PETRONAS Company Overview and Analysis

PETRONAS Compevery Overview and AnalysisPETRONAS is the in brief for Petroliam National Berhad. As an incorporated ph geniusr, it was founded on the 17th of August 1974. It was wholly owned and controlled by the giving medication of Malaysia. PETRONAS has ventured into more than 32 countries including Argentina, Russia and Egypt. It currently employs over 30, 000 employees of 38 nationalities.PETRONAS has involved in the good oil color activities. From managing the overlap contractors of the foreign production, it has been changed into moderniseing its own capabilities in the upstream sector allow it to take the lead in the exploration and production of the nations oil and gas resources. Vested with the entire oil and gas resources in Malaysia, PETRONAS is en self-relianceed by the brass to develop and summarize value to these resources.Besides that, it also ventured into downstream activities. It seeks to maximize value creation and build up of its operations all the way down the value chain. The range downstream activities of PETRONAS includes oil refining, gas touch on and liquefaction, gas transmission pipeline operations, petrochemical manufacturing and marketing, property investment, shipping, marketing of liquefied natural gas, marketing and distribution of oil color products, and trading.Internal purlieuThere is a high level of interdependence between an shaping and its sexual environment. The internal environment comprises elements that contrive a direct influence on the operations of the organization. They pick out an touch on on the achievement of the organizations goals. The Micro forces of the environment atomic number 18Vision and MissionPETRONAS is a big organization and a corporation which is widely known to the world as a company that exports Malaysian oil. universe a big organization, PETRONAS has its very own vision and mission to achieve its common goal and to dole out its customers the best service they can provide.As we all know vision is a long-term architectural plan that exists in almost every company or organization. PETRONASs vision statement is to be a guide oil and gas multinational of choice. It is hoping to become a worldwide known organization and also the root choice among all early(a) oil companies present so far.PETRONAS mission statements, on the opposite hand, are as followsWe are a clientele entity. rock oil is our core line of products.Our primary responsibility is to develop and bring value to this national resource.Our objective is to contribute to the well-being of the people and the nation.(PETRONAS, 2010)The mission and vision PETRONAS believes has made it grows enormously since it was incorporated in the month of August on the 17th in the course 1974. It is now a soundy-integrated oil and gas corporation which is ranked among FORTUNE Global 500s largest corporation in the world.Organizational complex body partOrganizational structure is the internal, formal fra me transaction of a business sector that shows the way in which management is connect to bunkher and how authority is transmitted. (Stimpson, 2006)PETRONAS adopts the functional organization structure. It enables specialization and allowing its employees to focus on their respective areas. There is print functional bonds between the respective sub contributions and departments. It is the bond and process of specialization that has led to the success of the organization. Team diddle is encouraged, all the departments work together to achieve the companys goals and targets. This has proved to rewarding for the organization as a exclusively and the employees, customers, suppliers and the community as a whole.The line of authority is clearly drawn, orders are sent from the top most level, the president and the CEO. PETRONAS has also hired consultants to improve business and organization results.Functional Strategies Corporate Planning and cultivation divisionThis division plans l ong term and short term business strategies which lead to the development of the organization. familiarity divisionThis division undertakes the responsibility of all the educational activities associated with PETRONAS. It involves the scholarships provided by University Technology PETRONAS and the education programs provided to the underserved community.Finance divisionThe Finance division provides the company with its accounting and monetary reporting backbone of the company. Its role is to identify financial sources to finance the operations of the company and to locate profitable areas where the business can invest their money to get higher replications. PETRONAS is involved in the sports world through its investment with Mercedes F1team. It has also contributed towards the development of Turkmenistan economy, by commit US dollar $ 1.8 billion in the oil and gas industries.Technical Services divisionThis division is set up to drive and manage the technological activities of PETRONAS.Human Resource divisionThe most distinguished function of the human resource department is recruitment, selection and study of employees among others. PETRONAS selects the best and brightest of employees through talent searches amongst local anesthetic and overseas graduate. PETRONAS trains and molds its own employees through technical training and innovative program provided in University Technology PETRONAS.ShareholdersShareholders of a firm can directly influence its policies and activities. PETRONAS shareholder is the government. It generates income and value for its shareholder. PETRONAS gave the government RM 52.3 billion from its RM86.8 billion pre-tax profit, in the form royalty, dividends, corporate tax, income tax and export duty. PETRONAS provides shareholders with the opportunity to gain first hand exposure on the Companys operations by organizing several visits to its Gas Processing Plants. Such two-way communication increases corporate recruitr and helps s hareholders take a longer term view of their investment based on a discontinue understanding of the companys corporate strategy and operation. PETRONAS recognizes the importance of eraly and equal dissemination of information to shareholders. Therefore they assemble the Annual General Meeting (AGM) which is a crucial mechanism in shareholders communication.EmployeesPETRONAS must be perpetrate to enhancing the capability of its employees, as a corporation is only as good as the people who work for it.This phrase is from PETRONAS mission statement. Employees are the most substantial asset of an organization, since it is the dedication, motivation and skills of an employee that make a business successful. PETRONAS highly values its employees and understands the importance of their motivation. Therefore it arranges motley programmes to encourage and support its employees by involving them in freewill work. Programmes such as Sentuhan Kasih and Jalinan Insan allow their employees to contribute to homes for disadvantaged children and orphans in the areas of their operations. These programmes provide the employees with job satisfaction, which in return highly motivates them to perform better.CommunityLord Holme and Richard Watts used the following definition.Corporate tender province is the inveterate commitment by business to behave ethically and contribute to scotch development while up the smell of life of the workforce and their families as well as of the local community and society at largeThe culture now is to be generous by giving back to the community. Therefore organizations have certain responsibility towards the community they work in. PETRONAS is a responsible citizen of the community, thus is has successfully imitated and supported various social, environmental and community projects.PETRONAS and EducationPETRONAS is committed is developing the people and they operate in by providing education particularly in the field on science and technolo gy. They are determined to create a realised human resource base for Malaysia through various schemes.ScholarshipsUniversity technology PETRONAS (UTP) provides hands on technical training and innovative programs to help employees build skills and competencies.PETROSAINS provides a rich and motivating environment for the customary to acquire familiarity about science and technology.PETRONAS benefits from this program since they are molding their own workforce, by educating them in standards which are important to PETRONAS.PETRONAS and environsPETRONAS recognizes the importance of conserving biological diversity in order to delay people, animals and plants. Therefore they developed the KUALA LUMPUR city CENTRE (KLCC) PARK, to balance the challenging conveys of ontogenesis urban populations, with the environmental conservation. A much needed public park and green lung for the city of Kuala Lumpur.External EnvironmentExternal environment refers to the factors that happen outs ide the business which cannot be controlled by the business. These factors will influence the internal functions of the business and its strategies to adapt itself to the changing environment.Political EnvironmentThe Malaysian government chose to create a state company, rather than using taxes, production limits, leasing, or other familiar instruments of supervision. The government sought to assert national rights over the use of the coun purifys resources. A state company, having some(prenominal) supervisory powers over the majors and production activities of its own, was a workable compromise between allowing the majors full rein and excluding them, along with their capital and expertise, altogether.PETRONAS is given full trust by Malaysia government to conduct business in pendantly from the government. Government holds 100% of PETRONAS and legislationtes and implements energy policies including oil gas. The company cooperates with the government for the common purpose to devel op the country to achieve the level of advanced countries. Regarding the relationship between PETRONAS and the government, one executive in the company said, There is a world, especially in the Third World, where only the government and the government (GG) can rude the first door. He claimed that there is the world which does not function well with the absence of mutual trust between the government and the national oil company.Legal EnvironmentLegal concepts, principles and issues are affecting common business decisions of all organizations. PETRONAS is a multinational organization. Therefore the company is subjected to laws in all of its host countries. oil Development Act 1974To regulate the oil and gas industry to achieve Malaysias economic development necessitate, Petroleum Development Act 1974 was speculate, and PETRONAS was established under this act. Through this act, PETRONAS owns the exclusive right of ownership, exploration and production of petroleum and gas. Under th e direct purview of Malaysias Prime Minister, PETRONAS is responsible for its planning, investment and regulation of all up-stream activities.Government receiptsPETRONAS is liable to pay to the Federal and State Government in terms of dividends, taxes, export duties and royalties. In the year of 2009, PETRONAS has paid RM 30.0 billion as dividends, RM20.3 billion as income tax, RM 9.1 billion as corporate income tax, RM 2.2 billion as export duties and RM 6.2 billion as royalties to the government (PETRONAS Media Release, 2009).Laws Regarding Employee BenefitsOn the other hand, nearly all government put out laws to control recruitment, employment, minimum wages, health and safety at work, and trade union rights of employees. One of its aims is to protect the workers from any kind of physical injuries. It requires the working environment in PETRONAS to be safe with adequate equipment and sanitation. However, these requirements usually summarize up to the business cost.Consumer Rig htsIn addition, PETRONAS has to protect consumer rights. The Consumer rights seek to protect the rights and interest of consumers, as well as to prevent them from receiving products that do not reach a logical level of safety. PETRONAS sternly practices this as to ensure maximum popularity amongst other oil and gas company as well as looking after(prenominal) customer satisfaction.Economical EnvironmentEconomical environment refers to the collective of the nature of economic carcass in the country. It would affect a business in terms of recession, interest rates, exchange rates and worldwide economic factors.RecessionRecession is the process when values of goods and service decline in an economy. It results in the fall of demand for certain products, as income is reduced. To keep the demand on going, the tolls of products are lowered. According to an article by Jane lee(prenominal) in 2009, net income of PETRONAS in the year ended March 31 dropped 14%. It was its first one-ye ar profit decline in 7 years due to sapped energy demand in global recession and high production cost.Interest ratesDuring inflation, there will be increase in the supply of money associated to the amount of goods available. This will result in a rise in prices of goods and services in the economy over a period of time. For PETRONAS, the high interest rates and fall of purchasing power would consequently affect the cash flow of the organization. vegetable oil Price oil colour Price has starchy relationship with PETRONAS sales performance. When oil price in Malaysia increase, its sales will strongly increase, and when oil price in Malaysia decrease, its sales also decrease.Technological EnvironmentIn order to adapt itself to the rapid growing technological environment, an organization has to be versatile and recognises the value of technology to its business growth. PETRONAS is a technology dependent organization that promotes and uses technology vastly for research and developmen t. It pursues the strategic deployment and application of technology to further enhance useable excellence and maximize the potential of its existing assets and emerging opportunities.Technology in Gas BusinessIn the Gas Business, PETRONASs technology emphasizes on mercury management. With the initiatives to remove mercury from raw condensates, the onshore mercury remotion system, a technology that is among the first in the world, has been installed at PETRONAS Onshore Gas Terminal in Kertih. This system is able to treat raw condensates at the terminal, to improve operational and Health, Safety and Environment (HSE) performance as well as to assure product quality.Technology in Oil BusinessIn the Oil Business, PETRONAS continue to pursue leading edge technologies to enhance its fuels and lubricants businesses. PRIMAX 3, the unleaded petrol, was developed in-house utilizing a superior quality fuel formulation innovated by optimising base fuel properties through the addition of the S inar G-05 additive (PETRONAS Oil Business, 2010). magic spell meeting environmental standards, it enhances engine performance and efficiency.In addition, PETRONAS also believes there are opportunities in secondary energy resources and continue to explore the potential of hydrocarbon resources as well as solar energy and bio-fuels. In building a long term and sustainable energy business, the company looks toward Green Technologies to prepare for the proximo low-carbon economy.These technologies are believed to be providing a strong competitive advantage for PETRONAS to strengthen its position in global business.CompetitionIn any of the industry, there must be competition among organizations. An organization will try to get more customers to buy their product instead of the one offered by the competitors. The success of organizations depends on which one makes the most attractive products at lower prices.The major competitors to PETRONAS are call down and Caltex. They produce dif ferent type and efficiency of petrol.PETRONASPETRONAS has designed PETRONAS PRIMAX 3 to provide maximum protection and performance for your car. By formulating with unique additive components, PETRONAS PRIMAX 3 efficiently protects the engine against injector fouling and corrosion, reinstating the car to its peak performance to improve fuel economy.ShellHowever, Shell is the leader in developing high quality fuels. Shell Super with fuel economy formula is specially designed by Shell experts to give you extra miles at no extra cost. It is formulated with Shells Synthetic Viscous Friction Improver, designed to reduce friction in this crucial part of your engine, service of process to improve its efficiency.CaltexOn the other hand, all Caltex petrols now include technologically-advanced, patented fuel ingredient, Techron. Caltex Techron with cleaning broker is unsurpassed at keeping engines clean and cleaning up deposits to help reinstate original performance. It contains properly detergents which help in removing deposits from fuel injectors intake ports and valves. The key benefits for using Techron are improved performance, enhanced reliability, even drive, restored fuel economy and lower emissions.Comparing these petrol brands, each of them has its own strengths. They are having a healthful competition in the petrol industry with the same goal to provide the best petrol they could produce.Social EnvironmentSocial environment refers to the factors regarding the society as well as the environment. An organization needs to have social responsibilities in order to contribute to the people of the society and to protect natural environment.Social Responsibility on ConsumerMany companies are affected by society and vice-versa. For PETRONAS, it was noticed that consumers are the foundation of the entire business, and dissatisfied customer could be a warning signal to the business. Therefore, it has to take care of societal needs and safeguard human rights. For example, it concerns about the safety and health of consumers. It has to make sure that it supplies safe products to the consumers and provides product knowledge via advertisements, as well as ensures product utility and performance as advertised.Social Responsibility on EnvironmentIn undertaking its business activities, PETRONAS cares for the environment by adopting responsible environmental management practices in its operations. At the same time, it also contributes to the biodiversity and conservation of the environment for the sake of the community.PETRONAS is taking every practicable and reasonable step to prevent the risk of injuries, health hazards and damages to properties in according to international Health, Safety and Environment standards. It is also investing in community-related initiatives in environmental conservation and urban renewal, both in Malaysia and other countries. These community projects aimed to create sustainable benefit and tangible value to the commun ities.ConclusionOver the years, PETRONASs unique experience and expertise, coupled with its technical and operational competencies have allowed it to be accepted as the preferred strategic checkmate by international companies and the host countries. Facing the adverse business and economic environment, PETRONAS is still able to integrate, add value and globalize its operations. These would bring the company towards the realization of its vision to become a Leading Oil and Gas Multinational of Choice.Moving forward, PETRONAS will continue to improve its business performance, strengthen its resilience and enhance its capabilities to confront the challenges in delivering a sustainable energy future for all its stakeholders. Moreover, it will guided by its objective to serve the nation and people with high standards of ethics and integrity, while at the same time maximizing shareholders returns.(3022 words)