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DSI Essays Series
Gianpaolo Abatecola, Roberto Cafferata, Sara Poggesi
Strategy, Structure and Market
Liberalization:
Evidence from ENI (2000-06)
7
McGraw-Hill
University of Rome “Tor Vergata”
Università degli Studi di Roma “Tor Vergata”
Department of Business Studies
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DSI Essays Series
Gianpaolo Abatecola, Roberto Cafferata, Sara Poggesi
Strategy, Structure and Market
Liberalization:
Evidence from ENI (2000-06)
n. 7
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Strategy, Structure and Market Liberalization:
Evidence from ENI (2000-06)
Gianpaolo Abatecola1, Roberto Cafferata2, Sara Poggesi3
Abstract
The paper explores the relationship between firm’s strategy and its structure
through the case study of the Italian public utility ENI. Within the liberalization process nowadays occurring in the Italian gas market, the paper analyzes
ENI’s performance in the period 2000-06 and focuses on the most relevant
strategic and organizational changes of the firm and their relationship with the
energy industry evolution.
The analysis is based both on public sources – such as official reports by international authorities – and on private information, such as in-depth field interviews with managers of the ENI’s G&P Division, ENI’s management surveys, historical archives and corporate governance reports.
JEL Classifications:
L 11, L 22, L 25, M 10, M 16
Keywords:
Case study, ENI, gas market, liberalization, strategy, structure.
________________
1
Research Fellow of Business Management, University of Rome “Tor Vergata”, Faculty of
Economics, Department of Business Studies.
2
Full Professor of Management, University of Rome “Tor Vergata”, Faculty of Economics,
Department of Business Studies.
3
Research Fellow of Business Management, University of Rome “Tor Vergata”, Faculty of
Economics, Department of Business Studies.
Contents
1. Introduction
2. Theoretical background
3. Legislative framework
4. The context: ENI at the beginning of the XXI century
5. The analysis: ENI’s strategies in the gas market (2000-2006)
6. Market liberalization and ENI’s strategic reaction
7. Changes in the organizational structure
8. Discussion and conclusions
References
Tables and figures
3
5
10
13
14
16
18
22
25
29
Editorial notes
Paper accepted for presentation at the V EIASM Workshop on “Corporate
Governance, Brussels, November 15-16, 2007.
1. Introduction
The paper explores the relationship between firm’s strategy and its structure
through the case study of the Italian public utility ENI. Within the liberalization process nowadays occurring in the Italian gas market, the paper analyzes
ENI’s performance in the period 2000-06 and focuses on the most relevant
strategic and organizational changes of the firm and their relationship with the
energy industry evolution.
After the Rome Treaty of 1957, the European Union (EU) settled common
rules in order to defend competition (Brittain, 1991; Cozzi, Vaccà, 1992; Cafferata, 1994). The European Commission has recently approved several reform
proposals of the current competition rules: both the Commission, and the antitrust authorities, and the national courts alike could be applied to for making
organizations and people comply to the European competition rules (Stiglitz,
1990; European Commission, 2003).
In the current phase of the European economic development and integration process, one of the main problems members face is the unitary governance of the European economy, which calls for important institutional changes
(Muller Graff, 1996; Secchi, 1999; Maillet, 2000, 2001; Violini, 2002). The difficulty of achieving this goal is today linked to the absence of a strong European
government, provided with all the powers necessary for example to implement
and control the competition rules (Maillet, 2000; Telò, 2002). As a consequence, EU authorities are often involved in creating new positive tools and
strengthening coordination measures to allow the European Commission to
play efficiently its economic role. Indeed, the establishment of the European
Central Bank and the introduction of the Euro currency were a milestone in
this direction. New governance models for today’s European large Stateowned companies are now part of this project.
The functions played by State-owned companies in Europe seem in conflict
with the development of the globalization process, which tends to encourage
privatization processes. Furthermore, everyone knows the effects of the deep
crisis experienced during the 90’s by large State-owned companies. Almost
every European country was involved in the process (Cafferata, 2000; Quadrio
Curzio, Fortis, 2000).
In this context, some topics concerning State-owned companies, just like
ENI, need to be underlined. First of all, State-owned companies and private
companies must be the object of a comparative analysis starting from the different goals and behaviours. Statutory goals are the critical element remembered by the top decision makers of the firm, while setting strategies with their
4
G. ABATECOLA, R. C AFFERATA, S. POGGESI
specific objectives (Simon, 1964). State-owned companies seem to have management criteria, while private companies consider income the critical goal, influencing both short-term and long-term strategies.
The differentiation among goals has relevant effects on risk taking and economic efficiency. Risk propensity/adversion and the ability to govern opportunities and threats depend on the goal to be obtained and on the environment
the firm is involved in (March, 1978; March, Shapira, 1987).
Corporate governance issues have long been studied by the scientific community (Bearle, Means, 1932; Fama, 1980; Fama, Jensen, 1983). In recent years,
particularly in the last decade, the analysis of these issues is a topic again. Their
own statute-reforms moved State-owned companies to take into account issues
which formerly belonged to privately owned stock companies. Furthermore,
the same statute-reforms asked for several structural changes to cope with the
general environment’s changes.
Public utilities had to face market liberalization, pressures towards privatization and the establishment of new independent agencies aimed at regulating
and controlling the evolution of industries’ structures (Cafferata, 1995). Challenged with these developments, they increased the use of information technology and turned to new organizational models to enhance their economic
performance. Creative employment of human resources, knowledge and quality management are among the most relevant factors which were planned for
the success of their new strategies (Bryntse, 1996; Stanley, Wisner, 2001).
This paper studies the evolution of the Italian gas market, which is nowadays affected by the ongoing liberalization process. On the one hand, the gas
market has been historically characterized by the presence of ENI itself as the
incumbent player, as far as the gas supplying, warehousing and distribution are
concerned; on the other hand, this market has been historically characterized
by the splitting of the most relevant players involved in the gas selling.
At the end of the Nineties, several reforms were approved in order to implement «effective concurrency» in the European and Italian gas markets (e.g.:
EU Directive n. 30/98; Italian Legislative Decree n. 164/00; EU Directive n.
55/2003; Italian Law n. 239/04). New challenges followed for the Italian public utilities.
What kind of strategic change influenced ENI’s performance in the gas
business in the period 2000-06? What organizational changes affected the
firm’s structure? What kind of relationship emerged between strategy and
structure in the period taken into account?
Among the «strategic management» scholars, the theoretical background of
the paper stands on those perspectives which, since the seminal work by Al-
Strategy, Structure and Market Liberalization: Evidence from ENI
5
fred Chandler Jr. (1962), deepened the nexus between strategy and structure.
Over the years, two opposite views have been basically developed by strategists: on one hand, structure follows strategy (Fouraker, Stopford, 1968; Scott,
1971; Pavan, 1972; Thanheiser, 1972; Pooley-Dias, 1972; Channon, 1973; Rumelt, 1974; Miller, 1986; Fombrun, 1989); on the other hand, strategy follows
structure (Bower, 1970; Child, 1972; Galbraith, Nathanson, 1978; Hall, Saias,
1980; Donaldson, 1982, 1987; Fredrickson, 1986).
The paper has been conceived as follows. The «strategy and structure» theoretical background is firstly highlighted. The liberalization process, nowadays
affecting the Italian gas market, is then described and ENI’s strategy and structure are analyzed for the period 2000-06. The firm’s growth in the gas business
is also explored. ENI’s national and international competitive position is then
focused on. The most relevant innovations affecting the firm’s organizational
structure as a consequence of the described strategic changes are taken into account.
The discussion of the main results and the implications for further research
follow the analysis of the collected data.
The analysis is based both on public sources – such as official reports by international authorities (AEEG, 2007; International Energy Agency, 2007) –
and on private information, such as in-depth field interviews with managers of
the ENI’s G&P Division, ENI’s management surveys, historical archives and
corporate governance reports. Recent works concerning the strategic change in
the oil & gas industry and ENI’s privatization are also taken into account
(Grant, 1993; Cafferata, 2000, 2002; Cafferata, Cibin, 1998; Cibin, Grant, 1996;
Grant, Cibin, 1996; Clò, 2004).
2. Theoretical background
The relationship between firm’s strategy and its structure represents one of the
most discussed topics in the field of strategic management. In the years, two
opposite positions have been basically developed by scholars: on one hand,
structure follows strategy; on the other hand, strategy follows structure.
Chandler’s study (1962) on the evolution of the American industry is universally acknowledged as the seminal work of the ongoing debate on strategy
and structure. More deeply, analyzing the strategic and organizational evolution
of the seventy most important American firms between 1919 and 1949, Chandler argued that «structure follows strategy and the most complex type of
structure is the result of the correlation of several basic strategies» (p. 49).
Chandler’s thought may be summarized as follows: (pp. 50-51):
6
G. ABATECOLA, R. C AFFERATA, S. POGGESI
•
«The growth of the population, the shifts from the country to the city and
then to the suburbs, the stages of economic depression and prosperity, and
the increasing rate of technological change; all these factors create a new
demand of the goods and services provided by a society»;
«The prospect of a new market or the threatened loss of a current one
stimulated geographical expansion, vertical integration, and product diversification» (strategic changes follow environmental changes);
«A new strategy required a new or at least updated organizational structure
in order to let a big firm operate efficiently» (structural changes follow strategic
changes);
«The failure to develop a new internal structure and to face new external
and internal opportunities and needs, was caused by the overconcentration
on short-term goals by the firms’ executives; or by their inability to develop
an entrepreneurial outlook, because of their past training, education or present position» (structural changes sometimes take place with a certain delay compared
to strategic changes);
«A firm’s growth without structural adjustment can lead only to economic
inefficiency».
•
•
•
•
Chandler explained the abovementioned relation through a 4-phase development model which characterizes the «big industrial firm» of his time (p. 49):
1.
2.
3.
4.
Growth of the firm’s dimension: this leads to the creation of an administrative
office which handles one function in one local area;
Growth through geographical dispersion: this brings the need for a departmental
structure and some headquarters in order to manage several local field
units;
Development of new functional areas in the firms: this calls for the creation of a
central office and a multidepartmental structure;
Development of new lines of products or growth on a national or international scale:
this brings the birth of the multidivisional structure, with the different divisions administered by a general office.
The Chandler’s model «growth strategy structure» was considered as the
reference pattern for the strategic management studies which followed.
Strategy, Structure and Market Liberalization: Evidence from ENI
7
Bruce Scott (1971) argued that structural changes follow strategic changes too.
He applied a 3-phase development model to the «big industrial firm» (p. 5)4:
I.
II.
III.
small company with one or a few functions performed largely by one
man ager;
growth in volume, geographic coverage and through vertical integration, multi-departmental enterprise with specialized managerial departments based upon functions;
diversification, multidivisional enterprise with divisions based largely
on product-market relationships5.
Scott interpreted the strategy/structure relationship as follows: «The I, II, III
sequence does appear to be a common and perhaps a dominant sequence in
the United States, as suggested both by Chandler’s findings and by more recent
research (Wrigley 1970). But the sequence of stages appears to be built upon
two different processes. One is the tendency towards continuing proliferation
of activities, and a still more different company, the other is the tendency to
use more and more complex and costly equipment in a given line of endeavour, leading towards a more integrated organization within that line of business» (p. 23).
Unlike Chandler, Scott highlighted the importance of «competitive pressure – the pressure of competitive marketplace», and pointed out that «the
change in strategy appears to be a necessary condition for a company to
change to the divisional structure. However, it is not a sufficient condition itself. Companies that change to a strategy of diversification frequently continue
________________
«Each of the stages is described in terms of nine characteristics (product line, organizational
structure, product-service transactions, R&D, performance measurement, rewards, control system, strategic choice), eight of which describe the actual characteristics of the way the firm is
managed, while the ninth describes the scope of strategic choice which characterizes the strategic framework of the respective stage of development. The first two characteristics denote
critical aspects of the relationship between the firm and its environment while the next six denote important aspects of the part-whole relationship within the firm» (p. 6).
5 Although Scott himself acknowledged the «oversimplification» of its model, he highlighted
the positive aspects of the model itself compared to the one by Chandler: «it classifies and then
relates companies not by a single managerial characteristic (structure) but by eight such characteristics, including structure, and reduces the emphasis on geographic growth (within USA)» (p.
6). Scott points out that: «the three stages approach emphasizes that there is a cluster of managerial characteristic associated with the various stages of development, a cluster which doesn’t
suggest just a form of organization, but a way of managing and, to a considerable extent, a way of
life within the enterprise» (p. 6).
4
8
G. ABATECOLA, R. C AFFERATA, S. POGGESI
to carry on with a functional structure for many years.[…] At an extreme, if
there were not competition at all, any form of management structure would be
adequate for operations of any degree of diversity. However, the divisional
structure appears to be the most effective way to manage the strategy of diversification under highly competitive conditions» (Scott, 1973: 141).
Chandler’s theory was tested and endorsed by Scott’s Harvard students, for
what concerns Italy (Pavan, 1972), Germany (Thanheiser, 1972), France (Pooley-Dias, 1972), Great Britain (Channon, 1973) and the USA (Rumelt, 1974)6.
The results by Channon and Rumelt seemed to be the most interesting.
Derek Channon analyzed the one hundred most important manufacturing
firms in the United Kingdom between 1950 and 1970. He confirmed Chandler’s statement, although with some limitations. More deeply, he argued that:
«Clearly a relationship existed between diversification and structure, but the lag
between the adoption of a strategy of diversification and a new structure could
be long and to some degree extended by the adoption of a holding-company
structure which permitted diversification to continue but without central strategic control» (p. 75)7.
Richard Rumelt extended Chandler’s strategy/structure relationship to the
effects of these two variables on the performance of a firm. He studied the
evolution of the American large firms between 1949 and 1969 through the
analysis of a random sample of about 200 companies comprised in the Fortune
500 list. Rumelt’s results generally support Chandler’s statement that strategy follows structure, but also stress the thesis that structure also follows fashion8.
________________
The proof of a positive correlation between the diversification strategy and the divisionalized
structure concerns internationalized firms too. Fouraker and Stopford (1968: 64), for instance,
argued that «the growth of foreign markets and opportunities requires diversification, reorganization, and the training of many more general international managers. The organizations that
have been most successful in meeting this new challenge have been those type III organizations that had already developed the ability to produce general managers capable of controlling
and guiding a heterogeneous, diverse enterprise».
7 Channon, more deeply, emphasized the difficulties occurring in the passage from one kind of
strategy and structure to another and the importance of the transitory stage in the passage itself.
«It is interesting to note that many firms underwent two structural transitions in pursuit of the
strategy of diversification. Many initially adopted a holding-company structure which was apparently quite stable until the 1960s both among early diversifiers and many new diversifiers.
However, the structure proved increasingly unstable during the latter period and was supported by the widespread adoption of the multidivisional structure» (Channon, 1973: 75).
8 «The firms Chandler studied often adopted the divisionalized structure only after the old system began to collapse under the burden of diversified operations. By contrast, many corporations of the 1960s, even those that were not highly diversified, split their operations into semi6
Strategy, Structure and Market Liberalization: Evidence from ENI
9
In contrast with the widely diffused Chandlerian theory, since the Seventies
studies arguing that strategy follows structure have been developed. According to
this kind of literature, strategy follows structure because of the limitations that the
latter imposes to the firm’s decision making process.
Bower (1970: 67, 287), for instance, stated that «[…] structure may motivate
or impede strategic activity […] when management chooses a particular organization form, it is providing not only a framework for current operations but
also the channels along which strategic information will flow […]».
In his well-known study on strategic choice, Child (1972: 49) wrote: «Internally
oriented actions may involve an attempt, within the limits of resource availability and indivisibility, to establish a configuration of personnel, technologies and
work organization which is both internally consistent and compatible with the
scale and nature of the operations planned».
According to Hall and Saias (1980: 161): «It is necessary to recognize that in
reality structure is the result of a complex play of variables other than strategy;
culture, values, the past and present functioning of the organization, its history
of success and failure, the psychological and sociological consequences of
technological development, and so on. Structure, then, assumes a political content in the same way as strategy, and there is no one reason to subordinate one
to the other».
Fredrickson (1986: 294) underlined that «[…] a balanced view of the strategy/structure relationship must acknowledge that the strategic decision process
and its outcomes can be facilitated, constrained, or simply shaped by structure’s direct effects […].». Frederickson, more deeply, focused on the effects
that the cognitive limitations of central decision makers may have on the global
strategies of firms with highly centralized structures9.
_________________
autonomous divisions without having suffered great administrative strains. Some divisionalized
because they planned to diversify, others wanted to create greater accountability for product
performance, even among closely related products, and still others simply believed that the
product-division structure was a better form of organization» (Rumelt, 1974: 149).
9 According to Hrebiniak e Joyce (1984: 87): «Raising the directionality question amounts to
the creation of a false dichotomy of causation and a resulting irrelevant dilemma […] there is
no satisfactory answer to this question because it is the question itself which is wrong». In this
regard, Mintzberg (1990: 187) argued: «None take precedence, each always precedes the other
and follows it [...] strategy formation is an integrated system, not an arbitrary sequence».
10 G. ABATECOLA, R. C AFFERATA, S. POGGESI
3.
Legislative framework
The natural gas consumption showed a marked growth all over the world between 2000 and 2006, although the growth rate was lower than that between
1992 and 2000.
Among the reasons of the gas «success», the following seem the most relevant:
• constant updating of the technologies employed in all the phases of the gas
production cycle, which allow the reduction of the distance between the gas
extraction sites and the gas consumption areas;
• more possibilities of «sustainable development» as compared to other hydrocarbons, in particular for what concerns the electric power production;
• increased gas reserves;
• higher prices of oil products at international level.
In Europe, Italy is the third largest market after the UK and Germany, as regards gas demand. In 2006, the national gas consumption was equal to 84.5 billion cubic meters with a decrease of about 2% compared to 2005 (AEEG,
2007). The natural gas requirements were met by imports (76.6%) and by national production (23,4%), including the gas drawn from the storage system
(ENI, 2007). According to ENI’s estimates (2005a), the national gas consumption will be equal to 91 billion cubic metres in 2010, thus covering 36% of the
national power requirements, against 33% in 2004.
The European Commission has long been committed in the development
of a policy for the enhancement of competition in the energy sector through
the promotion of market liberalization and the implementation of antitrust
regulations.
The natural gas production cycle embraces the following activities:
1. Supply: the natural gas production and/or import.
2. Transport: the transport of natural gas from production sites or storage fields
to the distribution networks. The land transport takes place via oil pipelines
and high pressure gas pipelines, the sea transport via gas tankers.
3. Storage: temporary storing of natural gas.
4. Primary distribution: activities carried out to supply raw natural gas to large
customers and gas distribution firms.
Strategy, Structure and Market Liberalization: Evidence from ENI
11
5. Secondary distribution: activities carried out to supply raw natural gas to residential and commercial customers, as well as small companies operating in
an urban environment.
6. Sale: gas marketing activities.
In the last few years, a monopolist or oligopolistic market structure has prevailed in Europe. In Italy, there was a de facto vertical monopoly for almost 40
years. More deeply, the ENI group, which was established by Law 136/1953,
was the incumbent player for what concerns the activities of gas acquisition,
transmission and storage (through AGIP). The firm also played a dominant
role in the primary distribution phase, providing gas to industrial and thermoelectric customers through SNAM. Moreover, ENI had almost the whole monopoly for what concerns secondary distribution (through Italgas). ENI’s
competitive position in the Italian gas production cycle at the end of the Eighties is depicted in Table 1.
The most relevant factors which pushed the EU towards the liberalization
of the gas market were the following: technological innovation, the need to delete dominant positions and abuses which prevented the market from an efficient functioning and the need to enhance economic development and promote growth and competition in the EU.
The gas market liberalization process was started by the Directive 98/30EC
(entered into force on August 10, 1998), which established common rules for
the natural gas supply, transport, distribution, supply and storage. The Directive established the «rules concerning the organisation and functioning of the
natural gas market, including the liquefied natural gas (LNG), the access to the
market and the criteria and procedures applicable to the granting of the
authorisations for supply, transport, distribution and storage of natural gas»
(art. 1) . The most relevant principles of this Directive are the following:
Supply: free access under non-discriminatory criteria in compliance with the Directive 98/22/EC.
Access to the system: introduction of the Third Party Access (TPA). Under certain
conditions, TPA allowed the eligible customers to access to the existing networks infrastructures which they did not own. For what concern the organization of the access to the system, the EU member States were able to choose
between «a) a negotiated procedure, in which the access to the system was
made through supply contracts based on voluntary commercial agreements; b)
a regulated procedure, in which the access to the system was made through
12 G. ABATECOLA, R. C AFFERATA, S. POGGESI
published tariffs and/or other terms and obligations for the use of that system;
c) both these options» (art. 14-16).
Eligible customers: customers that had the right to access to the gas system, such
as gas facilities for the production of electric power, regardless of their consumption level per year, as well as other final customers consuming more than
25 million cubic metres of gas per year. Member States would have had to ensure that the definition of eligible customers would result in an opening of the
market equal to at least 20% of the total annual gas consumption of the national gas market.
Vertical unbundling: in order to separate activities still carried out under a monopolistic system (transport, storage, distribution) from those which may be
opened to competition (supply and sale), the directive envisaged the unbundling of accounts: «integrated natural gas firms will, in their internal accounting, have to keep separate accounts for their natural gas transport, distribution
and storage activities […]. These internal accounts will have to include a balance sheet and a profit and loss account for each activity» (art.13).
In Italy, the Directive 98/30/EC was implemented by the Legislative Decree
164/2000, (hereafter the Letta Decree), whose main points are the following:
Supply: from January 1, 2003 to December 31, 2010, gas firms would not have
been allowed to sell to final customers more than 50% of the national consumption of natural gas on a yearly basis, directly or through subsidiaries or
controlling companies or through subsidiaries of the same controlling firm.
Moreover, from January 1, 2002 to December 31, 2010, gas firms would not
have been allowed to inject, either directly or through subsidiaries, more than
75% of the gas consumed at national level into the national network. This
value should have been reduced by two percentage points each year after 2002,
up to a minimum value equal to 61%. These percentages, which established the
so-called antitrust limits, had to be calculated net of the amount of gas directly
consumed by a firm itself, or through subsidiaries or controlling companies or
through subsidiaries of the same controlling firm. For what concerns the gas
sales, these percentages had to be calculated net of system losses too.
Access to the system: a regulated access to the system was chosen. More deeply,
the natural gas transmission and dispatch were defined as public interest activities. As a consequence, natural gas firms had to link to their network those us-
Strategy, Structure and Market Liberalization: Evidence from ENI
13
ers who applied for the service, if the users showed to have adequate capabilities and the works necessary to link the users themselves to the gas network
are technically and economically feasible. This complied with the criteria established by a resolution of the Gas and Electric Energy Authority. The distribution phase was considered a public service too and had to be assigned through
public tenders launched by local authorities.
Eligible customers: the Letta Decree established more stringent limits compared
to those set by the EU. More deeply, since January 1, 2003, the gas market has
been completely liberalized and all the customers, comprising the private ones,
has been considered eligible.
Vertical unbundling: since January 1, 2002, the natural gas transport and dispatch
has been undergoing ownership unbundling from the other activities of the
sector, with the exception of the storage function. The latter, however, has
been undergoing accounting and management unbundling from the transport
and dispatch operations, and ownership unbundling from all the other activities of the sector. Moreover, since the same date, the distribution of natural gas
has been undergoing ownership unbundling from the other activities of the
sector. Finally, since January 1, 2002, natural gas could be sold only by firms
which did not perform other activities in the same sector, except for import,
export, cultivation and wholesaling.
ENI’s competitive position in the Italian gas production cycle after the liberalization process is depicted in Table 2.
4. The context: ENI at the beginning of the XXI
century
In 2000, ENI was a state-owned firm operating in the oil, natural gas, electric
energy, petrochemical, construction and services sectors. The group was listed
on the Milan and New York Stock Exchanges, was active in 69 countries all
over the world and had 71,174 employees. Figure 1 shows the group’s structure on December 31, 2000.
As shown in the figure, ENI carried out exploration and production activities through its Exploration and Production Division (E&P), which performed
exploration, production and marketing activities for what concerns oil and
natural gas.
14 G. ABATECOLA, R. C AFFERATA, S. POGGESI
ENI operated through SNAM to supply, transmit, dispatch and sell natural
gas, as well as to transport liquid hydrocarbons through sealines and pipelines.
In the civil gas distribution sector, ENI operated trough the subsidiary Italgas.
The group operated through Agip Petroli to supply, refine and dispatch oil
products. In 2000, Agip Petroli was the fifth largest firm in Europe for what
concerns the overall refining capabilities.
For what concerns the other activities, ENI was active in the production and
sale of basic petrochemical, polymeric and elastomeric products through Enichem; in the construction and services sector through Snamprogetti and
Saipem; in the electric energy sector through EniPower (since January); in the
financial sector through Enifim, Sofid and ENI International Holding Bv.
5. The analysis: ENI’s strategies in the gas market
(2000-2006)
In the last 20 years, all the most relevant oil & gas firms have been developing
strategies of dimensional growth to counter the increasing market turbolence
(The Economist, 2005, 2006). The goal of these strategies was to achieve
economies of scale in order: a) to increase the firms’ contractual power towards the producing countries and their national oil companies; b) to rule out
any possible take-over by other energy players (Cibin, Grant, 1996; Grant, Cibin, 1996; Grant, 2003).
The analysis of ENI’s competitive strategies in the natural gas business between 2000 and 2006 should take into account some important elements
which characterized the re-organization process carried out by the firm in the
‘90s (Cafferata, 2000; Clò, 2004).
First of all, after being privatized, ENI became a listed firm focused on the
maximization of the shareholders’ value. New financial tools, such as the value
based management and the economic value added, were adopted to meet the new
goals of the firm.
Moreover, after its reorganization process, ENI re-focused its attention on
the oil & gas core business and increased its overall profitability, thanks to the
strong reduction of the overhead costs through the shutting down of obsolete
plants (Cafferata, Cibin, 2000). In this regard, the group’s overall debt was reduced and the oil & gas core business grew.
In a long term business perspective, one could argue that at the beginning of
the new millennium, ENI’s dimensional growth was more necessary than specifically desired,
because of the threats coming from the turbulence of the oil and gas market. In this regard,
Vittorio Mincato, who was the group’s Chief Executive Officer from Novem-
Strategy, Structure and Market Liberalization: Evidence from ENI
15
ber 1998 to May 2005, declared: «Once we were the largest among the small oil
players […], now we are the smallest among the large players. But we will have
still to grow in order to protect ourselves from any possible takeover» (Economy, 2005: 18). More deeply, Mincato observed that although ENI’s capitalization in the stock exchange market raised by 70% between 1999 and 2004, an
energy giant like Exxon Mobil would have needed the profits of only 4 years to
buy the whole ENI group.
Before grasping ENI’s strategies in the natural gas business over the period
2000-06, the following premise has to be made. One could argue that studying
ENI’s gas business without exploring its strategies in the oil business could
limit the effectiveness of the analysis. In this regard, however, since its birth
ENI has been focusing its activities not only in the oil business, but also in the
gas one, both in Italy and in Europe. This distinctive element has been distinguishing ENI’s strategic and organizational behaviour from that of the most
relevant international players in the oil business, the so-called «seven sisters».
Table 3 summarizes some data relating to the economic and financial performances of the group between 2000 and 2006.
As shown in the table, ENI’s growth was relevant in the period, especially
for what concerns the upstream (E&P Division) and downstream (G&P Division)
phases of the gas production cycle.
In the upstream phase, the gas production and the natural gas reserves increased by 7.7% and 5.5% respectively in the period 2000-05, thanks to the development of internal R&D activities, significant take-overs and the reorganization of the gas portfolio, which led to a greater efficiency in the natural gas production. More deeply, ENI restructured its upstream gas portfolio by
effectively grouping its gas fields, investing in paying-off projects and selling, at
the same time, the assets with lower profit margins.
Furthermore, the upstream growth will continue to be one of the group’s
most relevant goals, as stated in the 2006-2009 strategic plan, which was illustrated by Paolo Scaroni, ENI’s current Chief Executive Officer, on March 1,
2006 (ENI, 2006a).
Within the depicted framework, the upstream growth could have created
some problems to ENI itself, because, as depicted in the regulatory background of the paper, the ongoing liberalization process occurring in the Italian gas market
was reducing the players possibility to sell the increased volumes of natural gas directly to Italy..
As a consequence, ENI’s upstream growth required an effective and efficient strategic reaction to the gas market liberalization.
16 G. ABATECOLA, R. C AFFERATA, S. POGGESI
6. Market liberalization and ENI’s strategic reaction
ENI’s strategic reactions to the gas market liberalization process will be analyzed through a focus on the supply of gas to the Italian system. In this regard,
the possibility to set entry barriers in the upstream phase of the natural gas
production chain seems to be one of the most important elements by which
monopoly conditions in the gas market are determined.
According to AEEG’s estimates (2004) ENI’s share in the supply of gas to
the Italian market was equal to 92% in 2000. The new antitrust limits imposed
by the Italian legislator required ENI to reduce its share to 75% in 2002, and
then by two further percentage points per year, in order to reach the minimum
amount of 61%. ENI’s reaction was the following.
First of all, the firm started to sell natural gas outside Italy to players such as
Edison, Plurigas and Dalmine Energie, which, importing the gas to the Italian
market, were themselves ENI’s competitors in the last phase of the gas production cycle (AEEG, 2005). This because foreign sales, which AEEG and
AGCM defined «innovative», were not included in the antitrust limits (AEEG,
AGCM, 2004).
Second, ENI carried out a related diversification in the business of electric
energy, which it produced through gas-fired plants. More deeply, through selfconsumption, the firm could allocate the gas surplus which could not directly
pipe into the Italian network10.
Third, ENI carried on its internationalization process. Within the EU, the
group gained a lot of market shares in some target countries where the gas demand was increasing. ENI enlarged its activities through an increase of the gas
volumes directly put on the market and through relevant investments in foreign firms. This was also possible by ruling out territorial restrictions, called
«destination clauses», from the supply contracts ENI had signed with the gas
producers. More deeply, these clauses had previously limited ENI’s right to
choose the specific market where to sell raw materials.
By the end of 2006, ENI’s market share, as regards gas volumes marketed
in Europe, reached 18% (ENI, 2007a). The European gas demand, which was
531 Bcm in 2005, is expected to reach the threshold of about 600 Bcm in 2009
________________
In 2004, ENI became the fifth producer of electric energy in Italy, reaching a 5% market
share. In this regard, one could pose the following open question: will the firm develop multiutility strategies, based on related diversification, increased intra-group demand and cost leadership in the gas supply sector?
10
Strategy, Structure and Market Liberalization: Evidence from ENI
17
(ENI, 2006b). As envisaged by the 2006-2009 strategic plan, ENI’s objective
will be to further increase its market share in Europe, in order to reach a balance between the gas volumes sold in Italy and Europe respectively.
For what concerns non-European countries, ENI launched a number of
different projects (e.g. the exploration, production and marketing of gas; the
construction of pipelines and/or LNG terminals such as Greenstream and
Bluestream).
In 2004, ENI’s share in the gas supply to the national market was equal to
66% (AEEG, 2005). Notwithstanding this reduction, the group was able to keep a dominant market position for what concerns the gas volumes imported in Italy. In this regard, if
the gas volumes sold abroad by the firm were included in its market share, the
percentage of supplies controlled by the dominant operator would have
reached the 84,4% in 2006, thus greatly exceeding the antitrust limits established
by the legislator (AEEG, 2007).
As already pointed out, the gas transport and dispatch activities were regulated by the Letta decree, which offered some incentives exploited by ENI, as
in the case of Snam Rete Gas. This firm implemented large investment plans
yielding extra-profits, as established by the law.
For what concerns the gas sale to final customers in Italy, if one looks at the
group’s reaction to the antitrust limits set by the legislator, ENI’s sales in Italy
decreased by 14% approximately between 2000 and 2006, mainly because of a
reduction in the sales to wholesale customers and industrial users. This reduction, however, did not mean that the Italian customers were less dependent on
ENI, which, thanks to its cost leadership, still maintained a competitive advantage compared to the other Italian gas players. Furthermore, the firm carried
out a deep reorganization of its gas sale sector between 2000 and 2006.
Finally, one should take into account the different geographic areas from
which ENI draws natural gas. According to the ENI’s estimates (ENI, 2006c),
in 2005 ENI’s natural gas demand was mainly met by foreign suppliers (Russia
26%, Algeria 21%, the Netherlands 9%, Norway 7%) based on long-term contracts, while the remaining part was provided by the E&P Division.
Moreover, ENI subscribed supply contracts with take-or-pay clauses, lasting
16 years on average, which from 2008 will guarantee the supply of about 67,3
billion cubic metres of natural gas per year (Russia 28.5%, Algeria 21.5%, the
Netherlands 9.8%, Norway 6%, others 3%).
Applying the well-known diversification classification system by Rumelt
(1974), ENI’s geographic areas of supply did not result very diversified in
2006. More deeply, if one considers the ratio between the overall quota of gas
18 G. ABATECOLA, R. C AFFERATA, S. POGGESI
imported by ENI from Russia, Algeria and the Netherlands and the total
amount of gas imported, a value of about 87% is obtained.
This evidence may support the ongoing debate on the need, for Italy, to diversify the energy production sources and the geographic areas from which energy is drawn. Moreover, this debate has become even more heated because of
the tension between Russia and Ukraine in 2005.
7. Changes in the organizational structure
In the period 2000-06, ENI underwent a radical reorganization because of the
growth strategy and the legal requirements of the liberalization process. This
change followed three directions:
-
changes affecting the possible configurations of the firm’s organizational
structure;
the adoption of new systems of personality in one or more functional areas, also through new personnel management methods;
the implementation of new managerial policies to change the overall climate within the firm11.
Some elements which characterized ENI’s reorganization in the ‘90s should be
taken into account in order to analyze the changes in the firm’s organizational
structure occurring between 2000 and 2006:
-
the sale of those subsidiaries which were not directly related to the firm’s
core business or which were the least profitable, in line with the goals of
the reorganization process; these downsizing operations impacted on the
firm’s human resources management policies;
________________
The reference is both to the change which started in 1992 and which transformed the firm
into a joint-stock company and to the passage of power from the Chairman to the Chief Executive Officer (CEO). With regard to the former, the first package of shares was listed in
1995, followed by another six ones which progressively reduced the State’s presence in the
firm. With regard to the latter, Franco Bernabè was ENI’s CEO from 1992 to 1997; Vittorio
Mincato was ENI’s CEO from 1998 to 2005. Both aimed at improving the firm’s restructuring
and growth. Their policy seems to be confirmed by Paolo Scaroni, who is the current ENI’s
CEO.
11
Strategy, Structure and Market Liberalization: Evidence from ENI
19
-
a new rationalization program, which involved the simplification of the
decision-making process, the delegation of responsibilities to lower level
managers, the reduction of the number of the hierarchical levels and staffs
[…] the revision of the group’s coordination mechanisms» (Cafferata, Cibin, 2000: 19);
- the launch of the divisionalization process, which was considered as the
best organizational option to enhance the group’s effectiveness and reaction capability in its growth phase12.
At the end of 2000, ENI’s group was active in the following sectors: exploration and production of hydrocarbons through the E&P Division; supply,
transmission and distribution of natural gas through Snam and Italgas; refining
and distribution of oil products through Agip Petroli; petrochemical activities
through Enichem; construction and services through Snamprogetti and
Saipem; production of electric energy through Eni Power. Moreover, ENI operated in the financial sector through Enifin, Sofid and ENI International
Holding Bv, which carried out funding and insurance operations for the
group’s subsidiaries.
In 2001, some firms were established in the gas business in compliance
with the Letta Decree, some others were launched to support ENI’s growth
strategy. In compliance with the Letta Decree, the established firms were the
following (Figure 2):
1.
2.
Rete Gas Italia in November 2000, which was renamed Snam Rete Gas in
October 2001. On June 28, 2001 (effective date July 1, 2001) this new firm
incorporated the Snam’s business branch «Transmission and dispatch of
natural gas and LNG re-gasification»13.
GNL Italia in July 2001 (effective date November 1, 2001), which was totally controlled by Snam Rete Gas. This firm had to manage those opera-
________________
In order to fully under stand the divisionalization process, one should remember that in
1992, ENI was the holding company of a series of operational subholding companies. The
holding performed coordination and integration operations. Considering the huge number of
organizational levels, such a model could have caused the decision making process to slow
down as the growth strategy went on. As a possible result, a lack of efficiency could have been
produced. The divisionalization process transformed the holding company into an integrated
firm embracing three divisions: E&P, G&P and R&M. The benefits were the simplification of
the governance procedures, cost reduction and a more efficient management.
13This was in compliance with the Letta Decree, which required the separation of the transport
and management network from the gas selling phase in the gas production chain.
12
20 G. ABATECOLA, R. C AFFERATA, S. POGGESI
3.
4.
tions previously performed by Snam Rete Gas in the LNG re-gasification
sector.
Stoccaggi Gas Italia in November 2001, which incorporated ENI’s and
Snam’s business branches «Compression plants».
Italgas Più, set up by Italgas in November 2001 to carry out the gas sale
and other customer management activities14.
For what concerns the growth strategy, the upstream international operations
carried out by the firm were particularly relevant. In 2000, more deeply, ENI
had already bought the 33.3% of Galp, which was a Portuguese firm controlling the local gas and oil markets and the third major player in the Spanish
market. In May 2000, ENI acquired the British-Borneo, which had mainly operated in the North Sea until 1994, had merged with Hardy Oil & Gas in 1998
and had entered the Australian, Pakistani and Timorese markets. In January
2001, ENI incorporated the British Lasmo, a firm operating in the exploration
and production of hydrocarbons.
Furthermore, in 2001 ENI carried on its divisionalization process through
the incorporation of Snam, whose activities were divisionalized15. As a result of
this operation, the establishment of the G&P Division occurred on February 1,
2002. In this year, as a consequence, ENI’s organizational structure comprised
two divisions, as depicted in Figure 316:
-
E&P, which was active in the exploration and production of hydrocarbons
in Italy and abroad.
G&P, which was active in the supplying, marketing and distribution of gas
and electric energy.
In 2002, the divisionalization process was carried on and, on May 30, ENI incorporated AgipPetroli, whose activities were divisionalized. The goal was to
set up a third Division, Refining & Marketing (R&M), which was established
on January 1, 2003, to process and market crude oil at a national and international level.
________________
More deeply, Italgas Più was born in order to comply with the Letta Decree, which required
secondary distribution to be legally separated from the gas selling to final customers.
15 In this regard, one should remember that E&P Division had already been active since 1997,
as a result of the incorporation of Agip and its subsidiaries into ENI.
16 In the same year, ENI acquired 30% of Albacom.
14
Strategy, Structure and Market Liberalization: Evidence from ENI
21
Furthermore, in the same year, ENI internationally developed its upstream and
downstream activities. For what concerns the upstream operations, the firm acquired the Norwegian Forum Petroleum, which owned a large infrastructure
for the distribution of the natural gas in the European area. For what concerns
the downstream operations, ENI acquired 50% of the Spanish Union Fenosa
Gas and, in joint venture with the German EnBW, the 97.81% of GVS, which
was one of the most important gas transport and distribution firms in Germany. Saipem acquired Bouygues Offshore, a firm which was dealing with the
engineering and construction of plants for the oil & gas industry and was
mainly active in Europe and Africa.
In November 2002, ENI launched a voluntary and general take-over bid on
Italgas shares, which ended on January 27, 2003 with the acquisition of almost
all the shares of the firm. Therefore, the Italgas shares were delisted from the
Milan Stock Exchange17. The most relevant implications of the Italgas operation were the following (ENI G&P, 2005):
- the integration of the ENI and Italgas capabilities in the group’s gas production chain;
- the establishment of a strong and integrated commercial base in the Italian
gas market;
- the maximization of the value of the group’s basic assets value (Figure 4).
On June 23, 2004, ENI’s holding approved a partial spin-off of Italgas to the
group and the incorporation of ItalgasPiù18. These operations allowed the direct access to about five million customers in Italy, the integraton of ENI’s
commercial and development policies promoted by the take-over bid on Italgas in 2002 and the simplification of the group’s structure19. Italgas sold all its
activites not directly concerning the natural gas and remained active only in the
downstream operations of the Italian gas market production chain, as depicted
in Figure 5.
In 2005, the minerary portfolio continued to be strenghtened: ENI acquired
exploratory permits and production concessions in experienced countries such
________________
Furthermore, the chemical business was dismissed. On January 1, 2002, more deeply,
ENICHEM business branch named «Chemical strategic activities» was sold to Polimeri Europa.
18 The former took place on November 17, 2004; the latter occurred on December 16, 2004.
19 Furthermore, in 2004 ENI sold its stake in Albacom to British Telecom.
17
22 G. ABATECOLA, R. C AFFERATA, S. POGGESI
as Libia, Nigeria and Angola and in new countires with a high potential like
Alaska and India, for a total area of about 67 thousand square kilometres, 44
thousand of which owned by ENI.
Furthermore, ENI enhanced its stake in the Kashagan project in Kazakhstan from 16.67% to 18.52%. Kashagan is the biggest oil area which has been
discovered in the world in the last 30 years.
In 2006, G&P Division started the reorganization of Power activities. In
this regard, the selling of electric energy, which had been performed by
ENIPower until 2006, would have been performed by the Division itself from
2007. This would have allowed to manage the gas and electricity portfolio in an
integrated way and to develop a joint offer of gas and electricity. ENIPower
would have continued to manage the production of the electic energy.
On March 27, 2006, ENI completely sold its stake in Snamprogetti to
Saipem Project. An international leader in the construction and engineering
sector was born from this operation.
Furthermore, in the same year, ENI continued to strengthen its competitive
position acquiring assets both in experienced areas such as Northern and
Western Africa, Brazil, Norway and the United States and in new areas with a
high oil&gas potential such as Mali and Mozambic.
Finally, on November 14, 2006, ENI and Gazprom signed a great strategic
agreement in Moscow, which foresaw an International alliance between the
two firms for the development of joint projects in the upstream, midstream
and downstream phases of the gas production chain. Based on a relevant technological cooperation, the agreement foresaw the extension of ENI’s supply
contracts from Gazprom until 2035, this strengthening furthermore ENI’s gas
portfolio.
In conclusion, in the period 2000-06, as shown in this section, on one hand
ENI reached the goal of rationalizing its structure by completing its divisionalization process; on the other hand, the firm complied with the Italian laws
concerning the liberalization of the gas business.
8. Discussion and conclusion
In the paper, the literature concerning the causal relationship between a firm’s
strategy and structure has been firstly reviewed. Within the liberalization process nowadays occurring in the Italian gas market, the qualitative case study of
ENI’s performance between 2000 and 2006 has been then explored. More
deeply, the most relevant strategic and organizational changes regarding the
firm have been highlighted.
Strategy, Structure and Market Liberalization: Evidence from ENI
23
In regard to the relationship between strategy and structure in this case study,
the analysis suggests some evidence for what concerns the period taken into
account.
On one hand, ENI carried on its ten-year growth strategy between 2000 and
2006 in order to counter the increasing turbulence in the energy sector. Relevant structural changes followed, as shown in Figure 6.
On the other hand, in 2000 the liberalization process in the natural gas market was launched in Italy. Liberalization required ENI to adopt effective «reaction» strategies; at the same time, ex lege organizational changes took place, as
shown in Figure 7.
Combining Figures 6 and 7, a representation of the relationship between
strategy and structure in the case study between 2000 and 2006 is depicted in
Figure 8.
Two interconnected elements emerge from Figure 8. The first is the relationship between strategy and structure, which in the «planned growth 
strategy  structure» perspective corroborates Chandler’s thesis and is further
explained by Scott’s model, which emphasizes the importance of «competitive
pressure – the pressure of competitive market place» to implement strategic
changes.
The second element is the influence of the liberalization process both on
ENI’s organizational structure and strategy in the period taken into account.
The connections between the two perspectives are highlighted by the inverted arrows in the figure. More deeply, the arrows link ENI’s strategies
«planned during the Nineties and continuously implemented between 2000 and
2006» to those which were named as specifically «reactive» to the liberalization
process.
On the left-hand side of the figure, the arrow which connects the ongoing
liberalization process with ENI’s strategic planning in the Nineties means that
the potential influence of the future liberalization process had already been envisaged by the firm’s strategic planning of the period. This interpretation is
corroborated by the fact that, in the period taken into account, ENI’s planned
divisionalization was not influenced by those organizational changes which
have been imposed by the liberalization process.
The abovementioned considerations may contribute to a more general understanding of the strategy/structure relationship in the case study. If one considers ENI’s strategy/structure relationship since 1992, when the group was
formally privatized, Figure 9 shows how these two variables have changed over
time, as explained by in-depth field interviews with some managers of ENI’s
G&P Division.
24 G. ABATECOLA, R. C AFFERATA, S. POGGESI
As shown in the figure, the «strategy» variable is predominant in the 1992-1996
period. There is an extensive literature analyzing the reasons leading to the
group’s privatization process. This paper has summarized the most important
contributions on the subject, as a precondition to better evaluate the period
2000-06 in a strategic-organizational perspective.
Unlike the previous period, the «structure» variable was predominant between 1996 and 2000. For instance, some group’s subsidiaries, such as Agip
and Agip Petroli, were against the organizational changes envisaged by the
planning phase of the divisionalization process. This attitude impacted on
ENI’s performance, with the decrease in the value of the firm’s shares between
1996 and 2000.
Thus, in a theoretical perspective, the following evidence seems relevant: although the existence of a transition period between the strategic changes and
the structural ones does not totally account for the «strategy follows structure»
theory, it at least supports the Chandlerian position that there is often a phase
shift between the two variables, with possible repercussions on a firm’s performance. Moreover, this concept is in line with Channon’s theories [1973], as
already depicted in the theoretical background section of the paper.
Finally, this paper has tried to show that in the period 2000-06, under Vittorio Mincato’s governance, the strategic component was predominant in the
firm and succeeded in complying with the structural changes imposed by the
gas market liberation process in Italy. For what concerns ENI’s strategy/structure relationship under the current Paolo Scaroni’s governance, evidence suggests a macro-strategic continuity, which goes along with the ongoing
organizational changes.
Strategy, Structure and Market Liberalization: Evidence from ENI
25
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TELO M. (2002), “L’interdèpendance entre la gouvernance europèenne et la
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28 G. ABATECOLA, R. C AFFERATA, S. POGGESI
Other documents
ENI
(2000-06), Consolidated balance sheet and income statement, Rome: Ugo Quintily.
(2001-07), Corporate Governance Reports.
(2005a), World Oil & Gas Review 2004, Rome: Marchesi Grafiche Editoriali.
(2005b), Attività gas dell’ENI, Rome: Ugo Quintily.
(2006a), Presentation of the strategic plan (2006-09), London, March 1.
(2006b), Strategy and results, July 15.
(2006c), Gas seminar, London, December 1.
(2007), Factbook 2006, Rome, Ugo Quintily.
Il Sole 24 Ore
(2001-06), Dossier dell’Azionista. ENI 2000-05, Milan: Il Sole 24 Ore.
29
Strategy, Structure and Market Liberalization: Evidence from ENI
Tables and figures
Table 1: ENI’s competitive position in the Italian gas production cycle before
the Italian gas market liberalization.
Activity
Supply
Transport
Storage
Primary distribution
Secondary distribution
Sale
ENI’s subsidiaries
Agip, Snam
Snam
Agip
Snam
Italgas
Snam, Italgas
Source: adapted from ENI (2005b: 34).
Table 2: ENI’s competitive position in the Italian gas production cycle after
the Italian gas market liberalization.
Activity
ENI’s subsidiaries
Supply
E&P Division, G&P Division
Transport
G&P Division (through Snam Rete Gas)
Storage
E&P Division (through Stogit)
Primary Distribution
G&P Division (through Snam Rete Gas)
Secondary Distribution
G&P Division (through Italgas)
Sale
G&P Division (through ItalgasPiù)
Source: adapted from ENI (2005b: 34).
Table 3: ENI group’s economic and financial data in millions of euros
(2000-2006).
Revenues
Operating income
Net income
Return on sales (%)
Return on equity (%)
Return on investment (%)
E&P revenues
E&P operating income
G&P revenues
G&P operating income
2006
86,888
19,327
9,217
22.2
23.83
22.81
27,173
15,580
28,368
3,802
2005
74,526
16,827
8,788
22.82
23.84
33.29
22,531
12,592
22,969
3,321
2004
58,382
12,268
7,274
21.01
22.93
26.99
15,346
8,185
17,528
3,428
2003
51,487
9,537
5,585
18.52
18.94
22.01
12,746
5,746
16,067
3,627
2002
47,922
8,472
4,593
17.67
15.66
20.34
12,877
5,175
15,297
3,244
2001
48,925
10,347
7,751
21.14
29.51
28.70
13,960
5,984
16,098
3,672
Source: ENI’s consolidated balance sheet and income statement, 2000-2006.
2000
47,938
10,678
5,771
22.7
27.9
37.7
12,308
6,603
14,427
3,178
30 G. ABATECOLA, R. C AFFERATA, S. POGGESI
Figure 1: ENI on December 31, 2000.
Source: Elaboration on Il Sole 24 Ore, 2001.
Strategy, Structure and Market Liberalization: Evidence from ENI
Figure 2: ENI on December 31, 2001.
Source: elaboration on Il Sole 24 Ore (2002) and ENI group’s consolidated balance
sheet and income statement (2002).
31
32 G. ABATECOLA, R. C AFFERATA, S. POGGESI
Figure 3: ENI’s on December 31, 2002.
Source: elaboration on Il Sole 24 Ore (2003) and ENI’s consolidated balance sheet and
income statement (2003).
Strategy, Structure and Market Liberalization: Evidence from ENI
33
Figure 4: ENI’s on December 31, 2003.
Source: elaboration on Il Sole 24 Ore (2004) and ENI’s consolidated balance sheet and
income statement (2004).
34 G. ABATECOLA, R. C AFFERATA, S. POGGESI
Figure 5: ENI on December 31, 2004.
Source: elaboration on Il Sole 24 Ore (2005) and ENI’s consolidated balance sheet and
income statement (2005).
Figure 6: ENI: the influence of the growth strategy on the strategy/structure
relationship (2000-06).
Growth strategy
planned in the
Nineties
Strategy
(2000-2006)
Organizational
changes
Strategy, Structure and Market Liberalization: Evidence from ENI
Figure 7: ENI: the influence of the liberalization process on the strategy/structure
relationship (2000-2006).
Strategic «reaction»
(2000-2006)
Liberalization
Ex lege organizational changes
Figure 8: ENI: An interpretation of the strategy/structure relationship
(2000-2006).
Growth strategy
planned in the
Nineties
Strategy
(2000-2006)
Strategic
«reaction»
(2000-2006)
Liberalization
Ex lege organizational changes
Organizational
changes
35
36 G. ABATECOLA, R. C AFFERATA, S. POGGESI
Figure 9: ENI: the strategy/structure relationship since 1992.
1992-96
Strategy
1996-2000
Structure
2000-2005
Strategy
2006
Structure
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DSI Essays Series
Gianpaolo Abatecola, Roberto Cafferata, Sara Poggesi
Strategy, Structure and Market
Liberalization:
Evidence from ENI (2000-06)
7
McGraw-Hill