The Enron Saga


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:

Case Code : BECG001 For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges

Themes

Business Environment
Case Length : 11 Pages
Period : 1992 - 2001
Pub. Date : 2001
Teaching Note : Available
Organization : Enron, Dabhol Power, MSEB, Government of Maharashtra (GoM)
Industry : Power
Countries : India

Abstract:

The case 'The Enron Saga' 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 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 the various options available to Enron and the MSEB to sustain the project under the prevailing circumstance of MSEB defaulting on payments.

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.

Issues:

Effective strategy can overcome the various political, legal and economic hurdles

Contents:

  Page No.
Introduction 1
In Quest of Power 1
The Power Sector 2
The Power Factor 3
The Peak Load 5
A Tripp 7
Exhibits 8

Keywords:

The Enron Saga case study, Case Study, operations, legal, political, economic, 1990, India, MoU, strategy, project, Cogentrix, MSEB

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