CASE STUDY: INTERNATIONAL BUSINESS NEGOTIATIONS. 1. Why do you think the results of the first negotiation were so skewed in favor of Enron?
2. In the second round, Enron appears to have traded off equity ownership for increased capacity. Its reduction in tariff of 1 cent per KwH appears to have been absorbed by the larger production quotas and the use of lower-priced naphtha fuel. Why was Enron willing to make this trade-off? Why did the state of Maharashtra get more for its willingness to allow Enron to restart the project?
3. What can be learned from the first two rounds of the Dabhol power project negotiations about engaging in big foreign direct investment projects that are highly visible on the world economic scene?
4. How did GE and Bechtel’s filing for arbitration move the dispute along?
5. What is the difference between GE’s deal versus Bechtel’s deal? Both had the same amount of equity in the DPP, so why was Bechtel able to get $15 million more?
6. What general principles can you come up with for foreign direct investors using interests, rights, and power to protect their investments in developing countries?
7. What general principles can you come up with for governments negotiating with foreign direct investors?