Business Secrecy: Reasons, Mechanisms, and Competitive Advantage

This essay delves into the critical topic of business secrecy in a competitive environment, examining why companies prioritize confidentiality in their strategic planning. It highlights the increasing importance of data protection and the potential dangers of failing to secure sensitive information, including legal and reputational risks. The essay analyzes various factors driving the need for secrecy, such as technological advancements, changing work cultures, and the rise of a knowledge-based economy. It also explores the legal frameworks and international threats associated with trade secret misappropriation. Furthermore, the essay uses the Olympic Group as a case study to illustrate practical mechanisms for maintaining business secrecy, including identifying and prioritizing sensitive data, establishing access and distribution policies, implementing monitoring and enforcement systems, and regularly reviewing progress. The conclusion emphasizes that protecting trade secrets is an ongoing process requiring a systematic approach to safeguard competitive advantages.

Running head: SECRECY IN BUSINESS
SECRECY IN BUSINESS
Name of the Student:
Name of the University
Author Note:

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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:
Reasons
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

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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.
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.

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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.
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

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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.
Mechanisms
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

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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.
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.

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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.

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