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A Brief OVERVIEW OF Petronas

PETRONAS is the short for Petroliam Country wide Berhad. As an included company, it was founded on the 17th of August 1974. It was wholly had and manipulated by the federal government of Malaysia. PETRONAS has ventured into more than 32 countries including Argentina, Russia and Egypt. It currently uses over 30, 000 employees of 38 nationalities.

PETRONAS has involved with the whole petroleum activities. From taking care of the sharing companies of the overseas production, it's been changed into producing its own capacities in the upstream sector - let it take the business lead in the exploration and development of the nation's coal and oil resources. Vested with the complete coal and oil resources in Malaysia, PETRONAS is entrusted by the government to develop and add value to these resources.

Besides that, it also ventured into downstream activities. It looks for to increase value creation and strengthen of its functions completely down the worthiness chain. The number downstream activities of PETRONAS includes olive oil refining, gas processing and liquefaction, gas transmission pipeline operations, petrochemical developing and marketing, property investment, shipment, marketing of liquefied gas, marketing and circulation of petroleum products, and trading.

Internal Environment

There is a higher degree of interdependence between an organization and its interior environment. The inner environment, also called micro force, includes elements that have a direct influence on the businesses of the organization. They impact on the achievements of the organization's goals. The Micro pushes of the surroundings are:

Vision and Mission

PETRONAS is a huge group and a company which is well known to the globe as a corporation that exports Malaysian engine oil. Being a huge group, PETRONAS has its individual vision and quest to accomplish its common goal and also to serve its customers the best service they can provide.

As we all know vision is a long-term plan that exists in almost every company or company. PETRONAS's vision statement is usually to be a leading oil and gas multinational of choice. It is wishing to become worldwide known group as well as the first choice among all the engine oil companies present so far.

PETRONAS mission assertions, on the other side, are the following:

We are an enterprise entity.

Petroleum is our key business.

Our main responsibility is to build up and add value to the national source.

Our objective is to donate to the well-being of folks and the nation.

(PETRONAS, 2010)

The objective and eyesight PETRONAS is convinced has made it grows immensely since it was integrated in the month of August on the 17th in the year 1974. It really is now a fully-integrated oil and gas company which is positioned among FORTUNE Global 500's most significant corporation in the world.

Organizational structure

Organizational framework is the inner, formal framework of any business that shows how management is linked together and exactly how authority is sent. (Stimpson, 2006)

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Figure 1: The Corporation Organizational Framework of PETRONAS

(PETRONAS Case Study on Education, 2005)

As shown in the Shape 1, PETRONAS adopts the useful organization framework. It enables specialization and allowing its employees to concentrate on their respective areas. There exists cross efficient bonds between your particular divisions and departments. It's the bond and process of field of expertise that has resulted in the success of the organization. Team work is encouraged, all the departments interact to achieve the company's goals and focuses on. This has proved to satisfying for the organization all together and the employees, customers, suppliers and the community as a whole.

The type of authority is evidently drawn, orders are delivered from the very best most level, the president and the CEO. PETRONAS has also hired consultants to improve business and firm results.

Functional Strategies

Corporate Planning and development division

This division projects long-term and short-term business strategies which lead to the development of the business.

Education division

This section undertakes the duty of all educational activities associated with PETRONAS. It involves the scholarships provided by School Technology PETRONAS and the training programs provided to the underserved community.

Finance division

The Finance department provides the company using its accounting and financial reporting backbone of the company. Its role is to recognize financial sources to finance the businesses of the company and to discover profitable areas where the business can commit their money to get higher dividends. PETRONAS is mixed up in sports activities world through its investment with Mercedes F1team. It has also contributed towards development of Turkmenistan economy, by trading US dollar $ 1. 8 billion in the oil and gas industries.

Technical Services division

This division is established to drive and manage the technical activities of PETRONAS.

Human Learning resource division

The most significant function of the human being resource division is recruitment, selection and training of employees amongst others. PETRONAS chooses the best and brightest of employees through talent searches amidst local and abroad graduate. PETRONAS trains and molds its employees through technical training and ground breaking program provided in College or university Technology PETRONAS.


Shareholders of a firm can directly impact its policies and activities. PETRONAS shareholder is the federal government. It generates income and value for its shareholder. PETRONAS offered the federal government RM 52. 3 billion from its RM86. 8 billion pre-tax earnings, in the form royalty, dividends, corporate tax, income tax and export responsibility. PETRONAS provides shareholders with the chance to gain first hand exposure on the Company's operations by arranging several appointments to its Gas Processing Crops. Such two-way communication boosts corporate and business transparency and helps shareholders take a longer term view of these investment based on a better understanding of the company's corporate strategy and operation. PETRONAS recognizes the importance of well-timed and equivalent dissemination of information to shareholders. Therefore they arrange the Annual General Meeting (AGM) which really is a crucial mechanism in shareholders communication.


"PETRONAS must be focused on enhancing the capability of its employees, as a firm is only as good as folks who work for it. "

This expression is from PETRONAS objective declaration. Employees are the most important asset of an organization, since it is the dedication, determination and skills of an employee that make an enterprise successful. PETRONAS highly prices its employees and understands the importance of these motivation. Therefore it arranges various programs to encourage and support its employees by involving them in voluntary work. Programmes such as Sentuhan Kasih and Jalinan Insan allow their employees to contribute to homes for disadvantaged children and orphans in the regions of their businesses. These programmes supply the employees with job satisfaction, which in return highly motivates them to execute better.


Lord Holme and Richard W used the following definition.

"Corporate Community Responsibility is the continuing determination by business to react ethically and donate to financial development while bettering the quality of life of the labor force and their own families as well as of the local community and society at large"

The culture now could be to be nice by giving back in the city. Therefore organizations have certain responsibility towards the community they work in. PETRONAS is a sensible citizen of the city, thus is has successfully imitated and supported various public, environmental and community projects.

PETRONAS and Education

PETRONAS is committed is developing the individuals plus they operate in by providing education specifically in the field on technology and technology. They can be determined to make a skilled human source of information base for Malaysia through various plans.


University technology PETRONAS (UTP) - provides hands on technological training and progressive programs to help employees build skills and competencies.

PETROSAINS - provides a wealthy and motivating environment for the general public to acquire knowledge about technology and technology.

PETRONAS advantages from this program since they are molding their own labor force, by educating them in standards which are essential to PETRONAS.

PETRONAS and Environment

PETRONAS recognizes the importance of conserving biological diversity in order to ensure people, animals and crops. Therefore they developed the KUALA LUMPUR CITY CENTRE (KLCC) Playground, to balance the challenging needs of growing metropolitan populations, with the environmental conservation. A essential public playground and renewable lung for metropolis of Kuala Lumpur.

External Environment

External environment identifies the macro forces that happen beyond your business which cannot be controlled by the business. These pushes will influence the inner functions of the business and its strategies to adapt itself to the changing environment.

Political Environment

The Malaysian government thought we would create a state company, alternatively than using taxes, production limits, leasing, or other familiar equipment of supervision. The government sought to assert national rights over the use of the country's resources. A state company, having both supervisory forces within the majors and development activities of its, was a workable bargain between allowing the majors full rein and excluding them, along with their capital and competence, altogether.

PETRONAS is given full trust by Malaysia government to perform business independently from the federal government. Government contains 100% of PETRONAS and formulates and implements energy regulations including oil & gas. The company cooperates with the government for the normal purpose to develop the united states to attain the level of advanced countries. Regarding the partnership between PETRONAS and the federal government, one exec in the business said, "There is a world, especially in the 3rd World, where only the government and the government (G&G) can open up the first door. " He claimed that there surely is the entire world which will not function well with the lack of "mutual trust" between your government and the countrywide essential oil company.

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Legal Environment

Legal concepts, principles and issues are influencing day-to-day business decisions of all organizations. PETRONAS is a multinational corporation. Which means company is subjected to laws in all of its number countries.

Petroleum Development Action 1974

To regulate the coal and oil industry to attain Malaysia's economical development needs, Petroleum Development Take action 1974 was designed, and PETRONAS was set up under this act. Through this take action, PETRONAS has the exclusive right of ownership, exploration and production of petroleum and gas. Under the direct purview of Malaysia's Best Minister, PETRONAS is in charge of its planning, investment and regulation of most up-stream activities.

Government Taxation

PETRONAS is likely to pay to the Federal government and State Government in conditions of dividends, taxes, export responsibilities and royalties. In the year of 2009, PETRONAS has paid RM 30. 0 billion as dividends, RM20. 3 billion as tax, RM 9. 1 billion as corporate and business income tax, RM 2. 2 billion as export obligations and RM 6. 2 billion as royalties to the federal government (PETRONAS: Multimedia Release, 2009).

Laws Regarding Worker Benefits

On the other side, nearly all administration pass laws to regulate recruitment, employment, minimum wages, health insurance and safety at work, and trade union rights of employees. Among its seeks is to safeguard the workers from any sort of physical injuries. It requires the working environment in PETRONAS to be safe with enough equipment and sanitation. However, these requirements usually soon add up to the business enterprise cost.

Consumer Rights

In addition, PETRONAS must protect consumer protection under the law. The Consumer rights seek to safeguard the privileges and interest of consumers, as well as to prevent them from acquiring products that not reach a reasonable level of safe practices. PETRONAS sternly techniques this as to ensure maximum attractiveness amongst other oil and gas company as well as looking after client satisfaction.

Economical Environment

Economical environment refers to the collective of the nature of economic system in the country. It would influence a small business in terms of recession, interest levels, exchange rates and global economic factors.


Recession is the process when prices of goods and services drop in an overall economy. It results in the fall of demand for several products, as income is reduced. To keep carefully the demand on going, the costs of products are lowered. According to articles by Jane Lee in '09 2009, net income of PETRONAS in the entire year finished March 31 decreased 14%. It had been its first gross annual profit drop in 7 years credited to sapped energy demand in global tough economy and high creation cost.

Interest rates

During inflation, there will be increase in the supply of money associated to the quantity of goods available. This may result in a growth in prices of goods and services in the economy over a period of time. For PETRONAS, the high rates of interest and fall of purchasing power would as a result affect the cash flow of the organization.

Oil Price

Oil Price has strong marriage with PETRONAS sales performance. When olive oil price in Malaysia increase, its sales will highly increase, so when petrol price in Malaysia decrease, its sales also decrease.

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Technological Environment

In order to adjust itself to the immediate growing scientific environment, a business must be adaptable and recognises the worthiness of technology to its business development. PETRONAS is a technology centered firm that promotes and uses technology significantly for research and development. It pursues the tactical deployment and software of technology to help expand enhance operational quality and improve the probable of its existing possessions and growing opportunities.

Technology in Gas Business

In the Gas Business, PETRONAS's technology emphasizes on mercury management. While using initiatives to remove mercury from organic condensates, the onshore mercury removal system, a technology that is probably the first on the planet, has been installed at PETRONAS' Onshore Gas Terminal in Kertih. This system is able to treat uncooked condensates at the terminal, to boost operational and Health, Security and Environment (HSE) performance as well as to assure product quality.

Technology in Essential oil Business

In the Oil Business, PETRONAS continue steadily to pursue leading edge technologies to enhance its fuels and lubricants businesses. PRIMAX 3, the unleaded petrol, originated in-house employing a superior quality petrol formulation innovated by optimising bottom gas properties through the addition of the Sinar G-05 additive (PETRONAS: Olive oil Business, 2010). While meeting environmental specifications, it enhances engine performance and efficiency.

In addition, PETRONAS also feels there are opportunities in alternate energy resources and continue steadily to explore the potential of hydrocarbon resources as well as solar technology and bio-fuels. In creating a long-term and ecological energy business, the company looks toward Green Solutions to prepare for future years low-carbon overall economy.

These technologies are believed to be providing a solid competitive advantages for PETRONAS to bolster its position in global business.


In any of the industry, there must be competition among organizations. An organization will try to obtain additional customers to buy their product instead of the one made available from the challengers. The success of organizations depends on which makes the most attractive products at lower prices.

The major competition to PETRONAS are Shell and Caltex. They produce different type and efficiency of petrol.


PETRONAS 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 motor against injector fouling and corrosion, reinstating the car to its peak performance to boost fuel market.


However, Shell is the first choice in growing high quality fuels. Shell Super with gas economy formulation is specially created by Shell experts to offer extra a long way at no extra cost. It is created with Shell's Synthetic Viscous Friction Improver, designed to reduce friction in this critical part of your engine unit, assisting to improve its efficiency.


On the other hand, all Caltex petrol's now include technologically-advanced, copyrighted fuel component, Techron. Caltex Techron with cleaning agent is unsurpassed at keeping machines clean and cleaning up deposits to help reinstate original performance. It includes powerful detergents which help in removing debris from gasoline injectors intake plug-ins and valves. The key benefits for using Techron are better performance, enhanced dependability, smoother drive, restored gasoline overall economy and lower emissions.

Comparing these petrol brands, all of them has its own strengths. They are having a wholesome competition in the petrol industry with the same goal to provide the best petrol they could produce.

Social Environment

Social environment identifies the factors about the society as well as the surroundings. An organization needs to have social responsibilities in order to contribute to the people of the society also to protect natural environment.

Social Responsibility on Consumer

Many companies are afflicted by population and vice-versa. For PETRONAS, it was pointed out that consumers are the building blocks of the complete business, and dissatisfied customer is actually a warning indication to the business. Therefore, it has to manage societal needs and guard human rights. For instance, it concerns about the safe practices and health of consumers. It offers to make certain that it provides safe products to the consumers and product knowledge via adverts, as well as ensures product electricity and performance as publicized.

Social Responsibility on Environment

In undertaking its business activities, PETRONAS cares for the environment by adopting responsible environmental management routines in its procedures. At exactly the same time, it also contributes to the biodiversity and conservation of the environment for the sake of the city.

PETRONAS is taking every practicable and realistic step to prevent the risk of injuries, health hazards and damage to properties in regarding to international Health, Security and Environment expectations. Additionally it is investing in community-related initiatives in environmental conservation and urban renewal, both in Malaysia and other countries. These community tasks directed to create lasting gain and tangible value to the neighborhoods.

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Over the years, PETRONAS's unique experience and experience, coupled with its technological and functional competencies have allowed it to be accepted as the preferred strategic spouse by international companies and the number countries. Facing the undesirable business and monetary environment, PETRONAS is still able to integrate, add value and globalize its businesses. These would bring the business into the realization of its eyesight to become "Leading Oil and Gas Multinational of preference".

Moving ahead, PETRONAS will continue steadily to improve its business performance, reinforce its resilience and boost its capabilities to confront the challenges in delivering a ecological energy future for all its stakeholders. Furthermore, it will guided by its target to serve the country and folks with high expectations of ethics and integrity, while at the same time maximizing shareholders' returns.

(3029 words)

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