UNIVERSITI UNIVERSITI PUTRA PUTRA MAL AYSIA
A CA SE STUDY ON PETRONAS GLOBALIZATION A STRA TEGIC MANA GEMENT DECISION DECISION
AHMAD A HMAD HUSSAIN HUSSA IN
GSM 1999 6
AL - FATH FATHIHAH IHAH
IN THE NAME OF ALLAH, THE COMPASSIONATE, THE MERCIFUL. PRAISE IS ONLY FOR LLAH, THE LORD OF THE UNIVERSE THE ALLCOMPSSIONATE, THE ALLMERCIFUL THE MASTER OF THE DAY OF JUDGEMENT THEE LONE WE WORSP AND TO THEE ALONE W PRAY FOR HELP SHOW US THE STRAIGHT WY THE WAY OF THOSE WHOM THOU HAST BLESSED; WHO HAVE NOT INCURRED THY RATH NOR GONE STRY
UNVERT
PUTR
MALAYSIA
C P GZ GC G C BY MD U MTC : 0139
TS ASE DSSETAON S PESENED TO T FALTY OF EONOMS AND MANAGEMENT
UVTY UT MY S PATAL FLFLLMENT OF TE REQEMENT FO E DEGREE OF
OF B DO (B)
SEPTEMBE
PENGESAHAN ASLIAN LAPORAN
Dengan ini, saya HMD HU ( No Matrik GS0139) pelaja aster of Business Administation (MBA menga ahawa kajian kes untuk kursus ini adalah hasil asal saya senii.
Names and events haene in this pulication has been isguised and any similarity foun is mere oiniene Infomatio ound in this pubiation must e treated as HIGH COFIDENIL an shall e or the ose of lment of this MB
rogam No efeenes an eoduction of any ats of this plication shall e mae ithout prio knoege and aproval from the athor Vies exressed in this uiation are soey those of he author's opinion an not to e onstrue as the ies of PETRONS no PETRONAS in any ay esonsible or he content thereo
AH HUSSIN o ar : S039 6 Sepemer 999
CKWDMT
It s both my pleasre and oblgaton to acknowledge generos people who ave provded me with the guidance ad inpired me to make thi happen. Specal thanks to the lecturer ho have thought me during the night cae and member of my family for their continuo suppo Wthout ther pport and courage, completng thi MBA program would hae been dclt f not mposble.
ws to expre my gratitude to the following peope for ter knd asstance in thi MB progra and te cae disetaton Although mch of my aprecaton as bee expeed ws to express my ncere tanks to Tuan
Hj. Yaaob Ibram the A coordnator fo
akg this a reali to me
wat to acknowledge my pecal apprecaton to Assocate Professor Dr Zanal Abdn
oae who my project case spervsor for contos sppot copletng ts case ssertation t i truly impoible to express my feelig of gratte n ere words.
y rends and felow colleages n te A progra tha yo for beng a good teaates ad shared my problems troughot ths stdy criticism ae treasued
Yor assstace dea and
my hear
Never can ret my famly for ng istrumental ersh motvatng and moe impoantly for te patience througout thi coure o them I remai grateful and no can
I
gore tem from my memory ould ever have been able o compete ths M program ad te case dsseaton whe dd if ever at all
DEDICATED TO
My Wife Norfshah bt Ab Wahab
My Children Mohammad Fakhri ohammad Fakhrulah Mohammad Fakhrusysyakirin Fathin
My Parent Tuan Hj. Hussain Tamysa Hajjah Rokiah Bt Harun
c
PETRON vision as "To be Leading Oil and Gas Multinational ompan of hoie and it sated the globalization eo in 994. PETRON global opeation had extnded to ia ounties, onfedeate ndependene of oviet Union , Middle East and sia Pai ounties ome of te ia ounties inluded udan outh ia donsteam Engen, Liba and lgeia. The invesments in ee Tukmenist d Kazkst. The inestment in Middle East ounties inluded an ia and aq
I
the sia Pai, the
ovesea pofolios extended to Vietnam Mnma hina and usalia both Upsteam and donseam
The ovesea upseam ativities ee undeen b its subsidia PETRON aigali dn Bhd PB though its ovesea subsidia ompanies When PETRON staed its globalization effos, the envionmental fatos ee e muh favoable Hoeve, i n 997 and 1998 thee ee adese hanged in these envionmental fatos and had aeted PETRON globalization effos.
ome of these fatos ee the egional and old
eonomi tmoil, egional nanial and uen dealuation sloe eonomi oh lo demand of oil and gas loe oil and gas pie and loe pospetivi and ommeialit of the oil and gas poets
This ase sd evaluated PETRON stategi position and te impat on the inteational pofolios and made eommendation elating to these sateg issues. This ase stud analzed the enionmental fatos inuening te ompan e dietion though the used of the WOT analsis and detemined the stategi thust to ompehend the WOT analsis This sd assessed analtiall though the used of PE, the tue ompan dietion and evaluated the ovesea pofolios to deteine the pofoios oh oppounities and povide the deision as to hethe these pofolios should be etained paneed o diested
Abstrak
Vii ETROS adaah "eadi Sarikat iak da Ga arabaga ag Teruug da Teriih a ia ea memaka uaha gobaiai ada a Uaaa ke ara gobaiai teah meagka ke egara-egara di rika Coederae deedee o Soiet io (CS) a Tegah da ia aik egaraegara rka adaah ermauk Sda rika Seata (oera ra Ege) Liba ad ra.
eabra di CS
meragkumi egaraegara ee Trkmeita ad Kazarka aakaa eabura d ia Tegah meagka ke egaraegara ra Sria ad rak a ak, eabura atarabagaa termak etam mar, Chia da raa a da ra)
Oerai huua diedaika oe aak ariata iait ETA Cargai Sd hd S meaui aakaak arkaa ag ai ada ketika TS meaa uaha gobaiai aktorakor ekeiig adaah begit egaaka Waa bagaimaa daam ahu 99 da 99 erdaat erbaha eara ada akorakor ekeig ii ehigga eega uaha gobaai ETONS tara akorakor ag egaai erbaha etara adaah keaa eomo erata da da m kewaga ag eah uut iai atawag eraa ertubha eooi ag embab eura adar ermitaa mia da ga keaa harga ia da ga da aha roe da eaaa iaga roe ag reda.
e i; megaaia trategi TOS da imikai eata ooo aarabagaa da eterua memberi adaga k meeeaika iui ereb. e ii megaaia aktoraktor ekeiig yag memegaruhi arah t maa da arkat dega megguaka aaia SW da SE bagi meetaka tak raegik da membat aaia ooio aarabagaa emaada tuk ter memeaga berkogi aa meaa v
B F C AGE I
ENGESHN KSLIN LORN
II
KNOWLEDGEMENTS
II
DEDS
IV
STT
0
PETRONS GALISTIO ND THE DEM
0
MNY KGROUN
30
PETRONAS VISION, MSSON AND OBJECIVES
6
1
ViSON
6
32
MiSSiON
7
OBJECTVES
8
34
PETRONAS VALUES SYSTEM
9
40
50
. . . . . . . . . . . .
1
..
2
PETRONAS ORGANIZTION ENVIRONMEN
10
41
PCSB ORGANIZATION STRCTRE
11
42
FINANCIAL
1
43
MARKETING
15
44
OPERATION MAAGEMENT
17
45
MANAGEMEN
19
ENVIRONMENTAL ATORS
20
5.1
LEGAL POLTA
20
ECONOMiAL
20
53
SOCIAL CLTURA .
21
5.4
TECHNOLOGiAL
22
55
SUPPLIER
22
56
SUBSTITTE
22
V
60
70
80
57
OMPETITO
23
58
STOME
2
PETONAS PSTEAM GOBA VENTES
24
6.1
ETNAM
24
6 2
SyRA
2
63
AN
26
64
RAN
2
65
RMENSTAN
2
66
ALERA
ONTR ANASS
7
ETNAM
72
SRA ,
2
73
SAN
3
7 .4
RAN
3
75
TMENISTAN
4
76
AGEA
TE PETONAS E&P EMMA
6
A : AS ANALYSS
90
ROUTION
00
STAN ANALSS
4
0
PROLM STATEMENT
42
20
ORGANZATONA ANASS
42
2
RGANIATON SE
42
22
NANA STATS
4
23
MARKETNG
44
V
124
OPERATION MNAGMENT
45
125
MANAEMENT
5
ENVIRONMETAL ANALSIS
47
31
LEAL LITIAL ENVIRONMET .
7
132
IA ENVIRONMET .
8
133
SIA ULTURA ENVIRONMENT
49
134
TELIAL ENVIRONMENT
49
135
SUPL
49
136
SUSIU
50
137
OTITR
5
138
USTR
51
140
SWOT ANASIS .
53
150
SPCE ANALSIS
55
160
PORTOI ALSIS ..
58
161
BC ROT SARE MTRIX
58
162
PORTLIO ATTRATIVENESS
59
130
170
DEISION A LANNIN
62
180
IMPLEMENTAI
64
181
WOR RRAM AND SCEDULE
64
182
BUSISS SS RNIN
83
VALUE CHAIN .
List of Table List of Figures List of Appendce
V
68
LIS OF ABLE
PGE
ABLE1 : ORGANIZAIONAL NALYSIS
46
L 2 : ENVIRONMN SIS .
51
ABLE3 : SWO SUMMAR
53
LE4 : SWO MARIX
54
L 5 : SPAC MRI NS
56
ABLE6 : SPAC MARIX ALAION ABLE
57
BLE7 : PERONS BC-WH SHARE MARIX
59
AL : PROAS OVRS RFOLIO ANALYSIS
61
X
PAGE
IS OF FIGRES
FIGRE ERONAS EVOION
FIGR 2 ORGANIZAION SRR OF ERONAS
FIR 3 : RONAS ARIAI ORANIZAION SRR FIR 4 : RONAS ROVR
FI 6 : RONAS OA ASS
..
FIG 7 : SAE ARIX ANASIS
.
.
.
.
FI : RONAS B ROH SHAR ARIX
FIGR 0 WORK PROGRA AND SHEDE .. . . . ..
FIG9 RONAS OVRSA ORFOIO ANASIS
12
14 5 57 5
6
65
5
14
FIR 5 RONAS ROFI AR AX
4
FIG 1 1 ERONAS RENINRING NEW BSINESS DEVEOEN DIVISION
x
,
67
IS OF APPNICS
PAG
.................
68
APPNDIX 2 URY PRRN YR . ............... .......... ...
70
APPNDIX 3 ORY POA UDAN
APPNDIX 4 URY PRORN R
74
APPNIX 1 COUNRY PRORANC VINA
.
.
.
.
APPNDIX 5 RY PRORA URNISAN APPNDIX 6 URY PRFRAN RI .
.
.
.
7 7
APPNDIX7 PRAS ORAIZIN IRNNA ACR 80 •...
8
APPNIX9 PORIO ANYSIS VINA ............................
8
APPNIX 10 PROIO AAYIS YRI ..............................
APPNIX 1 1 PROI NAYSIS UD
84
APPNDIX 8 PRA XRNA NVIRONNA FACOR
APPNIX 12 PRI NAYI RN
. .
.......................
85
86
APPNIX 4 PROIO ANAYSIS ARIA ..............................
87
APPNDIX 13 PROIO ANYSIS URNISAN
1.0
PETRONAS GLOBALSATON AND TH DLEMMA
Tan Sr Hassan Marc, resen of PETRONAS, he naonal ol comany of Malaysa, was on hs way back aer a week long busness meeng wh hs new ners n Suan, hna Naonal Peroleum Cororaon (CNPC), Sae Peroleum an Suae, he Suan Naonal ol comany Accomanyng hm on hs raely hre je lane, were oher ce resens, hey were Dao' Mohama Irs Mansor, senor ce resen of Exloraon an Proucon Busness Un an Mur Mohamma, he ce resen of as Busness Un
They were hang serous
scussons on he rosec of e new jon enre an he resources nese n Sua There were abou 238 PETRONAS emloyees workng n Suan, an PETRONAS has nese US$30 mllon o ae
A one juncure Tan Sr Hassan ose a queson o Dao' Irs, "Dao' Irs, PETRONAS has neres n y fferen counes oun he worl, wh a oal nesen of US$6 blon So f, we hae been receng reenues from S rojecs n Iran, Da Hung an Ruby rojecs n Venam Da Hung has been a sasrous enure o us, mllons of ollars were los ue o lower ol reseres han exece We may hae o relnqush he el an reu back o he Veamese oemen I woner how are our oher rojec sans? Wh he aerse change n he enronmenal facors a curren unceranes n e global economy, how are our oersea potfolos dong and do we need to sttees ou fue recon
There was a long sghe an Dao Irs laer rele wh cauous, "We hae been abe o grab he oersea rojecs because we mae a horough analyss an feasbl suy. Howeer, n he exloraon an roucon busness, he rsk s ery hgh
Base on our lme aa an
nformaon hen, was he bes ecson Howeer, I agree ha here s a nee o reassess our rojecs an o ece wheher o rean he rojecs or es n some We wll reealuae he
project feasibili d carry out the porfoio alyses to determine which re the otfolios that can be retained nd those that need to be divested We wll advise the bod for the next course of action"
The tense and lemma were mmense on Dato Mohd Idris Mnsor He needed to know what were the sitations what adverse environmental changed occurred and the surrounding forces goveng these assets Was the political in the count n which PETROAS had invested permied a goo nvesment climate? What mpact d the global economy have on the projects' prospectivi. What would the re scenarios be? Coul the vsion mission nd objective of the comn be met?
Shoul PERONAS contnue to aggressivel expnd the inteational
operatons, what should be done to the exstng inteational porfolios and what should PETRONAS tre direction be? His contract wth PETRONAS vali for another three months He knew that he needed to impress d make the Management Commiee convince based on soli facal ata and nalses what re best for these nteatonal porfolios He needed
t
provide with proper recommenations nd drection for PETROAS to aopt His conact extenson could be in jeopard f he faile to provde the right ecision d direction
COMAN BACKGROU
PETRONAS was a Malasian natonal oil and gas compan whch was incoorate on August 7, 1974 under the Malasn Compan Act 965 The Malasian Peroleum Development Act
(PDA), 94 was passed by the Prliament on October , 974
t place peoleum
development under the portfolio of the Prime Minister Under the PDA PEROAS was veste with the ownershp of peroleum resources and had exclusive rts power liberies an privileges of eploring and deveoping petroleum resources In ret for the ownership and
rigts, PETRONAS pid roties to te Feder nd tte Goeents PETRONAS ws n te rit to crr ot�rocessing rening of petroe nd nfctring of petroceics Tis ct d gien PETRONAS te soe rigt to regte te petroe resorces in Msi nd ws entrsted to nge te resorces for te benet of te ntion Towrds te end of 976 te rst prodction sring contrcts were signed wit tree different jor oi copnies ie Sb Se, Swk Se nd Esso Dring te initi ers, PETRONAS roes in focs on nging nd regting te exportion ctiities of teir contrctors to ensure te pse ctiities were being we dinistered nd proper nged.
Since PERONAS eergent in it d deeoped itsef fro ere ngeent of petroe resorces to proect ngeent nd ter estbised itsef s te opertor in te pse ctiities before diersiing its ctiities nd went intetion
PETRONAS
eotion is sown in igre n 98, wit te estbisent of PETRON AS AA Sn Bd, it bece te operting r in te pstre ctiities Lter, seer strtegic studies were crried ot b PETRONAS tt ed to diersiction of its ctiities into oi rening, gs processing nd tiiztion nd petroceic nfcturing nd intetion reting
To
optiize te e nd xiize snergy of te ntur resorces, it d inteted e se nd downstre ctiities nd trnsfored PETRONAS into n inteted oi nd gs cop
In PEONS stared to diverif is acivitie oerse trog its operting
a
PETRONAS Crigi Sdn Bd n it d expnded te gob ctiities into 5 dierent conies in te pstre nd downstre PETRONAS gob opertion d extended to Aic conies Confederte ndependence of Soiet Union (CS) Midde Est nd Asi Pcic conies Soe of te Aic contries incded Sdn, Sot Afric (downse Engen), ib nd Ageri e inestents in CS were rkenistn nd Kzkstn Te inesent in Midde Est contries incded rn Sri nd rq (sti in negotition). I te Asi Pcic, 3
the oversea portfolios incuded Vietnam, Myanmar China and Austraa (both Upstrea and downstrea).
n ine with the gobaization, PETRONAS had deveoped a new vison and
ssion n accordance to its core activities and the copany aspiration of becoing a goba company of choice
FG 1: PTONAS EVOLTION
•
roject" anager peor ' +
roet anager I I ' + peator I I I I I I
negated il Cmpany
Petroeu was PETONAS core business right from nding hydrocarbon up to processing and rening petrochemica industres manufactuing and transportation The organiation structure of PETRONA is shown in Figure
Exporation and Production activities encopassed
4
expoaion, deveopmen and poduon of peoleum reource. Rening ctv focussed o renng the ude oi Makeng was esponsibe n makeing adng and eaiing of peoeum podus. Gas busness was esponsie n gas poessng and ansmission gas qefaion and gas uzaon suh as gas ds oong. The Peohema usness was esponsie fo he peohema manufang and makeing he pod.
Maiime and ogis business
nuded mane anspoaon por managemen and enang and nay he ogs aiies
FGU
ORGANISATIONAL STRUCTURE OF PTRONAS .
BOARD AUT r(MMIT��
. . M ANAGEMENT MM��
K CORPORAT PANNNG & DVOPMNT
DUATON VON
FINANC DIVON
VI�lnN
PROCHMICAL BUSNESS
HMAN ROURC VON
HNOOY MANAMNT
V�nN
5
30
PETRONAS's VISION SSION AND OBJECTES
Mission and vision statement is ve imporant to illustrate the organiation reason for existence and the direction towards achieving the objectives d goals in the shor and long term. PETRONAS had long developed the mission and vision statement. However, in 1995 aer its globalization eor PETRONAS changed its vision statement to incoporate the vision of being a multinational company of choice Below are discussion on the three elements of PETRONAS ndental principle of its existence and the values syste that it adored
3.1
VISION
ETRONAS vision "To be A Leaing Oil and Gas Multinational Copany of hoice
This dened that oil and gas as the core business and emphasized on
signicance of integrated upstream and donseam activities in adding values to the primary resorce line with the indus trend in the downsea and the relevancy in the value chain PETRONAS wanted to increase weighting towards gas and petrochemical. It expressed desired to leverage on the core businesses and out-sourced the nonstrategic activities and units PETRONAS has developed strategies where it emphasied o cerain business seents focused on ceain geoaphical locations and leveaged its cometitiveness in ceain aket segment.
In 1994 PETONAS stared its globalization eo to become a global multinational company Thus a signicant proporion of its operations were outside alaysia and across several counies ike other multinational company, PETRONAS had to deal and manage with multinationals and multiclal not only in Malaysia but other counries that it was operating The vision stated that it wanted to be a world class organition as
sc n 996, mngmn s ndtoo bsnss ocss ngnng o m PETRONAS mo comv nonlly
T vson lso sssd on bng
comny of coc nd nly fd by ll solds consms nd s
3.2
MISSION
T PETRONAS msson smn s dvlod o xln sons fo s xsnc sngtn vson nd cl coo dcon n cvng vson PETRONAS dscbd s msson smns s follos;
WE A A BUSINESS ENTITY PETROEUM IS OUR OE BUSINESS OUR PRIMARY ESPONSIBIITY IS TO DEVEOP AND ADD VAUE TO THIS NATIONA ESOURE OUR OBJETIVE IS TO ONTIBUTE TO T WEBEING OF T PEOPE AND T NATION
T msson stmn sd tolm c const of ol nd gs
a
bng t
co bsnss Polm s ntl soc d o b xlod dvlod odcd ocssd d nod o on odcs g gsoln n s fdsoc o tocmcl l nd gs fo o ln s y PETRONAS cold mmzd vl cn of s nl soc og synconzng h s cvs dons cvs
T sm cvs nvolvd xlong nd
odcng tolm s donsm cvs nvolvd ocssng nd nsfoon of nl soc no o ls nd fdsoc o ocmcl lns T msson lso mnond objcv s o conb 7
ward he well being f he peple d he nain eee sne was enrused wih he respnsibili develp he naral resures and given he exlusive righs under he PDA i has he respnsibili pre he well being f he peple d he nain whm i believed wned e wealh f he naural resures f he unr
OBJCTI
Taking he visin and missin
a
he fundain f he mpan direin PTAS
xplrain and Prduin (&P business uni has develped heir spei bjeives in rde ahieve he Cprae's visin and missin
The spei bjeives are
disussed belw
Inrease he share r revenues frm ineainal perain b 3 0% in ear 2005
Creaing value he mpan a 8 billin b ea 00
3.
T aquire billin f il equivalen b ear 2000
4
Be a leading upsream gas mpan in Suh Asia
S
Overall Tal Crprae e (TC f p quaile in Ineainal &P indusr
In ahieving he PTONAS &P bjeives sme f hese saegies were inegraed arss businesses snergies an reae value hain he mpan In is effr mimize value reain he mp PTNS had aquired servie mpan alliane minimie s f develpmen and sraegi parnerships wih her mpanies in is versea venures she he risk
8
3.4
PETRNAS VALES SYSTE
PETRONAS alue sysem was eeloe o exlain he alues ha he orgiaion aocae an he execaion a he organiaion has on is emloyee.
There were
four alues sysem aoe by PETRONAS
"LOYALTY "PROFESSIONALISM "INTERITY "OSIVENSS
The wor loyaly referre o he sa loyal o he naion cororaion. A loyal saff mainaine high cororae mage woul no make erogaory commens abou he comany an couny. The saff woul a all ime roie consrucie criicism wihin in-house forum, suor an ariciae in ensuring he comanys mission, roles, objecies in his or her aciiies eiher inhouse, ousie seminar, alks an social aciiies.
Professionalism in PETRONAS erminology means commie, innoaie an roacie d aways siving for excellene.
The sf wou mainain correcess an high
ii of behaior in eliering his uy an rm in ecision making base on objecie assessmen of siuaions in conucing aairs of he comany
Ineiy means hones an urigh. refee o saff rusworhiness in mainaining al conenialiy of comany's aairs an business an u comany's ineres aboe ersonal ineres an gains.
ohsinss mans uni in uros an fllowshi bl o work in a am conibu osiily owars a common goal in conucing coman's affairs an businss wih gnuin concs an rsc o h ol
40
PERONA ORGANIZAIONAL ENVIRONN
Som of h facors ha imac h lomn of an organiaion inclu h ncial, marking, oraon an managmn facors
Bas on Forun 500 ugus 98, in h
Polum Inus cago PETRONS has bn lis has numbr in rm of ru on rnus an ru on asss wih 284 % an 1 39% rscily Is ha insmn in 53 wholly own comanis wih 2 loca orsas an 32 locally, 27 arly own wih on in osa an 30 associa comanis wih loca orsa.
Th mo of cision making was ma cnrali wih scic businss unis ha hir own businss commi chair by h rsci is rsin Th organiaion cisionmakings an guiing olics wr ma hrough Magmn ommi ming an Boar ming Mmbrs rrsn h Magmn Commi wr mainly from h arious has of businss unis. h Bo Mmbrs comris of mmbr om h snior managmn an Gomn rna
h Eloraion an Proucion (E & P) businss uni was rsonsibl of h usam aciiis Prolum Managmn Uni which was a of h holing comany, was rsonsibl of maging h omsic rolum oraion an surising h imlmnaion of Proucion Sharing onracs sign bwn PETRONS an h conacors
10
PERONS igli Sdn Bhd PSB nde he E& e w e o PERONS nd ws e oeing m o PETRONAS in he sem secto. s domestic ssets s well s ineionl sses The ineionl ssets wee being mnged by wholly owed ineionl sbsidiies eded by e conry mnges
Te cse discssed the
globlizion cllenges in PSB
4.1
PCSB ORGANIZATION STRUCTURE
The oetig m o PETRONS in e stem ws PETRONS igli Sdn Bhd PSB which s bsinesses loclly nd intetionlly
ige
3
shows he
orgnizion o PSB The domesic oerions were rn by he egionl oces loced in Kei o te Peninslr Mlysi Mii or he Swk oetion nd Kot Kinbl o he Sb oetion The min coroe oce ws loced in PETRONAS Twin Tower, KL nd i mnged nd conolled e oerll oeion o e orgnizion
Te hie oering oce (OO ws resonsible o e tree regionl oetions nd he mde reglr eors to te EO Three egionl enel Mnges who mnged d conolled he dily oeion ge reglr reors o OO Most o ei oetions wee osore nd tey ensre e se nd objecies o he egionl oce were me. The min obective o ee regional ofces was o eiver oil nd gs odcion t ceain re to mee te ntionl rget se by PETRONAS In doing so e dily running o te mcinery odction ltorms mintennce nd se o te oerion were old
11