Global engneering

Running Head : Global Engineering

Case Study : Investing in Upstream

Oil Business in Ecuador

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Case Study : Investing in Upstream Oil Business in Ecuador

Introduction

In this age of globalization , companies enter foreign markets to increase their sales and profits and to protect their markets , profits and sales against competitors . Given these absolute business objectives it is also important to determine the different forces in a foreign environment that could affect the viability and competitiveness of any company . These forces can be internal - those

which can be controlled - or external - those which cannot be controlled . Between the two , it is more crucial to look at the uncontrollable forces , such as competition distribution , economic , socio-economic , financial , legal , etc . because they are beyond the control or management of the company . When it comes to this aspect , the Ecuadorian oil industry is worthy for a case study given the host government 's socialist tendencies and conflicts with a number of foreign oil companies

In a country where a populist government is dictating the rules of the game , private companies have no means to protect their interests , thus losing their capacity to pursue their objective , which is to earn profits and increase sales . This is the case of Ecuador 's oil industry wherein the government capriciously employed populist and socialist policies like nationalization , taxation and arbitrary laws in the name of national interest and nationalism to the disadvantage of foreign private companies that invested a huge amount of money and technical know-how...