KazOil Acquisitions Analysis

This assignment analyzes the effects of different acquisitions on KazOil, a crucial player in Kazakhstan's economy. It examines the impacts of Soviet, Chinese, and Canadian acquisitions on oil production and overall business performance. The analysis considers factors like investment strategies, organizational structures, and employee development.

Human Resource Strategy and Change Management

TABLE OF CONTENTS
BACKGROUND.............................................................................................................................1
SYMPTOMS...................................................................................................................................1
CRITICAL STATEMENT..............................................................................................................1
CONDUCTING THE ANALYSIS..................................................................................................2
ACTION PLAN / INTERVENTIONS............................................................................................3
EVALUATION OF ACTION PLAN..............................................................................................4
BRIEF SUMMARY.........................................................................................................................4
REFERENCES................................................................................................................................5

BACKGROUND
This report is about the acquisition of KazOil by various organizations and their impact
on the oil industry in Kazakhstan. The country was ninth largest in Eurasia in terms of area.
Nurlan Ospanov, the head of corporate finance at KazOil was not going to accept the offer made
by an american company for their new senior manager in Atyrau (Purce, 2014). The appreciation
dinner arranged was more focused on the management's perception of greatness and less on staff
motivation. KazOil was an oil production unit located in Kyzyl-Orda.
During the soviet era, the company was owned by Kazakhstan's government, later on sold
to Hydrocarbons Ltd, a Canadian company for USD 120 million. The company was more
focused on the employee relation. Later on in 2005, KazOil was sold to China petrol. But top
management has left the company, because Chinese management was not appropriate. This
report focuses on the culture of KazOil and ways to motivate the employees.
SYMPTOMS
The problem of KazOil when it was under Canadian organization was that the resistance
of work was more resistance. All the managerial positions was taken by the Canadian and they
are pushing all the locals to do more and more work irrespective of their age and experience. But
the positive aspect was that they are able to create some positivity and a spirit to the company.
When the soviet union got over, the problem in front of Kazakhstan was to stable their economic
condition. Their infrastructure was weak, legal system was lacking transparency, the governance
system was very poor (.Jackson, Schuler and Jiang, 2014). The symptoms of decreasing the
quality oil was seen when KazOil was under China's acquisition. Chinese were having very poor
communication skills, this results is increase in frustration among employees and further slowing
down the decision making process. Nurlan was having more than 25 years of experience but he
often gets ignored by the Chinese management.
CRITICAL STATEMENT
In 2006, KazOil's manager stated “that Everything is better and they have medical;
insurance, they have good bonuses which is caused by different style of management”. Nurlan
felt that the Chinese attempt of socializing the staff was very weak and it was more focused
towards Chinese perception and less on the motivation of employees (Schuster and Hunter,
2016). At the time of appreciation dinner, a government organization told that some things need
to be done in certain defined ways. According to them they have found out those mistakes which
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was operational deficiencies. The conflict will end by paying some minimal fee. The Chinese
agreed on that but the Canadians were not.
After soviet union, the country was named Kazakhstan – a free spirit. During 1996, the
company was controlled by Ministry of energy and it was very well protected from the
competition of international market. In Canadian acquisition, they are putting all the things in
accurate manner because no accidents took place, the working environment was safe and it was
working very well. But in Chinese transferred possession, the career of employee's slowed down
a lot. One employee while giving his views stated that Chinese managers comes at 9 am and
leaves at 6 pm irrespective of the work load or any kind of urgent project. “Their culture was of
silence” (Minbaeva and Muratbekova 2016). It was easily visible that their approach was “Them
vs us”, this was showing clear distance between staff and management. The soviet days were just
like a dream – red carpet, music, flowers, Deja vu!.
The goal of Canadian was to improve the skills and confidence of employees. Their aim
was to create the environment in such a way that employees get satisfaction from what they are
doing. But the Chinese aim was entirely different. They wanted to take all the higher level
management and pushed the lower level work to local people. They are not involving local
employees in the decision making process.
CONDUCTING THE ANALYSIS
For conducting the analysis, PESTLE tool can be applied, which will cover all the
political, economical, social, technological, legal and environmental factors affecting KazOil.
Political factors: Kazakhstan is having different political factors like, one when the
soviet rule was there and second one is when it became an independent country (Schultz, Bennett
and Ketchen Jr, 2015). During soviet union, it was hard for other countries to establish their
market, because tax regulations were very strict. When the company became independent, they
are not in a condition to apply some rules and laws because their financial condition was very
poor and it was directly affecting KazOil.
Economical factors: Since 2001, their economical condition was increasing at an average
rate of 10%, this was more than other developed countries in the world. In early 90's, US was the
heaviest investor in Kazakhstan with a total of 29.8% investments and the second one was UK
with a total of 13.2% (.Omernik and Griffith, 2014. ). This brings the economy of the country on
a whole new level and they are able to use these factors to improve the production rate.
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Social factors: During Chinese acquisition, their aim was to socializing the people was
failed miserably because they are trying to employ their social culture into another country. The
western social culture was affecting the political system and developing the free market structure
of economy. In this acquisition, Kazakhstan generated lots of revenue by producing quality oil
from their oil wells.
Technological factors: Country is using the latest technology under western acquisition.
Chinese technology was outdated and the processes used were too old to generate money
(Baskerville and Wood-Harper 2016). The Canadian were having some operational difficulties,
but their advanced technology helped Kazakhstan in increasing their production of oil.
Legal factors: The laws and rules at the time of independence were very Lenient. To
increase their economy, they are allowing more foreign investors by granting them permission to
do business in their country.
Environmental factors: Kazakhstan's environmental condition was very much suitable
for heavy oil production. The aim of the acquisition parties is to increase the production of oil
by reducing wastage and preventing the oil from going into the water resources.
ACTION PLAN / INTERVENTIONS
Action plan consist of Who, When, What order, How and What for. The action plan will
be:
Objective: The objective is to improve the staff satisfaction and increasing the production
oil.
Outcomes: At the end of this action plan, the employees of KazOil will understand their
work and they will be happy in what they are doing.
Activities: This will involve some motivational seminars to motivate the employees. The
company will give certain incentives so that they remain loyal and will not seek for new
opportunities. The employees will also involved in decision making process. This will give them
confidence to improve their decision-making skills (Kramar, 2014). If there are any foreign
employees present, then the company must improve his communication skills without being
disrespectful. This will help them to communicate in better way and it will improve the team
performance.
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Monitoring: Nurlan and other managers have to make sure that all the workers are happy
and the company's profit is increasing continuously. The employees must forget the Chinese
way, because Canadian way of doing business is much better and more professional.
The action plan is made so that it will give a brief idea about the objectives set by the company
and what activities they have to follow to achieve those targets.
EVALUATION OF ACTION PLAN
The evaluation of action plan is based on the performance of the employees. The top
management have to make sure that cultural of organization is maintained well. They have to
make the progress report of all the employee's. This will also include the steps taken in the action
plan, time taken by the employee to meet the objectives, the total expenses and the response from
the workers (Yeleussov, Kurmanov and Tolysbayev, 2015).
The top down approach of decision-making must be removed from the management
because its weaken the transparency and communication among the employees. The company'
have to make sure that the incentives given to the employee's must not disturb the financial
budget. By having an performance evaluation exam of the workers they will be able to know
how much the worker's have understood the procedures followed by the organization. Oral
health program can act as a blueprint, because by this, all the individuals will find themselves in
safe working environment.
BRIEF SUMMARY
KazOil is very essential part in the economical conditions of Kazakhstan. Different
acquisitions are having different impacts on the business. Soviet union were having the best
impact, but they are not having the funds to increase the production of oil. Then came Chinese,
they are having money to invest, but their organizational structure is not well oriented. Their
techniques and equipments are too old and can not improve the industry. It can certainly improve
the economy but not the oil production. By far the best and well managed acquisition was under
the Canadian. Their approach was positive and highly professional. They are more focused
towards the development of employee's skills, which will help their organization to perform in
better way.
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REFERENCES
Books and journals
Baskerville, R.L. and Wood-Harper, A.T., 2016. A critical perspective on action research as a
method for information systems research. In Enacting Research Methods in Information
Systems: Volume 2 (pp. 169-190). Springer International Publishing.
Jackson, S.E., Schuler, R.S. and Jiang, K., 2014. An aspirational framework for strategic human
resource management. The Academy of Management Annals. 8(1). pp.1-56.
Kramar, R., 2014. Beyond strategic human resource management: is sustainable human resource
management the next approach?. The International Journal of Human Resource
Management. 25(8). pp.1069-1089.
Minbaeva, D. and Muratbekova T., M., 2016. The Acquisition Experiences of Kazoil.
Omernik, J.M. and Griffith, G.E., 2014. Ecoregions of the conterminous United States: evolution
of a hierarchical spatial framework. Environmental management. 54(6). pp.1249-1266.
Purce, J., 2014. The impact of corporate strategy on human resource management. New
Perspectives on Human Resource Management (Routledge Revivals). 67.
Schultz, E.B., Bennett, N. and Ketchen Jr, D.J., 2015. An Examination of the Relationship
Between Strategy and Human Resource Management Practices among Small Businesses.
Journal of Small Business Strategy. 8(1). pp.35-48.
Schuster, L. and Hunter, M., 2016. Human Resources Strategy and Change: Essentials of
Mergers, Acquisitions, and Joint Ventures. Handbook of Human Resources Management.
p.1375.
Yeleussov, A., Kurmanov, N. and Tolysbayev, B., 2015. Education quality assurance strategy in
Kazakhstan. Aktual'ni Problemy Ekonomiky= Actual Problems in Economics. (164).
p.142.
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