Decision Analysis

God is Brazilian: Turning Alcohol into Fuel

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In September 1979, while Brazil is treading the uncertain and dangerous waters of an oil crisis that has exacerbated the country¿s balance of payment, Mario Garnero, the president of the National Association of Automotive Vehicle Manufacturers (ANFAVEA), is desperately looking for an escape to avoid the imminent threat of gasoline rationing and to contain the oil dependency of his country. The idea of developing a local ethanol industry and to produce vehicles that run exclusively on ethanol takes shape step by step, between the different reactions, interests and concerns of five actors: the automakers, the sugar producers, the state owned petrol company, the Government and most importantly the Brazilian customers. This case provides the background for a debate on what were the reasons behind the decision of the government to embark on the ethanol plan, on what were the concerns of the main stakeholders and on how the government should address the requests and the conditions of each of them, in order to implement the right set of measures for the plan effectively takes off and for Brazil to emerge from the crisis and to end its long and painful external oil dependency. The case is a fictional story, although mainly inspired by the real facts, from the perspective of our main character, Mario Garnero, considered the "Father of the Ethanol Car in Brazil".
Bibliographic citation: Giordano, Paola; Sanchez, Felix; Rahnema Alavi, Ahmad, "God is Brazilian: Turning Alcohol into Fuel", IESE, SM-1654-E, 11/2017
Date: 15/11/2017
Author(s): Giordano, Paola; Sanchez, Felix; Rahnema Alavi, Ahmad
Document type: Case
Editor(s): Cátedra Fuel Freedom de Energía y Desarrollo Social
Department: Strategic Management
Sector: Import/export
Languages: English
Year of the events: 1979
Geographic area: Brazil

Learning objective After reading, analyzing and discussing the case, students should be able to: - To understand the risks of an imported-oil dependence and the impact of an oil crisis over the whole economy of a country. - To understand the options managed by the government at that time and its implications. - To identify the main factors considered by the Government in its decision-making process. - To identify the main stakeholders affected by the change, their main concerns and options. To assess how each stakeholder can minimize their risks when embracing the change proposed. - To understand the importance of the Public Private Partnerships to support the structural changes in a complex industry and the importance of a strong leadership to transform a whole industry.