Gran tierra energy inc. In brazil Harvard Case Solution & Analysis

Q. Critically evaluate Gran Tierra's approach to internationalization?

Gran Tierra Energy Inc. is an independent, and international energy corporation, which was formed in 2005, by three senior executives includes a geologist, an engineer and a finance expert. The company is engaged in exploration, development, production and acquisition of oil and gas properties. Gran Tierra core operations are located in Argentina, Colombia, and Peru, and headquartered in Calgary, Canada.

COMPETENCIES

The oil and gas industry is considered one of the largest and most important global industry sector. The globalization of world economy differences between the various countries, leads the national and international business to face multiple issues and challenges such as high competition among the oil producing industries, commodity prices, currency rate, and economic and political difference. Therefore, Gran Tierra initiated as an oil and gas company with a focus to expand its market in various countries of South America, to maximize market share and leverage the future opportunities.

The mission of the Gran Tierra is to build the company through two approaches to industrialization such as develop a base of production by selective acquisitions, and achieve future growth through exploration and development of new fields. Moreover, the purpose of the company is to market the product and services in the right place, at the right time, and with the right resources, to gain customers and competitive advantage in the long run. Furthermore, the company business plan is to form and international business that focus on acquiring undervalued and overlooked opportunities.

PESTLE ANALYSIS

The company came into being at the time, when various countries were making political, fiscal and legal changes in their national framework to attract the foreign investment. As a result, the company faces political and economic instability in Argentina because of changing government policies and regulations. Moreover, the management of the company realized that the long-term growth potential was uncertain in Bolivia, Ecuador, and Venezuela due to political and economic risks.

Furthermore, the legal and fiscal regimes in Colombia were attractive and stable, with an immense amount of resources and government licensed large area of the country for exploration, in order to increase the country’s economy. However, due to lack of social knowledge, the company faced social conflicts and national security issues. On the other hand, the company does not invest in R&D and use existing technology and processes. Due to environment insensitivity and consequent regulations, the management team to evaluate that it would take years to reap the gain.

ENTRY STRATEGY

The company initiated multiple strategies to expand their market, in order to gain a competitive edge over competitors such as Argentina and Colombia initially participated through joint venture and acquisition. Moreover, acquired a license from the government to explore the larger area, to discover maximum resources. Furthermore, the challenges for the oil and gas company include the changing customer’s needs and perspectives towards the prices and decline in crude oil and natural gas.

Q.  What is Gran Tierra's competitive advantage and is it sustainable?

SWOT ANALYSIS

One of the major strengths of Gran Tierra Energy in Brazil is low production costs as comparable to the United States and Canada. Moreover, the strengths include the reduce labor costs, robust balance sheet with zero debt, a first-mover advantage in utilizing modern technology onshore in Brazil. Moreover, the government stability, foreign companies was increasingly entering Brazil and the possibility of high sales growth rate.

On the other hand,  the major weaknesses of the Gran Tierra Energy that the company is small in size as compared to competitors, and dependence on government for infrastructure. Moreover, lack of experience in offshore drilling and lack of modern technology and R&D department.

Following the various opportunities for the Gran Tierra includes new acquisition, joint venture, and smaller oil explorers. Moreover, opportunities include potential oil prices rebound, building a relationship with suppliers and business partners to increase production and reduce operational costs in Colombia (FARC).

Gran tierra energy inc. In brazil Case Solution

On the other hand, one of the major threat for Gran Tierra is the growing power of national oil companies (NOCs). Moreover, the threats include high competition, declining oil prices, uncertain economic conditions, increasing rates of interest, and increase in labor costs.

COMPETENCIES

The key areas of competence of Gran Tierra Energy include two-stage of growth approaches such as the base of production and exploration. The company is comprised of strong and talented executive team and employees, which help the company to increase its growth in the long time. The management team of the company consists of various experiences in exploration and development operations, geographical areas, planning and budgeting, and health and security. Moreover, a team helps the company to pursue future opportunities, and successfully target the right market........................

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