Ethical considerations are inevitable as Enron International pursues its agenda of aggressive overseas expansion and as needy countries like India seek out help for the development of their infrastructure. The symptom could be behavioral. Problems of ethics could be emerged if either the company or the government failed to deal with a situation appropriately. The root of the issue was the entire perception of business ethics. For a host government, as it desperately tries to attract foreign capital for economic development, it is also important to have a sincere respect for those foreign companies. Certainly, for the aspect of a company like Enron International, it should have respect for environmental conditions of the host economies.
India is undergoing unprecedented precedent in its power sector, which runs the risk of increasing environmental degradation. India is an attractive emerging market for investment in the global economy. The Maharashtra Enron power project–India’s largest single plant–is a gas-fired power plant, which will add to the country’s environmental woes. Much of the problems derives from India’s urgent need for investment and complicated governing responsibilities between national and state authorities. This is leading to a lack of accountability for environmental problems and minimal enforcement of existing laws.
Enron International took big challenge as the first foreign company to enter international market in India. Being a good example of dealing with problems might be caused in an overseas operation. While investing the largest foreign investment ever committed to India and the biggest independent power project in the world, the India government was confronting its old fears of colonization and foreign economic dominance. This case managed to give us a good example of handling issues in different conditions of cultural and political society structure. By reading the history of Enron International, we may better understand the issue about international business and apply the knowledge learned into reality.
Case Study Questions Answered
1. The company jumped into the project since India was suffering from chronic power shortages. The demand for electricity was urgent and the figure forecasted to be needed was huge. That convinced Enron International that the company would have long-run benefits. However, in my point view, these benefits might not compensated for the risks involved. The investment was huge and put a large amount of money at stake, accompanying with a shaky political system, many possibilities could be taken place.
2. It should be thought as correct. Just like what Mark said, the situation might change before and after you enter the country since for a foreign company, they must risk its fortune or capital for running a business in different conditions like culture and regulations. The risk premium was built for taking responsibility to both the company and the government. The company should have foreseen that this might have been perceived as cost padding since in the point view of the host government, the risk claimed by the company was associated with their usual customs, which should be a part of the society, it should not be regard as something a country should have obligations to.
3. For a foreign company that intends to make a investment in India, fully preparation should be considered. For India is a society may has different cultural and political environment. As a better way to run your business in India and avoid draining away large amounts of profits, a fair contract should be signed with carefulness.
4. He is right. The signal in this case is referred to the real meaning for foreign direct investments in India after the government claimed to do the substantial deregulation. In spite of the encouragement and the lure of India’s environment of investment. It is necessary for a foreign company to reconsider the entire plan in order to successfully run business in India after Enron’s experience.