ASSIGNMENT

MITM773 MIS & Competitive Intelligence

Members of Group 5:
1. Elangkoh Ragianan
2. Ahmad Rizal bin Muhammad Arif
3. Rosazlina binti Mohd Adzmi

SB22450
SB22264
ST22506

Michael Porters Five Forces Model

There are five forces that determine industry and long-run industry
profitability.
1. New market entrants
The threat of new entrants in the oil and gas industry is considerable
low, and the reason is because of the high level of protect exercised in
the industry through government policies.
As such, business sustainability if more or less assured is PETRONAS
GAS can be able to wade off competitions in the industry as new
entrants are not so likely.

Factors that can limit the threat of new entrants are known as barrier to
entry. Nowadays, there is no new entrance in Malaysia.

2. Substitute products and services

Threats of solar and electricity has been recognized highly in home and
office consumptions, such threats have not extended down to the
transportation industry as such technologies are still on its infancy and
development stages.
The using of gasses at home are still the most preferred source of
energy for cooking because they are more affordable than solar or
electricity. As such, the threat of substitute products is low but can
significantly change in the future.
Competition with natural gas substitute such as coal.

3. Suppliers
The threat of suppliers is very low because the supply system is based
purely on contracts, government policies and centralized.
Any influences on the supply for PETRONAS GAS will also effect the
other oil and gas companies in Malaysia.
4. Customers
The customers still have a considerable bargaining power and this is
constantly influenced by price and quality of products that oil and gas
companies have to offer.

5. Traditional Competitors

Petronas has its own traditional competitors known as the Big Oil. Each
of those competitors continuously develop new technology and new
products to remain competitive in the market. Examples of new
products are like new petrol with different carbon contain. Petroleum
with higher carbon content will be able to burn longer and at a higher
temperature. Where else example of new technology is new crude oil
cracking method, which enables much purer and different types of fuels
to be derived

Petronas invests heavily in Research and Development so that its

services and products stay on par with its competitors and it's not left
behind in the race for supremacy.

Four generic strategies for dealing with competitive forces

1. Low cost leadership

Petronas also announced its new leadership team, following a strategic

review of its business operating model for better business efficiency,
resilience and sustainability amidst a challenging time for the oil and gas
industry.
The structure sees new appointments from within the organisation, taking
effect from April 1, 2016, and the departure of some leaders whose service
contracts have come to an end which aimed at a flatter, leaner and more
efficient business operating model.
This help Petronas to better navigate the organisation through tough
external environments which a start of a total group-wide transformation
geared towards making it more resilient and focused to thrive both in the
current and future industry landscapes.
Manpower restructuring in an ongoing process. Petronas nonperformance programme is essentially an exercise where non-performing
workers are retrenched or demoted.

Striking down costs and simplification which involved reviewing some of

the processes across the group include human resource, procurement and
planning processes.

2. Product differentiation
Petronas has to been sold products at the best value, so it has to be all
across the value chain.
Expansion with growth project such as Refinery and Petrochemical
Integrated Development (RAPID), the Floating Liquefied Natural Gas
(FLNG).
3. Focus on market niche

Petronas uses cutting edge technology which has been developed

specifically for their own usage to increase efficiency in their decision
making and to decrease the time taken to make that decision.

Petronas uses computer modeling technology to estimate the location of

oil field, supply chain management system to coordinate the movement of
its products and resources and many more other inhouse built systems.
These systems were developed with cooperation by Petronas and
professional software developers. This systems enables them to cut short
time wastage and human error in decision making.

4. Strengthen customer and supplier intimacy

Introduction of eProcurement process consist of Indent Management,
eTendering,
eAuctioning,
Vendor
Management,
Catalogue
Management, and Contract Management.

Reference
1. http://www.thestar.com.my/business/business-news/2016/03/01/petronasexpects-1000-redundancies-under-group-wide-revamp/

2. http://www.themalaymailonline.com/money/article/petronas-ceo-says-no-fixedtarget-for-layoffs

3. http://www.thestar.com.my/business/business-news/2015/10/12/petronasoutlines-six-strategies-to-remain-profitable/

4. http://www.petronas.com.my/our-business/Upstream/Documents/FLOW
%20VOL%20204%20(LOW%20RES%20FILE).pdf

5. http://www.petronas.com.my/our-business/Upstream/Pages/default.aspx

6. http://ilokabenneth.blogspot.my/2015/06/petronas-gas-overview.html

7. http://www.petronas.com.my/partnering-us/eprocurement/Pages/default.aspx

8. http://www.mymesra.com.my/#