Flinders University BUSN3059: KazOil Acquisition Case Study Analysis

This case study examines the acquisition of KazOil by a Canadian company and its subsequent challenges, particularly after a Chinese company's involvement. The analysis focuses on issues arising from volatile economic conditions, authoritative Chinese management style, and cultural clashes. The student utilizes tools like the Five Whys and Fishbone diagrams to identify root causes of problems, including employee dissatisfaction, lack of transparency, and infrastructure limitations. The report addresses the need for a change management plan and implementation advice, offering evidence-based solutions and recommendations for Mr. Nurlan Ospanoov, the client. The report emphasizes the importance of addressing the issues of governance, communication and cultural differences. The student also highlights the need for enhanced infrastructure and the adaptation of human resource management policies to improve employee retention and operational efficiency.

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Name of the student
Name of the university
Author note

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2.2 Symptoms and issues diagnostic
The wider availability of natural resources in Kazakhstan supported the growth of the
FDIs in the region. However, it has been noticed that factors like the volatile economic
environment, weak infrastructural growth, lack of transparency in the legal frameworks and the
government intervention has affected the interests of the companies. In this relation, KazOil
acted as an oil production cooperative in Kyzyl- Orda. Kazakhstan Government sold the
concerned organization to the Hydrocarbons Ltd., which is a Canadian organization. The
acquisition of the organization by the Canadian organization has helped in the further
development of the concerned business.
However, development of KazOil was affected through the falling oil prices from a high
of US$11.13 to low of US$5.89 per barrel. In this scenario, the concerned organization created
one export contract with Russia and two contracts with China in the year 1999. The Chinese
contract provided the organization with an initiative of maximizing the rate of its production by
30% (amounting to 100,000 tons) of the production. It has helped the concerned organization in
upholding the sustenance of the same. Hydrocarbons Ltd considered selling the enterprise to the
China Petrol with the aim of upholding the sustenance of the same. However, the HR related
issues that are faced by the organization are related to the top- down management style of the
Chinese firms. The preference of the Chinese management towards the Chinese employees has
affected the morale of the existing employees of the concerned organization. On the other hand,
the authoritative control over the processes has created a cultural gap, which has affected the
capabilities of the concerned organization in upholding the efficiency of the operations.

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Kazakhstan followed a liberalization culture, which was affected by the implementation
of the Chinese authoritative government style. Dissatisfaction among the existing employees of
the concerned organization resulted to high level of staff turnover rates. On the other hand, the
skilled employees resigned from their respective posts as they failed to cope with the new
policies that are framed by the Chinese management system. It has affected the capabilities of the
organization in maintaining the efficiency of the operations in adherence to the sustenance
related needs of the same. On the other hand, the lack of transparency in the Chinese
management approach affected the capabilities of the organization in maintaining the efficiency
of the operations. Therefore, the different issues that are identified in the section will assist in
identifying the major concerns that were faced by the concerned organization while operating in
a change management context.
5 whys for the problems
Proble
m 1
Authoritative governance of Chinese management
Why 1 Why 2 Why 3 Why 4 Why 5 Root cause Reoccurre
nce
prevention
Lack of
transparenc
y
No
communicatio
n
Biased
decision
Dissatisfactio
n among
employees
Lack of
positive
culture
Authoritativ
e
governance
New
manageme
nt culture
No regard
for skilled
employees
Prioritization
of Chinese
workers
No step-
s for
retentio
Centralized
management
Top
down
approac
HRM
policies
Change in
the HRM
policies

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n of
skills
h
Proble
m 2
Volatile economic scenario
Why 1 Why 2 Why 3 Why 4 Why 5 Root cause Reoccurr
ence
preventio
n
Droppin
g oil
prices
Higher
supply of oil
High
compet
ition in
the
market
s
Lower scope
of expansion
Enhanc
ed rate
of
product
ion
China’s
interventio
n in supply
chains
Developi
ng FDIs
Lack of
infrastru
cture
growth
Lack of
economic
resources
Lack of
suitable
technol
ogical
develo
pments
Resistance
to FDIs
Govern
ment
interve
ntion
Incapabilit
y related to
technology
Developi
ng
infrastruc
ture

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Errors in production
Quality issues
Forced staff termination
and turnover
Volatile economic
scenario
Authoritative governance
Lack of transparency
No regard for skilled employees
No communicationGovernment intervention
Lack of infrastructure growth
Dropping oil prices
Clashing cultural values
Biased treatment to workforce
Dissatisfaction among employees design
Lack of communication design
Fishbone Diagram
Fishbone

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