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AES and Cameroon

AES was established in Arlington, Virginia, in 1981 expressly to take advantage of what its founders foresaw as an inevitable wave of global liberalization and privatization. The company owns a single electric utility in Indianapolis and about 20 generating plants in the United States; the rest of its operations are scattered over 27 countries. When Cameroon's government announced that it would sell a majority stake in its electricity system, AES saw it as a perfect fit for its global approach--and as a way to position AES for what it hoped would be a wave of utility privatizations in other African countries. The absence of other bids on the project might have hinted that AES was in for a struggle. Cameroon is perpetually impoverished and one of the most difficult places in the world to do business. In the late 1990s, Transparency International, the anticorruption watchdog, ranked Cameroon as the most corrupt country in the world--for the second year.

The state-owned utility company from which AES took over was broke, milked dry by the government and by some of its own employees, who had created their own mini-empires by reselling power siphoned from the bedraggled network of power lines and decades-old electricity meters. Bill payment was erratic, in part because of the government's curious practice of requiring everyone to pay their monthly bills in cash, in person, on nearly the same date, and at a few select payment centers. AES's first country manager in Cameroon was an American who had never worked in Africa and spoke no French, the nation's lingua franca.

The American was soon replaced with one of the few Cameroonians still in a high-ranking position at the utility, Jean-David Bile. Bile canceled a scheduled rate hike.  To further control costs, Bile attacked a procurement system of almost comic inefficiency. When he took charge, the utility still had an astonishing 3,000 suppliers, each of whom negotiated directly with the company. Not all of his ideas were successful. Bile believed a government minister who told him the essential equipment for improving a generating plant could be imported without paying any duties. When the equipment arrived, however, the government imposed heavy duties and kept the project at a stalemate for months until AES paid the duties and additional penalty fees.

 

89.Refer to AES and Cameroon. How does AES invest in global business?

a.a strategic alliance

b.direct foreign investment

c.a global new venture

d.a joint venture

e.direct exporting

90.Refer to AES and Cameroon. The duties charged by Cameroon were an example of:

a.import quotas

b.customs classifications

c.import standards

d.tariffs

e.boycotts

91.Refer to AES and Cameroon. One of Bile’s first moves as the head of the operation was to invite native chiefs to chant and pour libations of water, wine, and whiskey to seek favor from the gods when AES opened a new oil-fired plant.  AES found it effective to use _____ for its Cameroon operation.

a.global consistency

b.domestic synergy

c.the guerilla approach

d.the product ripple approach

e.local adaptation

92.Refer to AES and Cameroon. As one of the poorest nations in Africa, Cameroon lacked _____, an important sign of growth potential in foreign markets.

a.an economic infrastructure

b.work life quantity

c.purchasing power

d.foreign competition

e.tariff barriers

93.Refer to AES and Cameroon. When officials told AES it would not have to pay duties to import necessary equipment and then required it to pay them, AES faced problems associated with _____ .

a.political uncertainty

b.policy uncertainty

c.economic risk

d.infrastructure failure

e.nationalization

94.Refer to AES and Cameroon. The other utility companies that chose not to bid on an opportunity to own and operate the Cameroonian utilities used a(n) _____ strategy.

a.defensive

b.control

c.cooperative

d.avoidance

e.offensive

95.Refer to AES and Cameroon. According to Hofstede, Cameroonians would be classified as having _____ because lack of structure is accepted as a national norm.

a.a feminine culture

b.a masculine structure

c.a long-term orientation

d.low uncertainty avoidance

e.high risk aversion

96.Refer to AES and Cameroon. The first CEO that AES brought into manage the Cameroonian utilities was a(n):

a.expatriate

b.interim manager

c.nationalistically naïve manager

d.bureaucratic manager in the sense that Weber used the term

e.privatized manager

97.Refer to AES and Cameroon. How does AES invest in global business?

a.a strategic alliance

b.direct foreign investment

c.a global new venture

d.a joint venture

e.direct exporting

 

 

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