Tnk-Bp

 Tnk-Bp Dissertation

Berge, Andrea

MGMT 485W

Springtime 2013

Example: TNK-BP (Russia)

INTRODUCTION

" This case shows the remarkably uncertain situation facing BP in Russia at the end of 2007. In the midst of unraveling relationships with its cooperative partner and undesirable web host government procedures, ideal ideal conditions happen to be implausible. To be able to maximize effects under such imperfect situations, BP's senior management should fully measure the situational risks, understand the mechanics and motives driving stakeholder behavior, and establish a plan which can appeal to all interested parties. ” TNK-BP can be described as joint venture proven in Feb 2003 simply by BP and Alfa Access/Renova (AAR). The 2 companies put together their assets in Russian federation to create the country's third-largest oil and gas business. Each party holds a 50 percent share in the joint venture.

RISKS

The positive effect, the circulation of goods, capital, and solutions across intercontinental borders, is resulting in increased economic interdependence. The positive effect increases the offered opportunities to get firms; it has led to larger performance final results, including top quality, cost, and productivity. Although globalization offers potential benefits, there are related risks. These risks happen to be collectively known as the " the liability of foreignness. ” (p. 10) Political and Economic Risks

Political hazards can be defined as the " possibility of disruption of the functions of multinational enterprises simply by political makes or events. ” (p. 246) Examples include uncertainty due to government restrictions, legal issues, problem, and political instability. Economical risks can be explained as " primary weaknesses in [an] … economy together with the potential to cause adverse effects on firms' efforts. ” (p. 247) Political risks and economic dangers are interdependent. In Spain, BP confronted an enormous sum of politics and financial risk. Russia's institutional instability combined with a weak legal system and high levels of government corruption made overseas diversification in Russia a questionable expenditure.

BP, the planet's third major gas and oil company, analyzed the degree of risk and, beginning in 1997, began investing in the Russian oil and gas industry. Within the gas and oil industry, competition is based on increasing oil and gas production and replacing reserves. Reserve replacement is starting to become increasingly difficult as most in the " easy” oil and gas discoveries were previously claimed. The ussr with its tested reserves and production features was a chance for BP to expand. BP was trying to match the financial performance with the top two firms in the global market – ExxonMobil and Covering. The TNK-BP joint venture was an attempt for getting access to the oil and gas resources within Spain. But , in spite of the size and importance of the raw materials seen in Russia, creation was declining. In 08, the Russian oil industry was facing a combination of problems: (1) aging oil domains and poor maintenance procedures; (2) a confiscatory duty and regulating regime; (3) a lack of Russian and foreign investments in exploration and creation.

Of specific concern to BP was your confiscatory taxes and regulatory regime. Russian leaders have been accused of using oil and gas exports as a method of reaching foreign insurance plan objectives. The vast majority of industry in Russia was comprised of half a dozen large businesses: TNK-BP, Lukoil, Gazprom, Rosneft, Surgutneftegaz, and Tatneft. 4 of these organizations were government controlled. Just TNK-BP and Lukoil remained independently held. Of these two, only TNK-BP had significant foreign ownership; British-owned BP had a 50 percent stake inside the organization. Lukoil's largest shareholders were two Russian oligarchs with a 25 percent stake and Conoco-Phillips which has a 20 percent share. Regulatory improvements made between 2003 and 2008 were limiting BP's ability to succeed within Russia. Laws constraining foreign investment in ideal industries made the future of...

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