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Executive Summary

The market for petroleum products is highly competitive, with major multinational
corporations especially in a mix-market country. PETRONAS markets its products directly to
customers as well as through its network of service stations, LPG dealers and industrial dealers.
What sets them apart are the variety of products, services, promotional strategy, product branding
and image, company identity and marketing strategies. The marketing strategy that been
analyzed in this assignment are Dealing with Competition, Segmentation, Targeting Strategy, and
Positioning, and Marketing promotion Integrated Marketing Communications (IMC) and
Promotion Mix. In a market, there would be two different market categories: consumer markets
and business markets. As for oil and gas company, PETRONAS falls into both market categories
which are consumer markets and business markets. Meanwhile, PETRONAS also considered as
business market which they selling their oil and gas to business companies for resale or
producing another products. PETRONAS major product sale are fuels and lubricants for
Malaysias market. Meanwhile, lubricant products produced by PETRONAS into five categories
that are passenger car motor oil, motorcycle oil, duty engine oil, industrial & marine oil and,
transmission and gear oil. Under these segments, PETRONAS offered varieties of products
which key is to target different group of market and increase market shares. After examining the
market segmenting for PETRONAS products, PETRONAS will then have to devise a
promotional effort to market their products. PETRONAS, like any other company, has its own
promotion mix.

INTRODUCTION
NAME OF THE COMPANY
On August 17, 1974, the first Malaysian oil and gas company was founded namely as
PETRONAS, short for Petroli[ram National Berhad. It is wholly be owned by the Government of
Malaysia. The corporation is vested with the entire oil and gas resources in Malaysia and is
entrusted with the responsibility of developing and adding value to these resources. Its business
activities include (i) the exploration, development and production of crude oil and natural gas in
Malaysia and overseas; (ii) the liquefaction, sale and transportation of LNG; (iii) the processing
and transmission of natural gas and the sale of natural gas products; (iv) the refining and
marketing of petroleum products; (v) the manufacture and sale of petrochemical products; (vi)
the trading of crude oil, petroleum products and petrochemical products; and (vii) shipping and
logistics relating to LNG, crude oil and petroleum products.
HISTORY
PETRONAS was established in August 1974 and operates under the terms of the
Petroleum Development Act passed in October 1974. It was modeled on PERTAMINA, the
Indonesian state oil and Gas Company founded in 1971 in succession to PERTAMINA, which
had been set up in 1958. According to the 1971 plan, PETRONAS' goals would be to safeguard
national sovereignty over oil and gas reserves, to plan for both present and future national need
for oil and gas, to take part in distributing and marketing petroleum and petrochemical products
at reasonable prices, to encourage provision of plant, equipment, and services by Malaysian
companies, to produce nitrogenous fertilizers, and to spread the benefits of the petroleum
industry throughout the nation.
In 1976, PETRONAS went downstream for the first time when it was chosen by
the Association of South East Asian Nations (ASEAN) to begin construction on the second
ASEAN joint industrial project, a urea plant. The subsidiary, Asean Bintulu Fertilizer (ABF), is
based in Sarawak and now exports ammonia and urea all over the world. Also in 1976, Malaysia
became a net exporter of oil, but exports were at such a low level as to make the country
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ineligible to join Organization of the Petroleum Exporting Countries (OPEC). This situation
benefited to Malaysia and PETRONAS, by allowing the company a degree of commercial and
political flexibility and reinforcing PETRONAS' chief purpose, Malaysian self-reliance.
Until 1978, PETRONAS has supervised its foreign partners' oil activities taking no direct
role in production, when the government saw to the creation of a subsidiary for oil exploration
and production, PETRONAS Carigali. It began its work in an oil field off the Peninsula.
PETRONAS retained its supervisory powers over all oil and gas ventures, particularly on issues
of health and safety and environmental control.
In early 1970s, the government was determined to develop Malaysia's natural gas as well
as its oil Shipping Company (MISC).
In 1982 PETRONAS Carigali formed an exploration and production company with
Socit National Elf Aquitaine of France, it allowed Elf better terms for recovering costs than it
had offered in earlier ventures. This development came against the background of the
government's imposition of a depletion policy on PETRONAS.
In 1983, PETRONAS went into refining and distribution. It initiated the construction of
refineries at Malacca and at Kerteh in order to reduce its dependence on Royal Dutch/Shell's two
refineries at Port Dickson and Esso's refinery in Sarawak.
By 1990, 252 service stations carried the PETRONAS brand, all but 20 on a franchise
basis, and another 50 were planned. Some were set up on grounds of social benefit rather than of
strict commercial calculation.
In 1991, PETRONAS sold the Bumiputra bank back to another state company, Minister
of Finance Incorporation and announced its intention to concentrate on oil, gas, and associated
activities in future.
During the mid to late 1990s, international exploration, development, and production
remained key components in PETRONAS' strategy along with diversification. In 1994, the firm
has its first overseas production at Vietnam and established its first retail station outside of
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Malaysia in Cambodia. In 1995, a subsidiary was created to import, store, and


distribute liquefied petroleum gas (LPG).
In 1996, PETRONAS entered the aromatics market by way of a joint venture that created
Aromatics Malaysia Sdn Bhd that formed a contract with China National Offshore Oil
Corporation and Chevron Overseas Petroleum Ltd. to begin exploration of block 02/31 of the
Liaodong Bay area in China.
While the Asian economy as a whole suffered from an economic crisis during 1997 and
1998, Malaysia was quick to bounce back due to successful government reforms. From its new
headquarters in the Petronas Twin Towers, the state-owned concern continued its development in
the oil and gas industry that was officially opened on Malaysia's 42nd National Day, August 31,
1999 in the Corporations 24th anniversary year.
PETRONAS entered the new century determined to expand its international efforts. The
company forged deals for two new exploration plots in Pakistan and began construction on the
Chad-Cameroon Integrated Oil Development and Pipeline Project. By 2002, PETRONAS had
signed seven new PSCs and secured stakes in eight exploration blocks in eight countries,
including Gabon, Cameroon, Nigeria, Egypt, Yemen, Indonesia and Vietnam.
In 2004, Minister in the Prime Minister's Department, Datuk Mustapa Mohamed stated
that PETRONAS contributed RM 25 Billion to the country's treasury accounting for 25% of
revenue collected via dividends and other revenues. PETRONAS continuously provides the
Malaysian government dividends from its profits.
PETRONAS is ranked among Fortune Global 500's largest corporations in the
world. Fortune ranks PETRONAS as the 95th largest company in the world in 2008 and 80th
largest in 2009. It also ranks PETRONAS as the 13th most profitable company in the world and
the most profitable in Asia.

TYPES OF PRODUCT
Main Product

Associated Product

COMPANY MILESTONES IN 2010


Exploration & Production
1-PETRONAS through PETRONAS Carigali together with partner United National and Gas
Limited acquired deepwater Blocks MD4, MD5 and MD6 in Myanmar.
2-Awarded a PSC for Block SK320, offshore Sarawak, to MDC Oil and Gas (SK320) Ltd, a
subsidiary of Abu Dhabi owned Mubadala Development Company, and to PETRONAS Carigali
3- PETRONAS, through PETRONAS Carigali, inked an alliance agreement with Dowell
Schlumberger (Malaysia) Sdn Bhd to undertake the redevelopment of the Samarang field,
offshore Sabah. Through the alliance, PETRONAS Carigali will leverage on Schulumbergers
renowned subsurface technology, employing proven and new technologies, whilst enhancing
staff capabilities in EOR.

Oil Business
1-PETRONAS Dagangan launched its new and improved PRIMAX 97 petrol, replacing
PRIMAX 3.
2-PLI and PROTON Holdings Berhad signed a supply, technical and commercial collaboration
agreement, paving the way for greater business integration and cooperation in the area of
automotive lubricants and functional fluids.
3-PETRONAS Lubricants International Sdn Bhd (PLI) introduced PETRONAS Syntium Moto, a
range of premium grade synthetic motorcycle engine oils for the Malaysian market.
Gas Business
1-MLNG successfully delivered its first LNG cargo to Shikoku Electric Power Co Inc, Japan
under a long term contract of 15 years.
2-PETRONAS signed a MoU with Mitsubishi Corporation to jointly develop a solar
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photovoltaic demonstration project in Malaysia.


3-PETRONAS signed a Gas Sales Agreement with upstream contractors Sarawak Shell Berhad
and PETRONAS Carigali for natural gas to be produced from three fields in Block SK308
offshore Sarawak.
General
1-YBhg Tan Sri Mohd Hassan Marican ended his tenure as President and CEO of PETRONAS,
having helmed the corporation since 1995.
2-YBhg Dato Shamsul Azhar Abbas succeeded as the President & CEO, and Acting Chairman
of PETRONAS.
3-PETRONAS received a Master Award for Oil and Gas category during the Brand Laureate
4-Awards in recognition for its brand excellence amongst the top best brands in Malaysia and the
world.
5-PETRONAS was awarded the Certificate of Merit in Education by the Government of Vietnam
for PETRONAS significant contribution to the countrys education development in 2009.
6-PETRONAS received recognition from the Malaysian Government for the Companys
outstanding contributions in the field of corporate social responsibility (CSR) at the Prime
Ministers CSR Award 2009.
7-PETRONAS won three awards altogether, comprising Best Overall CSR Program

PLANNING

I)

Mission statement
"To develop and add value to petroleum resources wherever it operates, converting
these resources into higher-value products that would satisfy the needs of customers
and bring benefits to the people."

II)

Goals
PETRONAS goal was to improve efficiency and control by automating manual
activities via straight-through processing. There are few ways to create PETRONAS
to achieving their organizational goals and well know their products to all over
country such as promote it in the ways of campaign, through internet, and so on.
MISSION
Support PETRONAS aspiration in developing Malaysia into a Subsurface products
and expertise center and serving the interest of the Malaysian Oil & Gas industry in
establishing and enhancing their business capabilities in the subsurface sector.
VISION
To establish Malaysia as a hub of excellence for subsurface products solutions for oil
& gas and petrochemical industry in the Asia Pacific region.

III)

Objective
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Support and engage with PETRONAS initiative to develop Malaysia into a

Subsurface products and expertise center.


Provide a platform for foreign expertise and the Malaysian industry to
collaborate and create business relationships so as to increase local capability

in subsurface technology.
Provide business opportunities among members and actively participate in

tenders and or projects locally or internationally.


Encourage and mobilize services companies to fully engage with
PETRONAS, and become active players in sharing and developing subsurface

expertise.
Promote agenda and programs that will enhance and work closely with
PETRONAS, including technical conferences, forums, etc.

IV)

Single used plans


Single-use plans are created to address short-term challenges or provide guidance for
short-term initiatives. Single-use plans can be created in teams or by individual
managers. The scope of these plans is generally smaller than the scope of standing
plans. For example, single-use plans can be created for specific work groups or
departments to guide their contributions to short-term company objectives.
There are two type of single-use plans which is Programmes and projects. Company
like petronas also has a lot of single use plans. For example is,

i) Programme- coordinates complex activities which are related to a major non-recuring


goal.
bring out inner leader
Through strategic collaboration with University of Melbourne, programmed such
as Business Management Excellence and the Management Development
Programmed are developed to prepare senior and general managers for leadership
excellence. In enhancing and preparing the senior and general managers for
visionary leadership we have collaborated with DUKE CE to develop the valuable
Senior Management Development Programmed.
ii) Project- coordinates a set limited-scope task or activity.

PETRONAS and China National Petroleum Corporation (CNPC) signed a


Memorandum of Understanding (MoU) to collaborate in the area of Enhanced Oil
Recovery (EOR). This MoU will enable PETRONAS to enhance its EOR
technology and capability by tapping into CNPCs expertise.

ORGANIZING

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PETRONAS Corporate Structure


BOARD OF DIRECTORS

PRESIDENT & CHIEF EXECUTIVE


OFFICER

EVP FINANCE

VP
TREASURY

EVP GAS & POWER

FINANCE &
ACCOUNTS
SERVICES

EVP
DOWNSTREAM

EVP EXPLORATION
& PRODUCTION

VP CORPORATE
STRATEGIC
PLANNING

HEAD TAX

VP TECHNOLOGY
& ENGINEERING

VP HUMAN
RESOURCE
MANAGEMENT

GROUP CEO KLCC


(H) SB

PRESIDENT/CEO
MISC BERHAD

Organizations Chain of command


There is a chain of command that extends from upper organization levels to the lowest
levels and clarifies who reports to whom. The orders move from upward to downward and
suggestions move downward to upward direction. For example, the Finance Department is in
charge of treasury, tax, finance and accounts service meanwhile Gas and Power Department is in
charge of global LNG, infrastructure and utilities .The continuous improvement section is made
for this purpose. It encourages employees to give their suggestions and share the new ideas.
Span of control
Span of control of this organization is narrow. This is because in PETRONAS
organization there are higher numbers of communication issues among different management
levels. The jobs are formalized, there are explicit job descriptions, numerous organizational
rules, and clearly defined procedures covering work procedures. But in spite of formal rules and
regulations, PETRONAS keeps on changing to keep a pace with the changing environment. So,
it is strict but not rigid organization. In effort to be more flexible and responsive, there has been
distinct trend in this organization toward decentralizing decision-making.
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Types of departmentalization
Organizational structure is the formal framework by which jobs tasks are divided,
grouped, and coordinated. PETRONAS is a function-based organization. The tasks are divided
into separate jobs and then these jobs are grouped together under different departments i.e.
functional departmentalization is found in organization. Each major area is kept under the
manager who is specialist in that concerned field and is responsible for all activities, which that
department performs.
Line & staff responsibilities
Managers with line authority in an organization are those who are directly responsible for
achieving organization goals. Line authority is represented by a standard chain of command start
with a board of directors and extends downwards through various levels in organization. This
type of authority is mainly based on legitimate power. For example, managers involved with
manufacturing may limit line functions to production and sales.

MOTIVATION

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Every company is responsible for their employees need. To ensure their employees give fully
commitment to achieve goals that set by the company, top level management need to motivate
their employees by giving satisfaction to done the job.
According to Abraham Maslow (1954), to motivate our workers, management can provide
individuals needs by five districts level.
Level of individuals need
1. Physicological- the most fundamental

PETRONAS provide to their employees


PETRONAS has provide enough

human needs.

facilities to their workers such as,


cafeteria, toilet,hall prayers and

2. Safety-is a need for security in both

mosque, transportation,
Every new workers that sign contract

physical and interpersonal events day to

with PETRONAS, the company will

day life.

provide life insurances to guarantee

3. Social-needs or belongingness needs.

their safety.
Each year PETRONAS held events,
such as sport events and recreational

4. Self-esteem-individuals needs for the

high regard of others.

programmed.
PETRONAS give maternity benefits to
their workers they also have staff care
services.

5. Self-actualization-needs for self


fulfillments.

PETRONAS develop PETRONAS


leadership centre (PLC), to increase
their workers performances.

But, according to Frederick Herzberg (1959), there are two factor that influence peoples
attitudes toward work. The factor is Hygiene Factor (Dissatisfier) and Satisfier Factor
(Motivating).
1. Hygiene Factor (Dissatisfier)
Hygiene factor is associated with the work setting of an individual, often called job
context. Hygiene factor causes feelings of job dissatisfaction. In PETRONAS, they have
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provide good job context that can be a factor causes feelings of job dissatisfaction. For
example, the working condition. Petronas has provide good working condition with
enough facilities to their workers such as cafeteria, toilet, transportation and many more.
2. Satisfier Factor (Motivating)
Satisfier factor also known as motivating factor. Where hygiene factor is often associated
with job context, satisfier factor, on the other hand, is related to the job content of
individual. Satisfier factor causes feelings of satisfaction. Meaning to say, the workers
will find their own encouragement if they feel enjoy with their work and they love it.

LEADING

In Petronas, the top level of management such as its Chairman of Executive Officer
(CEO) uses behavioural theories based on the managerial grid model. In general, managerial grid
is a behavioural leadership model developed by Robert R. Blake and Jane Mouton. It is
originally identified five different leadership styles based on the concern for people and the
concern for production. Regarding the Petronas leadership approach for its employees, it highly
concerns both of its employees and production which is coordinated as (9,9) based on the
managerial grid model at below:
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Petronas uses Team Management approach as it is very concerned both of its


production and its employees. While the company focuses on its oil and gas production, but at
the same time, the company also concern for its employees welfare. For instance, the company
rewards its loyal employees and their families in terms of receiving life insurance, health care
coverage maternity benefits, staff care services and also recreational programmes.

CONTROL

Controlling is the process of regulating organizational activities, so that actual performances


conform to expected organizational standards and goals.

Process Technology and Operations


The Process Technology and Operations job area at PETRONAS represents the largest technical
population in PETRONAS encompassing upstream to downstream businesses. We bring our
expertise to crucial areas: from oil and gas extraction facilities and manufacturing plants to the
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petrochemical refineries and chemical laboratories. We supervise day-to-day operations, advise


on optimum operations, research and develop new processes and products, and provide analytical
lab services amongst others.
Process crude oil and natural gas by PETRONAS:-

There are many types of controls in management. PETRONAS also has use one of that way to
control their production and services. For example is PETRONAS Technical Standards.
The objective is to set the recommended standard for good technical practice to be applied by
PETRONAS in oil and gas production facilities, refineries, gas processing plants, chemical
plants, marketing facilities or any other such facility, and thereby to achieve maximum technical
and economic benefit and requirements.
In management usually the company from the upper level management must set performances
for the lower level management. The standard must be same with target so the company can
compared the actual performances. The standard must be measureable and accepted by all
members & in line with organization strategic planning.

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Secondly, company measures the actual performances. PETRONAS must decide what to
measures, when to measure and how frequently to measures.
Thirdly, PETRONAS must compare actual performances with standards. This step involves
determining if actual performances compare to standards falls. If performances match the
standard, no corrective action is required.
Finally, PETRONAS take corrective actions if a performance does not meet the standard this
step must be apply. For example PETRONAS provides incentives to enhance performances of
their workers.

COMMUNICATION

Business Communication
Business communication is used to relay information within the business and promote services,
products or organizations, as well as deal with legal and other similar issues. It covers several
topics including branding, marketing, advertising, customer relations, public relations and
consumer behavior, among others.

PETRONAS company has five major stakeholder groups, which include:-

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i. Governments - comprises the Malaysian Government and the various local governments where
PETRONAS has its operations.
ii. Customers consists of retailers/dealers and end-users of its products and services.
iii. Employees
iv. Local community - people living in countries/places where PETRONAS runs its operations
v. Environment
There is several type communication uses by PETRONAS, one of that is verbal communication.
It is o occurs either orally or in writing. For example is oral communication, this is a form of
spoken information, such as meeting, group discussion and many more. Another type or verbal
communication is written communication, whereby organizational member share information by
disseminating messages, such as reports forms manuals and many more.
PETRONAS also use electronic communication to conveys information to their stakeholder
especially customers and local community. Electronic communication is gradually playing a
major role in management due to challenges and demands of globalization that managers
encounter. It enhances the speed of message delivery and happen in real time. Some example of
electronic communication used by PETRONAS is:i)

Telecommuting- workers is linked to central office or employment location.


PETRONAS has many oil rig at many places around the world, they need to

ii)

communicate each other, so to make easier telecommuting the solution.


Electronic mail (e-mail)- PETRONAS also use e-mail to reduced the cost and time of
works. This is because e-mail is one of effective and faster way to use to transfer the
information. Every PETRONAS workers needs to have an e-mail account so they can

iii)

easily know information given by management.


The internet- PETRONAS use this platform to transfer their information to their
stakeholder. For example PETRONAS use YouTube as one of the way to advertise
their products. PETRONAS also use Facebook as platform to advertise their products

iv)

and to convey the latest news about their company.


Social responsibility- PETRONAS use this approach to communicate with local
community. For example PETRONAS hosted Sentuhan Kasih programmed. This
programmed hosted a series of gatherings for underprivileged children from
orphanages and shelter homes in and around our areas of operations, in the spirit of
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sharing and caring. Between 300 and 500 staff volunteers provided cash donations
and engaged with more than 1,000 children who participated in the programme in
2010.

CONCLUSION

Overall, PETRONAS has ventured into the oil and gas industry for quite some time. With
an aggressive market, PETRONAS has adapted to that environment by delivering products and
services at their best ability.
It is imperative that PETRONAS take the necessary actions to operate a sustainable
business and be mindful of the impacts on the environment. There are steps that can be
implemented immediately so it will not lose out on its competitive advantage. Changes must take
effect from the top level management and instilled right down to the people working on the
ground level. Leaders should first to make the move so there will be less resistance to change.
As we have seen, Petronas Bhd has become the most stable and elite company after 42
years of establishment. By knowing about the company corporate profile, business and corporate
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social responsibility, it will make us proud to become Malaysian. Although we are still
development country, we have Petronas Bhd which can compete with other giant company and
can place our country name equally with other multinational company.

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