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Essay / Research Paper Abstract
This 8 page paper considers the way in which an obsolescing bargain may emerge when a multinational corporation is making an investment in a infrastructure development. The writer explores this using the Harvard Business School case study of Enron Development Corporation in Dabhol, India. The bibliography cites 8 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TEobbarg.rtf
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Unformatted sample text from the term paper:
this nature, but ongoing threats which may change over time. Vernon (1971) outlined one of the models that presents threat as obsolescing bargain. This was a model that indicated whilst
at the beginning of an investment an investing company may retain a great deal of power, over time this power would be eroded (Vernon, 1971). The first stage of this
paper is to consider if this was a threat that was real to Enron and the formation of its subsidiary Dabhol Power Company (DPC) in India. First we need to
consider the model and how it will manifest and the market conditions that surround the risks it brings about. The way in which the obsolescing bargain model begins is
with a company making an investment being in the more powerful position. This does not mean there is no bargaining taking place, only that the investing company is in the
stronger position (Vachani, 1995). Where a country wants to attract investment, there are many attractions, not only the immediate need, but also the overspill produced by the investment, increased technological
expertise or marketing that will increase the areas core competences as it is developed and serve as a trigger and support for the development of the local economy and create
jobs (Vachani, 1995). If we look at the situation in India, there is a need for more power. There has been a constant supply problem with demand outstripping supply for
a period of time. This is occurring at low usage periods as well as peak periods. The shortage is not only for domestic power, but it is also a
requirement for the development of other industries. Reliable power suppliers are a major part of the infrastructure if the country is to attract other investors whatever sector they will operate
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