MPOM7103 Assignment: Strategic Decision-Making and Operational Resilience in Petronas Amid Energy Transition

Instructions to candidates:

1. Print your name and student number on the examination Paper AND Answer Book

2. Answer question according to the instruction for each section.

3. Do not detach any portion of the examination paper

4. Begin writing, as indicated, after the reading time has ended

5. All questions are to be answered in the answer booklet.

Materials allowed for this examination:

1. Lecture Notes.

2. Books.

SECTION A: CASE STUDY

Malaysia’s Petronas to ‘rightsize’ workforce to ensure survival”

KUALA LUMPUR, Feb 7 (Reuters) – Malaysia’s state energy firm Petronas will reduce its workforce to ensure its long-term survival amid increasing challenges in the global operating environment, local media reported on Friday, citing the Petronas chief. “The rationale to do this is to ensure the survival of Petronas in the coming decades. If we don’t do it now, there will be
no Petronas in 10 years,” president and chief executive officer Tengku Muhammad Taufik Tengku Aziz told media, according to outlet The Edge, without saying how many jobs might be affected.

State news agency Bernama carried a similar story from what it said was an editor’s briefing, quoting the CEO as saying the move was to ensure Petronas can “continuously contribute to nation-building”. Petronas has nearly 50,000 employees, according to its website. Petronas confirmed the media reports in an email response to Reuters, and said the number of affected employees was not mentioned during the briefing. Muhammad Taufik said the “right-sizing”
exercise was not a result of a deal between Petronas and the Sarawak state government on local gas distribution.

Negotiations between Petronas and Sarawak’s Petros last year raised concerns over the impact on Petronas, which is a major contributor to federal coffers, and its operations in Sarawak, which holds more than 60% of Malaysia’s gas reserves. Muhammad Taufik said, according to The Edge, that there would be thinner margins and higher technical challenges in oil and gas
development projects. Malaysia expects lower natural gas and crude oil output in 2025 due to the planned shutdowns of some production facilities for maintenance and easing demand in some export markets, according to a government report.

Muhammad Taufik said the composition of production-sharing contracts was expected to change, leading to a reduction in Petronas’ share of earnings, adding the lucrative margins enjoyed by the firm will shrink to low double digits in the years ahead, from above 20% currently.

Moving forward, Petronas must not only be a supplier of oil or natural gas but offer more products such as blue ammonia, a clean gas produced from hydrocarbon, he was quoted saying.
Source: https://www.reuters.com/business/energy/malaysias-petronas- Management

Based on the case study titled “Malaysia’s Petronas to ‘rightsize’ workforce to ensure survival”,

Based on the case study titled “Malaysia’s Petronas to ‘rightsize’ workforce to ensure survival”,

answer the following questions:

1. Given Petronas’ decision to “right-size” its workforce for long-term business operations survival, discuss 1 (ONE) decision-making frameworks (e.g., rational decision-making, bounded rationality, or intuitive decision-making) that could be used to ensure a balanced and ethical downsizing strategy. Justify your answer to rationalise your framework options. [Important Notes: Students MUST support their answers (the justification to rationalise) with relevant reference(s). Answers MUST NOT exceed 80 words]. (10 Marks)

2. With Petronas moving beyond oil and gas into alternative energy solutions such as blue ammonia, highlight and explain a leadership strategy that should be adopted to reposition the company’s core business while sustaining its market dominance. [Important Notes: Students MUST support their answers (the explanation part) with relevant reference(s). Answers MUST NOT exceed 80 words]. (10 Marks)

3. Considering the complexities of production-sharing contracts and revenue decline, explain 1 (ONE) example of leadership decision that should be prioritised by Petronas to maintain investor confidence and national economic contributions. Secondly, elaborate how can scenario planning be applied to navigate regulatory risks and ensure sustainable operations? [Important Notes: When explaining and elaborating your answer(s), you MUST support it with relevant reference(s). Answers MUST NOT exceed 150 words. Separate your answers for the first part and the second part of the question into two paragraphs]. (20 Marks)

4. With the expected decline in margins and rising technical challenges in oil and gas development, elucidate how should Petronas drives both its operational efficiency and innovation? [Important Notes: Students MUST support their answers with relevant reference(s). Answers MUST NOT exceed 80 words]. (10 Marks)

5. As the global energy sector transitions toward sustainability, rationalise how can the “Blue Ocean” approach enable Petronas to balance profitability with environmental and social responsibilities while ensuring long-term sustainability and competitive. [Important Notes: When rationalising your answers, you MUST support the answers with relevant reference(s). Answers MUST NOT exceed 80 words]. (10 Marks)

SECTION B: STRUCTURED QUESTIONS

There are TWO (2) questions under this section. Answer ALL questions.

1. Explain the term “forecasting” and elaborate on its importance in operations
management. [Important Notes: Student MUST explain the term in their words, supported with reference(s). The elaboration of its importance MUST also be supported with reference(s). Answers MUST NOT exceed 150 words]. (20 Marks)

2. A small retail store records the following monthly sales data (in units) for the first SIX (6) months of the year:

a) Using a 3-month moving average, calculate the forecasted sales for the months of April, May, June, and July. Show your calculation and round your answer to zero decimal places. (12 Marks)

b) Assuming that July sales are 165 units and using the forecasted values from Question 2(a), calculate the Mean Absolute Deviation (MAD) the months of April, May, June, and july. Show your calculation and round your answer to zero decimal places. (6 Marks)

c) Based on the MAD result from Question 3(a), what can be you concluded? (2 Marks)[Total: 20 Marks]

Answer

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