The development of the smart grid--the integration of traditional elements of energy transmission and delivery with information technology--heralds a new era in the power industry. Many new business opportunities will be created as the smart grid gets developed. What strategies should Cisco employ to become a leader in this industry? What obstacles and challenges must Cisco overcome to compete successfully in this new industry?
The Cosan case introduces students and executive education participants to political economy and business strategy in the biofuels industry. Cosan, based in Brazil, is the largest grower and processor of sugarcane in the world, and the largest sugar and ethanol producer in Brazil; it is also the world's largest exporter of ethanol for vehicle fuels. Rubens Ometto, Cosan's CEO, has staked out a leading position in the Brazilian ethanol and sugar industries by virtue of his efficiencies in agricultural production and in downstream logistics. He now needs to consider whether, and how aggressively, to expand abroad, either with production facilities or by exporting Brazilian output. He also needs to decide the appropriate vertical structure for the firm: whether he should be involved more extensively in agriculture, processing, distribution, or retail. The answers to these questions depend on his views of the future of the industry, and on the governmental institutions that will affect the distribution of value along the value chain.
In March 2009, the government of Iraq decided to hold its first oil field auctions. The auctions were for service contracts on the country's southern oil fields; the winner would obtain the right to produce oil above a certain target for a fixed fee. The bidders competed on the fee charged per barrel and the amount by which they promised to increase production. At the same time, the Kurdish regional government continued to sign Production Sharing Agreements with foreign companies for its oil fields, unrecognized by the national government. In a context of continuing (if much reduced) political violence and legislative deadlock in the national parliament, three actors needed to make key decisions. Jean Claude Gandur, the CEO of Addax Petroleum, needed to decide whether to continue investing in the Kurdish region in light of Baghdad's continuing opposition. The Iraqi oil minister, Hussein al-Shahristani, needed to design the oil auctions in such a way that oil companies would be moved to invest, and invest quickly, despite the lack of a national oil law. Finally, the American secretary of state, Hillary Clinton, needed to decide what Iraqi oil policy would be in the best interest of the United States, and what levers (if any) the U.S. government could pull in order to insure that such a policy would be carried out. What would the three actors decide, and how would their decisions affect the future of Iraq and the world oil market?
The first round of bidding on the rights to develop Iraq's oil field did not go as planned. All the bidding groups wanted to charge a fee per barrel that the Iraqi government considered too high. As a result, the Iraqi government conducted the auction a second time, this time making it clear that it would not consider fees above $2.00 per barrel. (In addition, the winner needed to deposit $500 million with the Iraqi oil ministry.) Only one bid was accepted: a consortium of the company formerly known as British Petroleum (now BP), the China National Petroleum Company (CNPC), and the Iraqi-state-owned South Oil Company. The consortium had previously bid $3.99 for the same field. It now had to negotiate the actual terms of the contract with the Iraqi government. In addition, the executives in London and Beijing needed to decide whether it made sense to exercise the option they had just purchased. Would they be throwing good money after bad by investing in the Rumaila super-giant field at such a low fee per barrel, or would there be strategic returns down the line?
In 2006, Afghanistan remains a country in turmoil. It has a newly elected democratic government, a rebounding economy, and considerable economic potential. But the country is still torn by rival factions and dominated by the opium trade. Explores how Afghanistan has been rebuilt since the U.S. invasion of 2001, and what it means to create a modern state. Can state institutions be imposed from the outside? And what are the prospects for democracy in such a perilous place?
Tells the story of Argentina's aggressive strategy for renegotiating its sovereign debt from 2003 to 2005. Most creditors accepted the offer to swap their debt for new securities worth 35 cents on the dollar, with no recognition of all past-due interest. Many holdouts, however, remain outside the deal. Some experts believe that Argentina's stance will have negative consequences for the country's private sector and gives a worrisome signal about public policies; others maintain that circumstances beyond the government's control had placed the country in an unsustainable situation, and the successful renegotiation opens up new opportunities. The case presents the story of Argentina's debt saga from the point of view of the country's creditors (foreign and domestic), its government, and private Argentine companies that had to do business in the post-renegotiation environment. Also, discusses the larger issue of how the international financial community should handle sovereign debt workouts.
In 2006, the Philippines faces a difficult choice. Japan has offered the country a trade agreement that includes access to the Japanese labor market for Philippine nurses and other professionals. The same trade agreement, however, means opening the country's manufacturing enterprises to Japanese exports, which is bitterly opposed by some of the nation's largest foreign investors. President Gloria Arroyo--embattled by coup attempts and political scandals--must decide whether to advance the nation's three-decade-old strategy of encouraging the export of its labor resources or whether to attenuate that strategy to meet the demands of large foreign investors.
In Maseru, the capital of the Kingdom of Lesotho, the stirrings of industrialization and modernization were promising, and more than 50,000 workers, mostly women, were employed in the textile sector; the figure reflected more than a threefold increase in just a few years. Just outside Maseru, however, life was pastoral. Of Lesotho's 1.9 million citizens, 86% were engaged in subsistence agriculture. The country's hopes for progress rested with the jobs created by Taiwanese and Chinese firms. In early 2006, however, the survival of the nascent industry hung in the balance. The appreciation of Lesotho's currency, the loti, made life difficult for the apparel firm, which exported almost all of their production to the United States. Although the firms enjoyed duty-free access to an otherwise protected U.S. clothing market through the African Growth and Opportunity Act, the provisions that most benefited Lesotho would expire in 2007. A few large buyers would be making sourcing decisions that could make or break Lesotho's industry. Local union leaders were upset with the government's handling of the textile boom and its putatively impending bust. Certainly the government would play an important role in formulating a strategy and adjusting the institutional context, but decisions made by the unions, foreign investors, foreign buyers, and the American government would also be critical. How would posterity judge Lesotho's first encounter with world markets--as a triumph or a disaster?