Gran Tierra Energy Inc. In Brazil Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Gran Tierra Energy Inc. In Brazil Case Solution

Introduction

Gran Tierra came into existence by the efforts of three talented senior executives in 2005. From these three executives, one is a geologist and others are engineer and finance expert. The company’s headquarter is in Alberta, Canada. These experienced executives combined their expertise and makes a business plan to make an international oil and gas company, to secure the unidentified opportunities in the energy sector. Since all of them had already worked in the oil and gas sector, therefore they have exposure to these industry dynamics and have the potential to drive the company to a successful level from the start of the company.

Initially, the company obtained its funding from the small entrepreneur investors. Afterwards more funds were raised from the financial community in Canada, US and Europe. The first operational base was made in Argentina at a small scale. The company has planned to expand the business to Columbia and Peru in the coming 18 months. The company made an acquisition in Canada and acquired another company in Argentina.

In 2007, the company strengthened its management with the addition of seasoned manager with high skills in the field. Gran Tierra’s CEO and CFO were also appointed, who were Martin Eden, a chartered accountant, and O’Leary a professional engineer respectively. The company has operated well in its early years and the statistics showed over performance by the company. Thus, with this progress Gran Tierra started its operations in Brazil in 2009.

Problem statement

Gran Tierra entered in Brazil in the year 2009, but even after the presence was made in Brazil after assessing the overall risks and market potential, Brazil’s operations have been facing numerous difficulties. Thus, in this case another country, Peru, is showing high opportunities for a successful business for the company. Therefore,the decision is needed to be taken after proper analysis whether to dis invest the Brazil operations and bring the assets from Brazil to Peru to use the favorable conditions of the country for the growth of the company or make different strategic changes in the Brazil operations and sort out the underlying problems to successfully make the Brazil operations profitable.

Company’s corporate strategy

Gran Tierra has made a business strategy to get the company’s progress in a steady way that is divided into two parts. This can be defined as two stage process towards the success. Firstly, the company will make certain acquisitions in order to provide a base for its production and operation. The second stage is after getting the base operations, the company should strive for growth through exploring and identifying the new potential oil fields as well as further development of the existing fields.

The company has targeted the countries that have certain attributes, and only if that country fits well in the criteria defined, then the company should seek opportunities in that country and it should consider its expansion in that country. The attributes defined are proven system of petroleum and hydrocarbon, favorable taxation and royalties terms, standard legal system with stability, flow of transactions, developed basic infrastructure, and ability to start work as an operator..................

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