International Business Report: PETRONAS Business Strategy and Analysis

This report analyzes the international business strategies of PETRONAS, a Malaysian oil and gas company, focusing on its expansion into China, the UAE, and the USA. The report begins with a PESTLE analysis to identify the economic, political, and cultural challenges faced by PETRONAS in each country. Key findings reveal economic risks in China, political instability and religious concerns in the UAE, and racial intolerance and changing government policies in the USA. The report then recommends organizational strategies tailored to each country, including technological advancements for China, governmental support in the UAE, and collaboration with local businesses in the USA. The analysis emphasizes the importance of adapting to local laws, developing international corporate structures, and formulating global pricing strategies to navigate the complexities of international business expansion. The report concludes by highlighting the need for PETRONAS to find alternative solutions to remain competitive in the face of changing oil prices and other external factors.

Running head: INTERNATIONAL BUSINESS
International Business
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Author Note:

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1. External Environmental Issues faced by PETRONAS: PESTLE Analysis
While expanding the business in three major countries like China, UAE, and USA,
PETRONAS has faced the considerable challenges from the external environment. In this section
of the study, these issues would be identified by identifying the influence from the political,
cultural, and economic environment. The analysis is discussed below:
Economic, Political and Cultural Impact
Country Economic Influence Political Influence Cultural Influence
China The increasing rate of the oil
prices is quite disadvantageous for
the oil and gas companies (Milton-
Edwards 2017).
In fact, it has been observed that
the changing oil prices in China
are affecting the foreign business
marketers during the business
expansion (Gilpin 2016).
PETRONAS is a developing
business that ensures growth
within a shorter period of time
(Petronas.com.my 2017). It would
be quite challenging for
PETRONAS to expand the
The political influences
are mostly visible in the
increasing rate of the oil
prices (Halpern 2015).
The changes in the
political ruling party can
also create the instability
in the country. The
current instability political
scenario in China is one
of the major reasons for
increasing prices of oil
and gas products (Gilpin
2016).
PETRONAS is a
Malaysian company,
which deals with the
diverse cultures. The
cultural diversity is
quite higher in the
country that has made
the company quite
flexible in dealing with
the diverse populations
(Beeson 2014). The
company is thus quite
flexible in dealing with
the Asian cultures in

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business in China. Therefore, PETRONAS
may face the political
turmoil in Asian
countries.
China.
Hence, the cultural
influence is not much
severe for
PETRONAS.
Middle
East
The economic influence on the oil
and petroleum companies in UAE
ensures the stronghold, which
depicts the opportunistic
conditions for the foreign business
(Gilpin 2016).
This economic investment factors
would be much opportune for
PETRONAS in expanding
business in this region.
The government policies
in a country like UAE are
quite favorable for the oil
and petroleum companies
(Halpern 2015). However,
the political instability,
terrorism attacks, and
violence are some of the
considerable risks for the
foreign business
marketers.
Therefore, it can be
implied that in spite of
being politically
opportunistic scenario,
PETRONAS may face the
risks of political
instability and terrorism.
The cultural scenario in
UAE can become
challenging for the
foreign business
marketers (Beeson
2014). However, the
high concerns for their
religious aspects could
become an area of
concern for the foreign
business like
PETRONAS.

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USA The increasing amount in the
business investments, substantial
decrease, and consumer
expenditure would be the
considerable source of income
(Wild, Wild and Han 2014).
PETRONAS has the larger
opportunities in USA to expand
the business. However, the
emergence of the global recession
would possibly affect the
economic value of the oil and
petroleum products.
The current changes in the
political systems of US
are posing more
challenges for the foreign
businesses.
PETRONAS thus requires
concentrating on the
government policies and
legal norms before
expanding the business
entity in USA.
The aging population is
much higher in USA. It
might lead the foreign
business towards the
labor shortage (Gilpin
2016). In addition to
this, the increasing
illegal racial
intolerance is much
riskier for the
Malaysian company
PETRONAS.
Table 1: Economic, Political, and Cultural Influence on PETRONAS in ASIA, Middle East,
and USA
(Source: Gilpin 2016)
The above discussion suggests that in China, PETRONAS can face most considerable
risks in the economic parameter. The emerging economic crisis is quite challenging for the
business growth. In UAE, the political instability and religion concerns may affect the business
functions of PETRONAS. The racial intolerance and changing government policies in USA are
quite unfavorable for the long term sustainability of PETRONAS after the expansion.

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2. Organisation Strategy Recommendation for each country
Expansion of the business in overseas countries reflects the dynamic cultural
environment and extensive customer base. It has been observed that the business marketers often
face the considerable challenges while expanding the business in the outside countries (Baylis,
Owens and Smith 2017). The major issues are found in maintaining foreign laws, developing the
internationalized corporate structure, adopting the global pricing strategy. Currency rates,
political risks, and so on. PETRONAS need to undertake the fruitful organizational strategy to
expand the business in these three countries.
It has been observed that the economic crisis in the Asian country like China is much
challenging for the foreign business. Moreover, the country requires development in the supply
and demands of the oil and petroleum industry. The domestic political rules can put the
PETRONAS project at risks. PETRONAS need to improve the technological equipment to
produce more oil and petroleum products in China. The advancements in the technological field
would produce the high quality products that would be profitable to earn more revenues in the
country and mitigate the economic crisis.
The inhabitants in UAE are prone to comfortable lifestyle by maintaining their well-paid
jobs. They are even quite adaptive to the globalization strategies in different business sectors.
Middle East is quite renowned for producing and exporting oil much significantly. UAE is not an
exception in such regards. It has been observed that the changing oil prices are affecting the
foreign business marketers during the business expansion. Another risk is found in the political

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environment of UAE. It is noticed that the political instability, terrorism attacks, and violence are
some of the considerable risks for the foreign business marketers. Therefore, the development of
the assistance and governmental support would be much preferable for PETRONAS to deal with
the political risks in UAE. Maintaining the suggested laws and regulations is also preferable
enough to sustain the business for a longer period.
The largest economic value of United States is quite opportune for the foreign business
marketers to develop the business entity and earn profits. PETRONAS needs to collaborate with
the local business companies in US. The strong democratic political setup is quite favorable for
the foreign marketers. The workforce supports derived from the local businesses would be
beneficial for PETRONAS to mitigate the challenges of workforce shortage. It is even noticed
that the increasing illegal racial intolerance is much riskier for the Malaysian company
PETRONAS. On the other hand, maintaining the legal rules and government considerations
would be helpful in developing the sustainable business entity in US.
Application of these business strategies would be helpful for the expanding the business
in these countries. Maintaining the legal norms and regulations would be necessary to avail the
business benefits in a considerable way. While the changing oil prices are affecting the foreign
business marketers during the business expansion, it is necessary for the business marketers to
find out the alternative solution to remain competitive. These business strategies are thus helpful
in managing the scenario and establish the business entity in the foreign market.