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DABHOL POWER

PLANT CASE
Cultural Limitations in the Indian Teams Negotiating
Strategy

Indian society has suffered from a historical distrust of


foreign multinationals.
Indian public had relatively little experience with large
foreign multinationals, creating distrust.
Public distrust of foreign companies can also be
explained by the fact that India assumed a protectionist
ideology post-Independence like many post-colonial
regimes, in an effort to direct its economy towards self-
reliance.
Cultural Limitations in the Indian Teams Negotiating
Strategy

Efforts have not been made by the political leadership


in India to move towards constructing an alternative
ideology that could function in Indias new economy.
These cultural and ideological underpinnings in India
explain popular backlash against the Dabhol project,
why the Indian government could not sell the merits of
the Dabhol project to the Indian public, and ultimately
why Indian negotiators assumed a hardliner stance in
their negotiations.
Cultural Limitations in Enrons
Negotiating Strategy
Large multinational companies sometimes become
complacent, and tend to overlook the critical cultural barriers
in global strategy
Enron gave primacy to the political and economic variables to
direct its strategy in India, ignoring the core cultural values
as part of its organizational strategy.
Over-exuberant and borderline aggressive tactics employed
by Enron during its deal-making with the GOM
Enron relied greatly on its management success in other
emerging markets as a predictor of how to guide negotiations
with India.
Other Constraints
Institutional Memory As a Constraint in the Decision-
making Process
The legacy of those killed and injured in the Bhopal disaster of
December 1984 that involved the US chemical company.This event
had the lasting effects of increasing public concern nationally
about issues concerning due diligence by MNCs.
The Breakdown of Effective Communication between the
Negotiating Parties
The Government of Indias affront to what it perceived to be a
veiled threat issued by Kenneth Lay that the US government may
resort to imposing sanctions on India is an excellent example of
how misunderstandings arise between parties to an agreement.
Other Constraints
The Breakdown of Effective Communication with
Stakeholders
Neither the merits of the deal nor the conditions and terms of
agreement were communicated to the local communities, which
contributed to theoverall untenability of the agreement.
Agreements suffered from time deficiencies which can
be explained by the hastiness and the lack of timeliness at
which the agreements were concluded.
The process became diluted through an erosion of trust
between the parties in large part due to the fact that no
business relationship was developed as part of the pre-
negotiation strategy