Politics is the allocation of power. And a synonym for power is the ability to make decisions.
When you've got a limited resource (eg, the time of 300 employees), allocation of that resource is guaranteed to be political, precisely because there will be competing interests which need to be resolved. The question is whether the company comes up with healthy method for making these decisions.
Agree with your statement on its own. In this context, "political" likely means loyalty is valued over competence.