmental resources. Businesses are therefore more or less affected by political decisions depending on their industry and on their relations with society at large as discussed in Hillman and Hitt (1999, p829). Moreover, some companies may have departments that are very sensible to political settings such as financial reporting matters, while others remain unharmed by changes in laws and regulations. The trade-off becomes clearer, companies that operate in industries that have a tight link with politics, with their whole operations being under the influence of political activity may choose to engage in a continuous and long-term oriented political strategy as suggested by Oliver et al. (2008 p.499). At the other extreme, companies can simply take action when their operations are clearly in danger because of political reasons. However, companies will have to determine whether the returns they get from their involvement are higher than the value of the resources they commit to follow such a strategy.
Another factor that must be considered in this regard is the type of political system. In corporatist countries, firms are more incline to engage in long-term political activity than in pluralist countries (Hillman and Hitt, 1999, p832), the rationale behind it is that corporatist countries have integrated business into policy making, meaning that regardless of how many firms show interest in politics, their representatives will be part of negotiations with the government, whereas pluralist countries solely consider business when they show sufficient interest. In essence, these systems call for long term and short term engagement.
Companies also need to decide whether to act on their own, or to join a group.
There again, the structure of the systems sets a few restrictions. As seen before, corporatist countries only allow for collective action through representatives, which means that individual action has to be taken through informal channel and can result in penalties if it is discovered and considered as corruption. However in pluralist countries, this type of individual action is common and generally accepted, given that the company has the necessary resources to do so. For those companies or groups that do not have the necessary resources and connections, cooperation within an interest groups is crucial. Interest groups are created around a common purpose. Once formed and organized, these groups use pressure and connections to gain influence over policy making, in order to foster change, or simply to keep things the way they are. (Hague et al., 2007, p.210-212)

Conclusion
This paper presented a brief overview of the reasons why companies engage in corporate political strategy, and gave recommendations towards the form it should take depending on the political structures in use. As a matter of fact, companies engage in political activity because of the gains they can extract from it, but also because of the risks it represents. A better understanding of the political system coupled with the adequate resources to influence policy making is the key to managing the political risk that companies face. Furthermore, this paper presented the different channels available to companies when they want to reach governments and policy makers. It can be observed that some countries allow for more informal pressure than others, meaning that the value of corporate political strategy may differ amongst regions of the world.
Obviously this analysis is limited to the general aspects of corporate political strategy. This paper only considered that firms wish to gain access to governments; further research may differentiate companies in terms of their strategic intents, meaning that some companies look for a renewal of policies while others try to maintain the status quo.

References
Hague, Rod, & Harrop, Martin (2007), Comparative government and politics. An introduction.
7th edition, New York: Palgrave McMillan, p.209-220.
Hillman, Amy J., & Hitt, Michael A. (1999), Corporate political strategy formulation: A model of approach, participation and strategy decisions, Academy of Management Review24(4),
p.825-842.
Oliver, Christine & Holzinger, Ingo (2008), The effectiveness of strategic political management: a dynamic capabilities framework, Academy of Management Review 33(2), p.496-520.
Siaroff, Alan (1999), Corporatism in 24 industrial democracies: Meaning and measurement,
European Journal of Political Research, 36, p.175-205