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Date: 05/20/2018, 4:21 AM
1.0 INTRODUCTION A strategic business unit is a separate and specialized subsystem in the organization which acts as an independent entity. It is a fully-functional unit of business that has its own vision and direction. A strategic business unit is a division or team of the organization that is responsible for its own strategies. Typically, it operates as a separate unit but it is also an important part of the company. A strategic business unit has to report directly to the headquarters of the organization about the status of its operation. It is big enough to have its own support such as HR, training department and others. Each strategic business unit has its own budget and also has its own sales target. It typically have a discrete marketing plan, analysis of competition and marketing operation. A strategic business unit also own set of competitors. This principle works best for the organization that have multiple product structure. It bring in profits independently of other strategic business units. A strategic business unit in the organization can be considered a separated business who may compete with other strategic business units for corporate resources. The main features of the strategic business unit are they present in the organizational structure and they are organizational units without separate legal personality. A strategic business unit has divisional structure which is determined by the size of the production, technology and research activities, financial and accounting processes and marketing activities. There are some benefits that can gain by having a strategic business unit. A strategic business unit are able to affect the most factors which influence the organization’s performance. It is able to adapt to the quick changes in the market and able to analyse all of that. A strategic business unit needs to be flexible because it needs to adapt to any major changes in the market. Having strategic business unit can assists organization to plan their strategies and make manufacturing decisions. A strategic business unit also create to avoid any decision making concentrated only in the central management. By adjusting to change on strategic business unit levels, the organization can become more profitable. A strategic business unit allows the organization to concentrate on the target consumers and provide cost leadership to the company. It also supports cooperation between the departments of the company which has similar range of activities. Other than that, strategic business unit’s advantages are improvement of strategic management, improvement of accounting operations and easier planning of activities (Khairul, Jale & Hooi, 2010).
2.0 PETRONAS DAGANGAN BERHAD (PDB) Committed to an aggressive growth journey, Petronas Dagangan Berhad endlessly delivers innovative products and differentiated services in its core businesses of Liquefied Petroleum Gas (LPG), Lubricants, Retail and Commercial. Petronas Dagangan Berhad invests broadly in research and development to ensure that it continuous offer a wide range of internationally-recognised high quality petroleum products. In addition, Petronas Dagangan Berhad’s top line and bottom-line are further enhanced by its grocery store business which is Kedai Mesra. Moving forward, Petronas Dagangan Berhad’s growth strategies will be somewhat different from its strategies before. Before, the majority of the company’s capital spending is focused on establishment of the new stations across the country in an attempt to enhance its physical presence. However, the company will now be more focused on increasing the quantity of its existing stations and to only establish new stations in niche areas where necessary. The business unit of Petronas Dagangan Berhad are Liquefied Petroleum Gas (LPG), Lubricants, Retail and Commercial which also known as their core business (Khairul, Jale ; Hooi, 2010). 2.1 LIQUEFIED PETROLEUM GAS (LPG) Petronas Dagangan Berhad which currently holds about 50% shares of the domestic Liquefied Petroleum Gas market, remains positive on the Liquefied Petroleum Gas’s industry in the country. In its annual report, Liquefied Petroleum Gas business in Malaysia contributed about 20% to its bottom-line. Petronas Dagangan Berhad continues to be the market leader in the Liquefied Petroleum Gas sectors with a strong fundamentals to maintain and further strength this position. Its market growth is usually determined by the country’s population growth which is continuing to increase. Liquefied Petroleum Gas products sell under the brand name of Gas Petronas. Gas Petronas is offered in 12 kg and 14 kg cylinders for domestic use and 50 kg cylinders or bulk storage for commercial and industrial use. Petronas Dagangan Berhad expects to maintain its leadership position in Liquefied Petroleum Gas segment in Malaysia with monthly sales volume of around four million cylinders. Petronas have gone to places so far out to deliver
supplies of Liquefied Petroleum Gas. With this kind of strategy, Petronas has been able to meet the demand of energy in the rural areas in Malaysia. The challenges are various but Petronas Dagangan Berhad continues its mission to make Liquefied Petroleum Gas accessible most times even absorbing the cost of delivering these cylinders to communities in remote areas. As one of the Liquefied Petroleum Gas dealers to Pulau Bruit, Sarawak, Petronas knows that they have the challenges involved in ensuring the villages on the island are properly supplied. The island itself is connected to the mainland and towns by just two ferry pints which means the only way to reach there by boat. The real challenge is when monsoon season come which usually lasts for about three months between November to January, where big waves up to two metre high in the waters around Pulau Bruit pose a threat not just to the smooth delivery of the Liquefied Petroleum Gas but also the lives of the employees. The strategy that Petronas Dagangan Berhad focus is optimise cost on the back of an efficient supply and distribution network. The Liquefied Petroleum Gas Business started cost optimisation initiatives in order to achieving greater cost efficiencies that is centred on improving contract management performance and enhancing operational excellence to unlock value across its business chain. Next strategy that Petronas Dagangan Berhad focus is maximise value in domestic and regional markets. Petronas Dagangan Berhad also focus on international business. Liquefied Petroleum Gas Business is a key segment of the Philippines downstream oil industry. As a widely used fuel commodity in the country, the Liquefied Petroleum Gas Business sector is highly competitive in a deregulated market condition (Joanne, 2013). 2.2 LUBRICANTS Lubricants is the fluid that required by the vehicles to maximize it performance through tailor-made products offerings and expert services. The products under Lubricants Business are passenger car motor oils, motorcycle oil, commercial vehicle lubricants such as Heavy Duty Diesel Engine Oil, automotive functional fluids such as brake fluids, industrial ; marine lubricants such as hydraulic oils and agriculture oils and fully branded outlets which is Petronas LubeXperts.