L'Eurotunnel.

CASE  TEACHING NOTES

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Eurotunnel

Geoff Goddin

1. Introduction

Eurotunnel is an Anglo-French jointly owned and managed legal entity comprising Eurotunnel Plc and Eurotunnel SA.

It is responsible for the management and operation of the ‘Channel Tunnel’ between England (Folkestone) and France (Sangatte). The tunnel actually comprises three tunnels, one large bore rail tunnel in each direction, both linked continuously to a smaller escape, access and services tunnel running between them.

Eurotunnel operates the ‘Shuttle’ rail services terminal to terminal carrying vehicles, it manages the retail estates at each terminal and provides cabling services through the tunnel.

‘Through’ passenger and freight rail services using the tunnel pay user charges per passenger or per tonne.

In the mid-2000s the key strategic dilemma for Eurotunnel’s management was that revenues from rail services were much lower than forecast before the tunnel was completed in 1994, and insufficient to service, let alone repay, £6bn plus debts from constructing the tunnel.

1. Position of the case

Eurotunnel is a core case study for issues raised in Chapter 4 of Exploring Corporate Strategy.

This case highlights how stakeholder power and expectations are located  within national cultures.

The importance of commercial law frameworks and governance systems  in underpinning stakeholder positions is discussed together with the challenges this presents for management of cross-cultural enterprises.

1. Learning objectives

The aim of this case is to highlight how stakeholder expectations, and management’s views on how to respond to and manage those expectations, can be strongly influenced by National Cultures – themselves underpinned by commercial law and governance frameworks.

Specifically the case can illustrate the following issues:

1. Identification of the objectives of stakeholder groups related to Eurotunnel.

1. Identifying conflicts of interest between stakeholder groups and how those conflicts can also be due to differing national cultures and perspectives on interest and power.

1. How strategy formulation, purposes and objectives can be shaped by the cultural context of strategic debate.

1. The need for strategy formulation to respond to the priorities and constraints of the strategic context.

1. Syndicate group themes/questions

1. What were the key business environment and competition issues likely to influence Eurotunnel’s opportunities for trading?

1. What were the factors in the legal, governance and government policy frameworks within which Eurotunnel operated that circumscribed its strategic freedom of action?

1. Identify the contrasting UK and French company viewpoints and perspectives of stakeholder power, responsibilities and expectations.

1. Identify the critical strategic issues within the Eurotunnel accounts (see Exhibits in the Case Study).

1. Case analysis

Students should initially consider the degree of strategic freedom that any management of Eurotunnel would have.

Their view is likely to be that strategic management is constrained by a task environment over which the tunnel may have limited influence.

A ‘PESTEL’ analysis of cross-channel transport could identify the following:

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