Applied Principle for Responsible Business Practice - PETRONAS

PETRONAS is a Malaysian oil and gas multinational corporation that investigates, produces, and supplies energy. This report discusses supply chain and human resource management issues, implications, and recommendations for improvement.

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PETRONAS
Applied Principle for Responsible business practice

Applied principle for responsible business practice 1
Executive Summary
PETRONAS was built in 1974, is Malaysia fully united oil and gas multinational among
the largest corporation. They investigate, produce, and supply energy to meet humanity’s
developing needs. The emerging demand reinforces their purpose to consistently drive and
push limitations towards an economical energy future. They apply advanced approaches to
technology which encourages energy sources from remote environments. It is held
responsible to maintain and manage the supply of oil in Malaysia to sustain the profit in the
company. In the following an effort has been made to address the issues in the context of
supply chain and human resource, give implication, and recommendation to improve the
business.

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Introduction
PETRONAS is termed, as Petroliam Nasional Berhad (National Petroleum, Limited), is a
Malaysian oil company that was established on 17 August 1974. It was entirely controlled by
the administration of Malaysia; the business is conferred with the whole oil resources and is
endowed with the accountability of creating and accumulating assessment to these resources.
It is positioned amongst Fortune Global 500’s major companies in the world. In the following
report, an effort has been made to discuss the issues of human resource management &
supply chain management and provide a recommendation on how to improve its approach
(Alazzani & Wan-Hussin, 2013).
Supply chain management issues
 Diminishing domestic manufacturers due to high deterioration Rates-Oil well
generally produces at its maximum rate; the production rate ultimately declines to a
point at which it never again creates profitable amounts. Wells in water-drive and gas-
cap drive supplies frequently deliver at a near constant rate until the point when the
infringing water or extending gas cap achieves the well, causing a sudden
deterioration in oil production.
 Over-stretching of the supplied framework has led to supply interruptions due to
condensed Reliabilities-This highly dependency on non-renewable energy sources
combined with the diminishing domestic petroleum product assets constraint will
drive Malaysia to import additional non-renewable energy source at a high market
value where the energy price is unpredictable if fuel mix divergence is not considered.
Therefore, the declining of domestic gas production and overstretching of supply
framework has directed to numerous supply disruptions in the power group industry.
 Expensive supplied gas imports due to trading countries’ declining Production-Their
oil imports peaked in 2005 and usually declined up until 2015. This trend was the
aftereffect of many factors, incorporating, a decline in utilization, expanded use of
domestic biofuels, and increasing domestic generation of crude oil and hydrocarbon
gas fluids (Saad, Mohamed Udin & Hasnan, 2014).

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Human Resource Management issues
 Lost many staffs- PETRONAS representatives claim that they are devoted, but when
it comes to money, they are expected to throw out the patriotism. They lost much
personnel to Middle Eastern Oil organizations due to higher pay checks. They have
kept staff dismissal, activated by the downturn in the oil industry, to a least possible
as the national oil organization wanted to proceed with its capability development.
 Middle management occupied with unskilled Managers-Post tends to be involved by
an employee who is incompetent to carry out allotted responsibilities who have not
yet achieved their level of incompetence as this is hampering the development of the
organization.
 Too inflexible HR policy- Their HR policy is too rigid, which is providing limitations
to accountability, reliability, and openness in the conduct of a group’s business and
tasks. It seeks to direct its issues in an ethical, transparent and responsible manner. It
also embraces numerous strategies to build up our staff on the standards of merit,
performance, and competency. It does not maintain labour rights, non-segregation,
and observing acts and regulations (Horwitz, 2012).
 Government as the stakeholders, its methodologies and activities that usually supports
the administrations, occasionally to the hindrance of the local communal or
environment, For example, Ecological/Environmental Destruction and Human Rights
Violation.
The concept of Supply Chain Management
Their frameworks are coordinated partnership among all connections in the flow of goods
and services to the clients. They are created for the main purpose of improving quality,
achieving a sustainable advantage, reducing costs etc. It incorporates planning, sourcing,
creating, delivering, and accommodating returns, are taken care cooperatively within an
integrated supply chain to safeguard the extreme use of shared assets (Mangan, Lalwani &
Lalwani, 2016).

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Implication
It gives business a competitive advantage in the marketplace and helps in order tracking as
it raised consumer expectations and forcing companies to pay more attention to supply chain
problems. Companies should employ supply chain management team to handle any issues of
tracing the defect of the product (Beske & Seuring, 2014).
The concept of Human Resource Management
Human resource management involves organizational culture and safeguarding well-being
and safety. It organizes personnel so that they can efficiently perform work events. The
human resource management team recommends how to strategically manage people as
business resources. This incorporates managing, employing and hiring personnel, directing
employee benefits, recommending training, and development strategies (Bratton & Gold,
2017).
Implication
As an organization grows, it may generate a human resource department that is
accountable for managing personnel and their prosperity. It affects an organization is that
they manage personnel recruiting, which determines which personnel are employed. They are
accountable of handling the dispersal of employee pay and benefits. They are also responsible
for dealing worker’s compensation, worker security, quarrel resolution, and discipline (Stone,
Deadrick, Lukaszewski & Johnson, 2015).
Recommendation
Petronas as the primary producer of oil and gas in Malaysia can certainly retain their sales
by keep track on oil expense and keep it sustain in expanding rate because the effect shows
that oil price strongly impacted PETRONAS sales. The government also can keep oil price in
expanding rate because it is the enterprise which is the significant contributor to dividend,
sovereigns, and tax to the government.
PETRONAS should always give significance to its training and advancement to enhance
and advance the employees’ expertise’s and also to be in the competitive gain. Performance
appraisal should be done by the department head on a yearly basis. The employee
faithfulness, working profitability, and commitment can be expanded by providing a very
effective compensation and benefits system. They should also deliver job description and

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opportunity to the workers. So, to ensure sustainable groups of aptitudes for their future
development, they should trust in building their own timber.
It is necessary for formulating strategies and practices will assist employees to grow and
develop globally. With the help of supply chain management companies can experience
problems associated with the dynamic process in a firm’s competencies which will contribute
to maximising the profit and sustainable growth in the company (Silvestre, 2015).
Conclusion
Petronas has developed to be a combined global oil company with corporate welfares in
35 nations. They have faced supply chain and human resource management issues which has
decrease oil production and the company lost much personnel. This has affected the
sustainable growth and development of the company. So they have to advance its business
performance, reinforce its resilience and upgrade its capabilities to confront the encounters in
delivering a vitality energy future for all its stakeholders. It can add significance, able to
incorporate, and globalize its operations and the company can achieve its mission and vision
to become a multinational company.

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References
Alazzani, A., & Wan-Hussin, W. N. (2013). Global Reporting Initiative's environmental
reporting: A study of oil and gas companies. Ecological indicators, 32, 19-24
Beske, P., & Seuring, S. (2014). Putting sustainability into supply chain management. Supply
Chain Management: an international journal, 19(3), 322-331
Bratton, J., & Gold, J. (2017). Human resource management: theory and practice (6th Ed.).
London: Palgrave.
Horwitz, F. M. (2012). Evolving human resource management in Southern African
multinational firms: Towards an Afro-Asian nexus. The International Journal of
Human Resource Management, 23(14), 2938-2958
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain
management (3 rd. Ed.). U.K: John Wiley & Sons.
Saad, S., Mohamed Udin, Z., & Hasnan, N. (2014). Dynamic supply chain capabilities: A
case study in oil and gas industry. International Journal of Supply Chain
Management, 3(2)
Silvestre, B. S. (2015). Sustainable supply chain management in emerging economies:
Environmental turbulence, institutional voids and sustainability
trajectories. International Journal of Production Economics, 167, 156-169
Stone, D. L., Deadrick, D. L., Lukaszewski, K. M., & Johnson, R. (2015). The influence of
technology on the future of human resource management. Human Resource
Management Review, 25(2), 216-231