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Corporate Espionage, Its Forms and Protection Report

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Updated: Nov 20th, 2021

Executive Summary

Industrial or corporate espionage is spying activities carried out for commercial gains. It refers to activities like stealing of trade secrets, subornment, blackmail, and use of hi-tech surveillance. There exist various ways- ethical, unethical, legitimate or illegitimate- through which many corporations attempt to procure the trade secrets of their different competitors to gain a competitive edge. Alertness with regards to such techniques and formulation of a countering strategy are vital for every company to guard against corporate espionage.

In the past few years, due to its technological innovativeness, Volkswagen has emerged as a potential target for corporate espionage in the Neighborhood Electric Vehicle industry. This article looks at the issues related to corporate espionage and analyses them from the perspective of the operations of Volts Vagon.

Introduction

Espionage or intelligence gathering entails getting hold of information that is regarded as surreptitious or confidential without the consent of the information holder. Espionage is intrinsically secretive as the rightful information holder may alter arrangements or embark on other countermeasures once the information leakage is discovered.

Industrial or corporate espionage is spying activities carried out for commercial gains. The expression is different from legislative and ethical processes like reviewing corporate journals, web locations, patent filings, and other legally accessible means to assess the activities of a corporate organization which is usually known as competitive/corporate intelligence. Theoretically the distinction amongst espionage and legal procurement of information is evident. However, in reality, it is rather complicated to separate legal and illegal techniques. In particular, on the ethical front of information procurement, the line delineating line becomes even more indistinct and difficult to define. (Willis, 1986)

Corporate espionage refers to activities like stealing of trade secrets, subornment, blackmail, and use of hi-tech surveillance. In some cases government agencies may also be victims of business espionage. Corporate espionage is most frequently linked with technology-driven sectors, in particular, the electronic and automobile industries. Espionage manifests itself in various forms. In a nutshell, the rationale underlying espionage is to procure information about (an) organization(s) which may be used by the procurer for some commercial gain. (Finder, 2006)

Findings

Through this article the most pertinent threats and different issues related to corporate espionage are presented.

Trade secrets is generally explicated as a certain device, process, formula with some commercial worth that is known only to the business holder which is used to gain competitive advantage. There exist various ways- ethical, unethical, legitimate or illegitimate- through which many corporations attempt to procure the trade secrets of their different competitors to gain a competitive edge. Alertness with regards to such techniques and formulation of a countering strategy are vital for every company to guard against corporate espionage. (Bissell, 2006)

In this context, the difference between intelligence and espionage must be understood and appreciated. Trade secrets may not be necessarily be procured through stealing. Majority of the corporations today make use of a structured intelligence collection process. Business executives use intelligence collection in their everyday business activities, although they may not always recognize the varied pursuits of information as intelligence. In an interview, Adam Peneberg, the co-author of Spooked: Espionage in Corporate America, states that usually corporate intelligence is simply basic market research, carried out by professionals, who unearth publicly accessible documents such as corporate publications, market investigations, etc. However, at times organizations employ the services of individuals who adopt illegal course of actions, or as a minimum legally, act as corporate spies. (Rosner, 2001)

Consultants, supply chain elements, direct marketers may all be considered to be potential sources of information. Trade conferences and conventions, Technology seminars present the opportunity to gather information about the activities of competitors. Comparison shopping and reverse engineering are other techniques through which competitors attempt to find out various technological and economic aspects and cost effectiveness of the competitors products which may be copied and implemented in their own products. (Finder, 2006)

Analysis

Information has the potential to play a crucial role in the success or failure of an organization. For instance, if a trade secret is compromised, the competitive grounds are balanced or may even be inclined in support of the rival corporations. Even though scores of information collection activities are performed through examination of public documentations such as public databases and patent filings, sometimes various corporations adopt the course of illegal or unethical means to procure information for commercial gain. Corporate espionage manifests itself as a major threat to any industry driven by information. The information rival companies may attempt to procure include client records, supplier contracts, personnel lists, research articles, or prototype sketches of an innovative product or service. The collection of these critical components is known as a Competitive Intelligence Solution (CIS) or Competitive Response Solution (CRS). (Hargreaves, 2007)

In the past few years, the scope of corporate espionage has expanded manifold. For example, malicious efforts to interfere with activities of a corporation may be regarded as corporate espionage. In this context, the expression assumes wider implications of its begetting word. In some instances, hi-tech interference such as bugs, malware and spyware have been included in the corporate espionage scenario. Such intelligence collection and incapacitation (commercial or otherwise) have come to be more evidently linked with each other which is confirmed by several profiling research activities carried out by governmental as well as corporate agencies. The fact that the US Federal Government at present employs a polygraph evaluation for the “Test of Espionage and Sabotage” (TES) is also expressive of the ever more accepted (although not essentially the group accord) construct, by those researching in the field of espionage and interference countering strategies, of the correlation among the two. In actual fact, and predominantly with regards to ‘trusted insiders’, they are typically regarded as functionally alike in terms of mainstream countermeasure strategies. (Bissell, 2006)

Volts Vagon is a pioneering automobile corporation, focusing operations in the electric vehicles segment. The corporation at present commercializes the Moxie in the Neighborhood Electric Vehicle group. To spread out their market presence, it is at present prototyping a bigger passenger automobile, named the VivaCity, targeted at the small commercial transportation sector. Market analysts suppose that Volts Vagon intends to market the VivaCity to taxi cab agencies, couriers companies and different high-mileage commercial service providers. The company is expected to grow strongly in the near future on account of their established reputation in battery technology. Undeniably, to provide an add-on to their returns, it has licensed a few of their crucial patents to different automobile corporations.

From the outlook of the market, significance of electric vehicles has increased in a never before manner with customers becoming more aware about the emission standards and environmental influences of riding conventional oil driven automobiles. The auto-industry is constituted by several well-established multinational giants. The company finds itself challenged by large fierce competitors with high budgets and well proven Research & Development lineups. These companies have now embarked on the endeavor to build their own vehicles with alternative technologies. However, only a few have exclusively focused on prototyping an entirely electric automobile. As a result, Volts Vagon has emerged as a potential target for corporate espionage in the Neighborhood Electric Vehicle industry. (Hargreaves, 2007)

The company acknowledges that classified information is an indispensable asset for Volts Vagon. Illegal usage or revelation of such information is firmly prohibited as per company policies. The company is aware of using rightful sources to gather information about its rivals and their products is an essential component of carrying business. Nevertheless, its policies ensure that it will not take in activities relating to commercial espionage or collect classified information through any means that infringes pertinent laws or contractual requirements. (Bissell, 2006)

Conclusion

Amongst the most well acknowledged protection against corporate espionage are commonsensical safety measures. Some other aspects that should be paid careful attention are physical surveillance, organizational culture and electronic security.

Access control structures to sensitive information should be devised by the management of the company. Information distribution should be on a strictly need to know basis. Security guards and surveillance equipment should be placed in areas holding classified documents.

Thorough background checks must be carried out on all prospective employees as well as temporary employees working on contractual basis. Signing of legal contracts protecting confidentiality of company information should be made obligatory. Exit interviews should be carried out in order to remind employees about nondisclosure clauses in their contracts.

Phone lines, computer networks and other communication channels used to transmit and receive sensitive data must be thoroughly combed to detect unauthorized intrusion and should be well encrypted.

Discontented and underpaid employees prove to be a great danger to any organization. A fair and just framework must be created through which employees are able to work comfortably and advance in their career paths. (Hargreaves, 2007)

References

Bissell, B. (2006). Information and Knowledge Management. Auckland: Ebsco publishing.

Finder, J. (2006). The Myth of the Corporate Spy. Forbes 177(12), 36-36.

Hargreaves, A. (2007). Sustaining Information. Auckland: Ebsco publishing.

Rosner, B. (2001). HR should get a clue: Corporate spying is real. Workforce: Costa Mesa 80(4), 72-76.

Willis, R. (1986). Corporate Cloaks and Daggers. Management Review (2), 41-45.

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