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Hpl group i case analysis_eni_12.02.15.v2.0


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Leadership in Crisis

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Hpl group i case analysis_eni_12.02.15.v2.0

  1. 1. 2/12/2015 1 CaseAnalysis-FrancoBernabe&ENI Binus Business School, MM Executive Batch 20 Presented by Group I Alexander Christian Dina Sandri Fani Ridwan Martawidjaja Jenna Widyawati Case Study Analysis Franco Bernabe - ENI
  2. 2.  Activities began by Agip in 1926  Eni was founded with law 136 dated 10 Feb 1953; came into force on 11 Apr 1953  Enrico Mattei was the 1st Chairman of Eni  Public statutory body at the beginning to foster and implement activities of national interest in hydrocarbons ENIataGlance 2 2/12/2015CaseAnalysis-FrancoBernabe&ENI  Engaged in all aspects of the petroleum industry  Core business was in energy, hydrocarbon in particular  Upstream and downstream activities  Natural gas transmission and distribution  Petrochemicals  Oil field services and petroleum engineering/ construction  2 core units, i.e. AGIP (upstream) and SNAM (downstream)  Meeting shareholders’ expectation through value creation  How to get there:  Cost efficiency  Continuous improvement of its products & services  Attention to the needs of its employees  Commitment to a sustainable growth pattern  Encompassing the careful assessment of the environmental impact  Innovative & efficient technologies The MissionThe Business ModelThe History
  3. 3. ENIataGlance 2/12/2015 CaseAnalysis-FrancoBernabe& ENI 3  Experienced declined on political independence  Staked out by the political parties as their area of patronage  Lose professionalism: political consensus to fill board and top management position  Policy highly dictated by political party  2 main responsibilities include maintaining technological capabilities and large international operations as well as fulfilling “social purposes” The ImpactAftermath – Post Mattei Significant loses for many years 1 2 Heavily subsidized by the State
  4. 4. ENIataGlance 2/12/2015 CaseAnalysis-FrancoBernabe& ENI 6 After BernabeBefore Bernabe 1 State-owned company Politically controlled entity, incapable management resulted to high debt 1 2 3 Ineffective internal controls allowing culture of corruption Turned to be private yet professional company 2  Independent  Free from political parties’ influence 3  Introduced scorecard measures in operations  Sell irrelevant subsidiaries  Fire & reshuffle some of the executives  The right man on the right place 4  Start to make profit  No need for the State subsidy
  5. 5. AboutFrancoBernabe ChildhoodandCareerPath 2/12/2015 CaseAnalysis-FrancoBernabe& ENI 7 Childhood  Born in 1948 in Vipiteno, Italy  Live in US since his teenage years  Graduated from University of Turin majoring political science and economic policy Career path  1972 : work with professor Franco Reviglio  1973 : Fellow of Einaudi Foundation  1975 : Professor of Economic Policy at Turin School of Industrial Administration  1976 : Senior Economist for OECD  1978-1983 : Chief Economist at Fiat  1983 : Assistant to the Chairman at ENI  1984 : Vice Director of Corporate Development, Planning, & Control at ENI  1986 : Director of Planning Department at ENI  1990 : Managing Director & CEO of ENI
  6. 6. 2/12/2015 CaseAnalysis-FrancoBernabe& ENI 8 AboutFrancoBernabe PersonalTraits Visionary leader Analytical + logical thinker
  7. 7. 2/12/2015 CaseAnalysis-FrancoBernabe& ENI 10 AboutFrancoBernabe LeadershipTraits:Whatmadehimanexemplaryleader •Never ran the nitty-gritty of an operating business •Fire and replace incompetent, corrupt executives & managers Integrity •Able to envision ENI as a focused global network of professional business •Encyclopedic knowledge of ENI’s operation Intelligence + Knowledge •Lead from within; an inner compass pointed toward humanity and justice •Build rapport from others; however free from agendas of others when make decision Credibility •Desert Storm operation: taking the company by surprise •Quickly assess the situation accurately •Immediately developed a compelling plan for the future of ENI Sense of Urgency •Tireless advocacy for change •Strong commitment to create more transparent, productive, & competitive company •Willingness to take a risk consistently Consistency •Bottom up and top down approach •Concise, clear message on ENI’s future mission: to build a great and global company that is able to behave with the agility, creativity, and entrepreneurship Communication Skills
  8. 8. 2/12/2015 CaseAnalysis-FrancoBernabe& ENI 11 FrancoBernabe’sMainChallenges TogetoutoftheswampofpoliticsandcorruptionandtoturnENI’sintoahealthyandprofitable company 1 Intense resistance Was regularly excoriated in the media as a traitor who was destined to bring down ENI due to his idea toward privatization 2 Clean Hands case Being trapped by a culture of embezzlement, bribery, and kickbacks within ENI involving 20 top ENI’s executives 3 Incompetent executives and managers Lose professionalism: political consensus to fill board and top management position 4 Huge loss and unfocussed business Posted a loss of $554 million; heavily subsidized by the state: creating the needs to rid ENI’s of its noncore, unprofitable business
  9. 9. 2/12/2015 CaseAnalysis-FrancoBernabe& ENI 12 FrancoBernabe’sLegacies 1 A healthy, profitable company  Free from political interference  Capital spending decreased by $1.3 billion  Debt decreased by 9.1 billion  Profits of $3 billion in 1997  Successful IPO: sold 1.2 million shares and netted $5.2 billion 2 Culture of innovation and operational excellence Labor productivity has risen 112% during his leadership period 3 The ENI Code: an inner compass  Stewardship of the company’s first-ever code of practice  Laying out company values and standards of behavior  Adherence to the values of professionalism, transparency, and honesty
  10. 10. LessonlearnedforIndonesia 2/12/2015 CaseAnalysis-FrancoBernabe& ENI 13 1 The existence of inner compass Lead from within; an inner compass pointed toward humanity and justice. Have the code of practice implemented consistently across organization 2 Personal survival traits Indonesia needs someone who is brave enough to embrace the risk, accepting solitude, and providing strategic and moral direction where little existed 3 No need to form political allies to reach the success Driven not by personal ambition but by a sincere commitment to the company’s and the nation’s fate 4 Free from political interference State-owned enterprises need to be treated like common private sector organization in the way they operate
  11. 11. 14 CaseAnalysis-FrancoBernabe& ENI 2/12/2015