Reference no: EM133349383

Case Study: Petro Mart Sdn. Bhd. (PMSB) was first established in the year 1999 and fully operated in 19th October 2003. The company was registered with RM1,000,000 authorised capital and RM791,000 paid-up capital. The core nature of its business activities are supply and installation of retail Petroleum equipment, signage, engineering structure design and services.

In its recent financial highlights, the company reported a net sales revenue increase of 49.21% in 2019. There was a total growth of 0.04% in Petro Mart Sdn. Bhd.'s total assets over the same period. The net profit margin increased by 0.77% in 2019.

The management team of PMSB consist of the Finance Manager, Production Manager, Business Development Manager and the Operation Manager. The organization structure is supported with several functional departments including the Graphic Design

and Printing, Installation and Maintenance Coordination. They are headed by Mr Mohamad Shukor Abdullah as the Company Director, who are the qualified Accountant by qualification and having more than 30 years' experience in the agriculture (Golden

Hope Plantation), engineering (PERNEC Technologies), and telecommunication (PERNECNEC Telecommunication Bhd.).

Scope of Business

Petro Mart's Production Plant

Petro Mart Sdn. Bhd. scope of job that they have to bid from the oil and gas retailers and engineering companies, includes:

Billboards
Visual Elements and Signage
Steel, Fibre Glass Fabrication and Installation ?
Building Maintenance and Services
Mechanical and Civil Engineering Construction
With the combination of the skilled and professional workers and experienced management teams, PMSB has managed to developed and established trust of its clients in various related industries such as oil and gas, construction, agriculture and the government agencies.

PMSB also believes in developing its teams by entrusting them with continuous support of technical knowledge and skills. In order to stay competitive in the business sector, PMSB is very committed towards creative and innovative products, continuous improvement in quality design and timely job completion.

As far as competition is concerned, even though there are only a few business players in the related sector, Petro Mart Sdn. Bhd. is relying on the long-term contracts to ensure profitable return due to high cost of investments.

The Covid-19 Crisis

Coronavirus Decease (COVID-19) was declared as an outbreak of public health emergency of international concern on 30th January 2020 and a pandemic on 11th March 2020 (WHO, 2020). Globally, COVID-19 pandemic has extremely affected people and impacted all type of businesses in the public and private sector. The oil and gas industry are not exempted, and it has been negatively impacted by this unprecedented crisis of COVID-19 pandemic. Moreover, the oil and gas industry are facing challenges such as disruption of material and equipment supply, shortage of workforce on site and financial crisis. In response to the crisis, many oil and gas organizations have implemented short term strategies such as cost- cutting, downsizing and renegotiating contracts in order to reduce cost and control expenses. For instance, rationalizing is one of the factors that has led to countless employees to lose their job during this pandemic. COVID-19 pandemic has extremely affected people and businesses around the world. Oil and gas industry are not exempted, and negatively impacted by the unprecedented crisis of COVID-19. This pandemic has also caused delays in the oil and gas projects. In an attempt to control the spread of COVID-19, Malaysian government has introduced Movement Control Order (MCO) in the whole country to be closed and lockdown all premises except essential services to operate. This has resulted major delays in the project execution. Researchers have conducted studies to identify factors that causing project delays. Approximately 75 delay factors were found in some

studies and it revealed that most delay factors were not directly caused by COVID-19 but the repercussion of the stagnancy of economics activities.

Furthermore, COVID-19 pandemic has also in such a ways has caused delays in the oil and gas projects. Delay of a project is defined as behind project completion as compared to the baseline schedule. Delay causes risk to a project objective related

time, cost and quality. Most construction delays were generally the outcome of miscommunication among contractors, subcontractors, owners and suppliers. Additionally, delay factors such as "lack of proper planning, budgeting, and scheduling, scope creep, and late delivery of materials".

Business Strategic Issues at Petro Mart Sdn. Bhd.

The impact of the Covid19 issue has been so huge and the entire business plan was very much affected. There are a lot of elements of uncertainty and ambiguous information moving around especially regarding the movement control order (MCO) of the local and foreign operators within the oil and gas business chain.

The management recently assigned Mr Harun Mohamad, the Business Development Manager, who has worked in the business industry for over 20 years. His main task is to re-look on the existing contract to analyse the impact on the situation. Those involve the project works on progress and the awarded contract that are yet to start out. The scope of analysis should cover the financial aspects including the costing, the impact of change in cost of materials and labour. The management should prepare to talk over and negotiate on some terms of the contract to avoid losses in projects execution. Some of the long-term consequences of the judgments and decisions should be pre-empted.

Besides that, Mr Harun has to engage a team of task force to consider on other related consequences of the crisis including the situation and relevant policies regarding workforce (to review their tenure and separation terms), the related legal implications on the business decisions and the business contingency plan should the crisis prolonged.

Question: Discuss the requirements and benefits for Petro Mart Sdn. Bhd. of employing an effective negotiation approach and to engage them with its business strategic decisions including on the scope of financial management, operation, marketing and human resource.