Introduction To The Company Petronas Commerce Essay

September 2, 2017 Commerce

PETRONAS is the short for Petroliam National Berhad. As an integrated company, it was founded on the 17th of August 1974. It was entirely owned and controlled by the authorities of Malaysia. PETRONAS has ventured into more than 32 states including Argentina, Russia and Egypt. It presently employs over 30, 000 employees of 38 nationalities.

PETRONAS has involved in the full crude oil activities. From pull offing the sharing contractors of the foreign production, it has been changed into developing its ain capablenesss in the upstream sector – let it to take the lead in the geographic expedition and production of the state ‘s oil and gas resources. Vested with the full oil and gas resources in Malaysia, PETRONAS is entrusted by the authorities to develop and add value to these resources.

Besides that, it besides ventured into downstream activities. It seeks to maximise value creative activity and strengthen of its operations all the manner down the value concatenation. The scope downstream activities of PETRONAS includes oil refinement, gas processing and liquefaction, gas transmittal grapevine operations, petrochemical fabrication and selling, belongings investing, transportation, selling of liquified natural gas, selling and distribution of crude oil merchandises, and trading.

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Internal Environment

There is a high degree of mutuality between an organisation and its internal environment. The internal environment comprises elements that have a direct influence on the operations of the organisation. They have an impact on the accomplishment of the organisation ‘s ends. The Micro forces of the environment are:

Vision and Mission

PETRONAS is a large organisation and a corporation which is widely known to the universe as a company that exports Malayan oil. Bing a large organisation, PETRONAS has its really ain vision and mission to accomplish its common end and to function its clients the best service they can supply.

As we all know vision is a long-run program that exists in about every company or organisation. PETRONAS ‘s vision statement is to be a prima oil and gas multinational of pick. It is trusting to go a world-wide known organisation and besides the first pick among all other oil companies present so far.

PETRONAS mission statements, on the other manus, are as follows:

We are a concern entity.

Petroleum is our nucleus concern.

Our primary duty is to develop and add value to this national resource.

Our aim is to lend to the wellbeing of the people and the state.

( 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 twelvemonth 1974. It is now a fully-integrated oil and gas corporation which is ranked among FORTUNE Global 500 ‘s largest corporation in the universe.

Organizational construction

Organizational construction is the internal, formal model of a concern that shows the manner in which direction is linked together and how authorization is transmitted. ( Stimpson, 2006 )


Figure 1: The Corporation Organizational Structure of PETRONAS

( PETRONAS Case Study on Education, 2005 )

As shown in the Figure 1, PETRONAS adopts the functional organisation construction. It enables specialisation and leting its employees to concentrate on their several countries. There is transverse functional bonds between the several divisions and sections. It is the bond and procedure of specialisation that has led to the success of the organisation. Team work is encouraged, all the sections work together to accomplish the company ‘s ends and marks. This has proved to honoring for the organisation as a whole and the employees, clients, providers and the community as a whole.

The line of authorization is clearly drawn, orders are sent from the top most flat, the president and the CEO. PETRONAS has besides hired advisers to better concern and organisation consequences.

Functional Schemes A

Corporate Planning and development division

This division plans long term and short term concern schemes which lead to the development of the organisation.

Education division

This division undertakes the duty of all the educational activities associated with PETRONAS. It involves the scholarships provided by University Technology PETRONAS and the instruction plans provided to the underserved community.

Finance division

The Finance division provides the company with its accounting and fiscal describing anchor of the company. Its function is to place fiscal beginnings to finance the operations of the company and to turn up profitable countries where the concern can put their money to acquire higher returns. PETRONAS is involved in the athleticss universe through its investing with Mercedes F1team. It has besides contributed towards the development of Turkmenistan economic system, by puting US dollar $ 1.8 billion in the oil and gas industries.

Technical Services division

This division is set up to drive and pull off the technological activities of PETRONAS.

Human ResourceA division

The most of import map of the human resource section is recruitment, choice and preparation of employees among others. PETRONAS selects the best and brightest of employees through endowment hunts amongst local and abroad alumnus. PETRONAS trains and model its ain employees through proficient preparation and advanced plan provided in University Technology PETRONAS.


Stockholders of a house can straight act upon its policies and activities. PETRONAS stockholder is the authorities. It generates income and value for its stockholder. PETRONAS gave the authorities RM 52.3 billion from its RM86.8 billion pre-tax net income, in the signifier royalty, dividends, corporate revenue enhancement, income revenue enhancement and export responsibility. PETRONAS provides stockholders with the chance to derive first manus exposure on the Company ‘s operations by forming several visits to its Gas Processing Plants. Such bipartisan communicating additions corporate transparence and helps stockholders take a longer term position of their investing based on a better apprehension of the company ‘s corporate scheme and operation. PETRONAS recognizes the importance of timely and equal airing of information to stockholders. Therefore they arrange the Annual General Meeting ( AGM ) which is a important mechanism in stockholders communicating.


“ PETRONAS must be committed to heightening the capableness of its employees, as a corporation is merely every bit good as the people who work for it. ”

This phrase is from PETRONAS mission statement. Employees are the most of import plus of an organisation, since it is the dedication, motive and accomplishments of an employee that make a concern successful. PETRONAS extremely values its employees and understands the importance of their motive. Therefore it arranges assorted programmes to promote and back up its employees by affecting them in voluntary work. Programs such as Sentuhan Kasih and Jalinan Insan let their employees to lend to places for deprived kids and orphans in the countries of their operations. These programmes provide the employees with occupation satisfaction, which in return extremely motivates them to execute better.


Lord Holme and Richard Watts used the undermentioned definition.

“ Corporate Social Responsibility is the go oning committedness by concern to act ethically and lend to economic development while bettering the quality of life of the work force and their households every bit good as of the local community and society at big ”

The civilization now is to be generous by giving back to the community. Therefore organisations have certain duty towards the community they work in. PETRONAS is a responsible citizen of the community, therefore is has successfully imitated and supported assorted societal, environmental and community undertakings.

PETRONAS and Education

PETRONAS is committed is developing the people and they operate in by supplying instruction peculiarly in the field on scientific discipline and engineering. They are determined to make a skilled human resource base for Malaysia through assorted strategies.


University engineering PETRONAS ( UTP ) – provides custodies on proficient preparation and advanced plans to assist employees construct accomplishments and competences.

PETROSAINS – provides a rich and motivative environment for the populace to get cognition about scientific discipline and engineering.

PETRONAS benefit ‘s from this plan since they are modeling their ain work force, by educating them in criterions which are of import to PETRONAS.

PETRONAS and Environment

PETRONAS recognizes the importance of conserving biological diverseness in order to guarantee people, animate beings and workss. Therefore they developed the KUALA LUMPUR CITY CENTRE ( KLCC ) PARK, to equilibrate the ambitious demands of turning urban populations, with the environmental preservation. A much needed populace park and green lung for the metropolis of Kuala Lumpur.

External Environment

External environment refers to the factors that go on outside the concern which can non be controlled by the concern. These factors will act upon the internal maps of the concern and its schemes to accommodate itself to the altering environment.

Political Environment

The Malayan authorities chose to make a province company, instead than utilizing revenue enhancements, production bounds, leasing, or other familiar instruments of supervising. The authorities sought to asseverate national rights over the usage of the state ‘s resources. A province company, holding both supervisory powers over the big leagues and production activities of its ain, was a feasible via media between leting the big leagues full rein and excepting them, along with their capital and expertness, wholly.

PETRONAS is given full trust by Malaysia authorities to carry on concern independently from the authorities. Government holds 100 % of PETRONAS and formulates and implements energy policies including oil & A ; gas. The company cooperates with the authorities for the common intent to develop the state to accomplish the degree of advanced states. Sing the relationship between PETRONAS and the authorities, one executive in the company said, “ There is a universe, particularly in the Third World, where merely the authorities and the authorities ( G & A ; G ) can open the first door. ” He claimed that there is the universe which does non work good with the absence of “ common trust ” between the authorities and the national oil company.

Legal Environment

Legal constructs, rules and issues are impacting mundane concern determinations of all organisations. PETRONAS is a transnational organisation. Therefore the company is subjected to Torahs in all of its host states.

Petroleum Development Act 1974

To modulate the oil and gas industry to accomplish Malaysia ‘s economic development demands, Petroleum Development Act 1974 was formulated, and PETRONAS was established under this act. Through this act, PETRONAS owns the sole right of ownership, geographic expedition and production of crude oil and gas. Under the direct horizon of Malaysia ‘s Prime Minister, PETRONAS is responsible for its planning, investing and ordinance of all up-stream activities.

Government Taxation

PETRONAS is apt to pay to the Federal and State Government in footings of dividends, revenue enhancements, export responsibilities and royalties. In the twelvemonth of 2009, PETRONAS has paid RM 30.0 billion as dividends, RM20.3 billion as income revenue enhancement, RM 9.1 billion as corporate income revenue enhancement, RM 2.2 billion as export responsibilities and RM 6.2 billion as royalties to the authorities ( PETRONAS: Media Release, 2009 ) .

Laws Sing Employee Benefits

On the other manus, about all authorities base on balls Torahs to command enlisting, employment, lower limit rewards, wellness and safety at work, and trade brotherhood rights of employees. One of its purposes is to protect the workers from any sort of physical hurts. It requires the working environment in PETRONAS to be safe with equal equipment and sanitation. However, these demands normally add up to the concern cost.

Consumer Rights

In add-on, PETRONAS has to protect consumer rights. The Consumer rights seek to protect the rights and involvement of consumers, every bit good as to forestall them from having merchandises that do non make a sensible degree of safety. PETRONAS severely patterns this as to guarantee maximal popularity amongst other oil and gas company every bit good as looking after client satisfaction.

Economic Environment

Economic environment refers to the collective of the nature of economic system in the state. It would impact a concern in footings of recession, involvement rates, exchange rates and planetary economic factors.


Recession is the procedure when values of goods and services diminution in an economic system. It consequences in the autumn of demand for certain merchandises, as income is reduced. To maintain the demand on traveling, the monetary values of merchandises are lowered. Harmonizing to an article by Jane Lee in 2009, net income of PETRONAS in the twelvemonth ended March 31 dropped 14 % . It was its first one-year net income diminution in 7 old ages due to run down energy demand in planetary recession and high production cost.

Interest rates

During rising prices, there will be increase in the supply of money associated to the sum of goods available. This will ensue in a rise in monetary values of goods and services in the economic system over a period of clip. For PETRONAS, the high involvement rates and autumn of buying power would accordingly impact the hard currency flow of the organisation.

Oil Monetary value

Oil Price has strong relationship with PETRONAS gross revenues public presentation. When oil monetary value in Malaysia addition, its gross revenues will strongly increase, and when oil monetary value in Malaysia lessening, its gross revenues besides decrease.

Technological Environment

In order to accommodate itself to the rapid turning technological environment, an organisation has to be various and recognises the value of engineering to its concern growing. PETRONAS is a engineering dependent organisation that promotes and uses engineering immensely for research and development. It pursues the strategic deployment and application of engineering to farther enhance operational excellence and maximise the potency of its bing assets and emerging chances.

Technology in Gas Business

In the Gas Business, PETRONAS ‘s engineering emphasizes on quicksilver direction. With the enterprises to take quicksilver from natural condensates, the inshore quicksilver remotion system, a engineering that is among the first in the universe, has been installed at PETRONAS ‘ Onshore Gas Terminal in Kertih. This system is able to handle natural condensates at the terminus, to better operational and Health, Safety and Environment ( HSE ) public presentation every bit good as to guarantee merchandise quality.

Technology in Oil Business

In the Oil Business, PETRONAS continue to prosecute taking border engineerings to heighten its fuels and lubricators concerns. PRIMAX 3, the leadless gasoline, was developed in-house using a superior quality fuel preparation innovated by optimizing base fuel belongingss through the add-on of the Sinar G-05 additive ( PETRONAS: Oil Business, 2010 ) . While run intoing environmental criterions, it enhances engine public presentation and efficiency.

In add-on, PETRONAS besides believes there are chances in alternate energy resources and go on to research the potency of hydrocarbon resources every bit good as solar energy and bio-fuels. In constructing a long term and sustainable energy concern, the company looks toward Green Technologies to fix for the future low-carbon economic system.

These engineerings are believed to be supplying a strong competitory advantage for PETRONAS to beef up its place in planetary concern.


In any of the industry, there must be competition among organisations. An organisation will seek to acquire more clients to purchase their merchandise alternatively of the one offered by the rivals. The success of organisations depends on which one makes the most attractive merchandises at lower monetary values.

The major rivals to PETRONAS are Shell and Caltex. They produce different type and efficiency of gasoline.


PETRONAS has designed PETRONAS PRIMAX 3 to supply maximal protection and public presentation for your auto. By explicating with alone linear constituents, PETRONAS PRIMAX 3 expeditiously protects the engine against injector fouling and corrosion, reinstating the auto to its peak public presentation toA better fuel economic system.


However, Shell is the leader in developing highA quality fuels. Shell Super with fuel economic system expression is specially designed by Shell experts to give you excess stat mis at no excess cost. It is formulated with Shell ‘s Synthetic Viscous Friction Improver, designed to cut down clash in this important portion of your engine, assisting to better its efficiency.


On the other manus, all Caltex gasoline ‘s now include technologically-advanced, patented fuel ingredient, TechronA® . Caltex Techron with cleansing agent is unsurpassed at maintaining engines clean and cleaning up sedimentations to assist reinstate original public presentation. It contains powerful detergents which help in taking sedimentations from fuel injectors intake ports and valves. The cardinal benefits for utilizing TechronA® are improved public presentation, enhanced dependability, smoother thrust, restored fuel economic system and lower emanations.

Comparing these gasoline trade names, each of them has its ain strengths. They are holding a healthy competition in the gasoline industry with the same end to supply the best gasoline they could bring forth.

Social Environment

Social environment refers to the factors sing the society every bit good as the environment. An organisation needs to hold societal duties in order to lend to the people of the society and to protect natural environment.

Social Responsibility on Consumer

Many companies are affected by society and vice-versa. For PETRONAS, it was noticed that consumers are the foundation of the full concern, and dissatisfied client could be a admonitory signal to the concern. Therefore, it has to take attention of social demands and precaution human rights. For illustration, it concerns about the safety and wellness of consumers. It has to do certain that it supplies safe merchandises to the consumers and provides merchandise cognition via advertizements, every bit good as ensures merchandise public-service corporation and public presentation as advertised.

Social Responsibility on Environment

In set abouting its concern activities, PETRONAS cares for the environment by following responsible environmental direction patterns in its operations. At the same clip, it besides contributes to the biodiversity and preservation of the environment for the interest of the community.

PETRONAS is taking every operable and sensible measure to forestall the hazard of hurts, wellness jeopardies and amendss to belongingss in harmonizing to international Health, Safety and Environment criterions. It is besides puting in community-related enterprises in environmental preservation and urban reclamation, both in Malaysia and other states. These community undertakings aimed to make sustainable benefit and touchable value to the communities.


Over the old ages, PETRONAS ‘s alone experience and expertness, coupled with its proficient and operational competences have allowed it to be accepted as the preferable strategic spouse by international companies and the host states. Confronting the inauspicious concern and economic environment, PETRONAS is still able to incorporate, add value and globalise its operations. These would convey the company towards the realisation of its vision to go a “ Leading Oil and Gas Multinational of Choice ” .

Traveling frontward, PETRONAS will go on to better its concern public presentation, beef up its resiliency and heighten its capablenesss to face the challenges in presenting a sustainable energy hereafter for all its stakeholders. Furthermore, it will guided by its aim to function the state and people with high criterions of moralss and unity, while at the same clip maximising stockholders ‘ returns.

( 3022 words )


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