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Case
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Reference no. 202-014-1
Authors: Sanjib Dutta
Published by: IBS Center for Management Research
Published in: 2002
Length: 12 pages
Data source: Published sources

Abstract

The case outlines the problems faced by Enron in starting its operations in India - the legal, political and economic forces at play during the early 1990s. The case is an example of how Enron surmounted the different hurdles and made the project viable under the then prevailing business environment in India. The case outlines the various events from the time the Memorandum of Understanding (MoU) was signed till the final clearance. The case is a good example of the strategy adopted by Enron to make the project a success. It also draws a comparison with Cogentrix, which failed to take off under similar conditions as faced by Enron. The case also touches on the various options available to Enron and the Maharashtra State Electricity Board (MSEB) to sustain the project under the prevailing circumstance of MSEB defaulting on payments. Aimed at the MBA/PGDBA students as part of the business environment curriculum, the case helps them to understand how an effective strategy can overcome the various political, legal and economic hurdles. The case also shows how the political and legal environment influenced the approval of the project thus proving advantageous to Enron. From the case, the students are expected to understand the various factors (mainly the external environment) that should be taken care of before entering an international market. The case is a good example of the role of ethics in business. One of the teaching objectives is that a foreign (not local) company can drain away large amounts of profits if the contract that is signed is not fair. To avoid this, it is important to regulate the entry of companies to negotiate a fair deal. The rate of return is not important in the power sector; the single most important factor is the price at which one gets the power. This can be lowered if there is competitive and transparent bidding. It is also important that the state boards are run on a competitive basis.
Location:
Industry:
Size:
Large
Other setting(s):
1992-2001

About

Abstract

The case outlines the problems faced by Enron in starting its operations in India - the legal, political and economic forces at play during the early 1990s. The case is an example of how Enron surmounted the different hurdles and made the project viable under the then prevailing business environment in India. The case outlines the various events from the time the Memorandum of Understanding (MoU) was signed till the final clearance. The case is a good example of the strategy adopted by Enron to make the project a success. It also draws a comparison with Cogentrix, which failed to take off under similar conditions as faced by Enron. The case also touches on the various options available to Enron and the Maharashtra State Electricity Board (MSEB) to sustain the project under the prevailing circumstance of MSEB defaulting on payments. Aimed at the MBA/PGDBA students as part of the business environment curriculum, the case helps them to understand how an effective strategy can overcome the various political, legal and economic hurdles. The case also shows how the political and legal environment influenced the approval of the project thus proving advantageous to Enron. From the case, the students are expected to understand the various factors (mainly the external environment) that should be taken care of before entering an international market. The case is a good example of the role of ethics in business. One of the teaching objectives is that a foreign (not local) company can drain away large amounts of profits if the contract that is signed is not fair. To avoid this, it is important to regulate the entry of companies to negotiate a fair deal. The rate of return is not important in the power sector; the single most important factor is the price at which one gets the power. This can be lowered if there is competitive and transparent bidding. It is also important that the state boards are run on a competitive basis.

Settings

Location:
Industry:
Size:
Large
Other setting(s):
1992-2001

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