Petronas Business Analysis
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- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -“The moral issues of distributive justice are unlikely to be realised if biophysical limits to growth are ignored” - Philip A. Lawn, 2001.
This paper evaluates the likely impact on the competitive position of PETRONAS if it were to strengthen its business strategy based on Sustainable Development.
PETRONAS, acronym for Petroliam Nasional Berhad, is a Malaysian owned oil and gas company that was founded on 17 August 1974. Wholly owned by the Government, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources. PETRONAS is ranked among Fortune Global 500’s largest corporations in the world. In 2007, its revenue was in excess of US$51 billion.
Source: Wikipedia and Fortune Global 500
Since its incorporation it has grown to be an integrated international oil and gas company with business interests in 31 countries. As of the end of March 2005, the Petronas Group comprised 103 wholly owned subsidiaries, 19 partly-owned outfits and 57 associated companies. Together, these companies make the Petronas Group, which is involved in various oil and gas based activities. The Financial Times has identified PETRONAS as one of the “new seven sisters”: the most influential and mainly state-owned national oil and gas companies from countries outside the OECD.
Source: FT.com, 11 March 2007
The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment. PETRONAS built the Petronas Twin Towers (opened 1998), the tallest twin towers and once the world’s tallest buildings, as its headquarters.
The looming growth of globalisation and continuous development have resulted in a negative impact on the environment, which will be detriment to the survival of mankind and other living things on this planet if we do not take the necessary steps to reduce this impact. As for our planet, it has all the time in the world to regenerate itself, but we don’t.
The threat to our survival has become more apparent with the increasing number of environmental catastrophe such as earthquakes, flooding, drought, water shortage, depleting natural resources and ultimately the increase in Greenhouse Gases fueled by rapid development to meet the current population demands, which contributes to Global Warming.
Global warming is the result of the constant increase in the level of carbon dioxide (CO2) in the atmosphere measured in parts per million (PPM). Scientists has revealed that if this measure reaches 450PPM, the world will be at the tipping point of its own survival, and this number is climbing fast.
Source: The 11th Hour, 16 June 2008 & InterGovernment Panel for Climate Change.
However, this can be mitigated through increasing awareness of how real the problem is, by the adoption of Environmental and Ecological Economics, alongside mainstream/neo- classical economics which takes into account the environmental impacts that economic growth promotes as well. One way of addressing this issue is through Sustainable Development (“SD”).
According to The Brundtland Report (1987), Sustainable Development is the development that meets the needs of the present without compromising the ability of future generations to meet their economic...
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