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EBX: The Rise and Fall of a Billionaire - Eike Batista

Published 25 Sep 2017
Reference 5930
Topic Strategy
Industry Oil & Energy
Region South America
popular
Prizes & Awards

Winner of the EFMD Case Writing Competition 2017 in the Category “Latin American Business Cases”

Summary

This is a condensed version of the cases EBX Group (A): Eike Batista and the X-Factor/EBX Group (B): Autopsy of a failure. It describes the boom and bust of the EBX Group and its founder, Eike Batista. The first part traces the history of the Brazilian conglomerate from its origins as a small gold-mining operation in the early 1980s to 2012 when it has become a diversified national and global player in multiple industries. It examines Batista’s personal drive, motivations and choices, and how these influenced the strategy deployed by the company. Known for his huge ‘risk appetite’, Batista had an extraordinary ability to exploit gaps in the market when starting new businesses. The second part of the case recounts the “historic” downfall of the ‘X Empire’ which was of a magnitude and speed never seen before in the history. Batista’s personal net worth of US$30 billion – making him the seventh wealthiest person in the world and the richest in Brazil – had plummeted to US$200 million as debts piled up and the stock price went into freefall. In January 2014, Bloomberg reported that Batista had “a negative net worth”.

Teaching objectives

The case illustrates and explains the following: 1. The assets and liabilities of one of the world’s largest emerging markets – Brazil. 2. The concept of ‘institutional voids’ in emerging markets, and how companies both overcome and capitalize on these to create distinct value. 3. How business groups are formed and add value in emerging markets. 4. The challenges of making the transition from an entrepreneurial business to an operational one. 5. The concept of organizational ambidexterity – how firms need to be both entrepreneurial and innovative as well as operationally efficient – the ability to both exploit and explore. 6. Diseconomies of time compression

Keywords
  • Mining
  • Oil & Gas
  • Diversified Conglomerates
  • Emerging Markets
  • Brazil
  • Institutional Voids
  • Entrepreneurship
  • South America
  • Q11718