Competitive Advantage

Topics: Petrochemical, Generally Accepted Accounting Principles, Petronas Pages: 2 (310 words) Published: January 7, 2011
1) The petrochemical industry produces goods that are largely undifferentiated. To be profitable, PCG need to be the lowest cost producer. Raw materials form the majority of PCG cost of revenue. PCG competitive advantage is, it has access to very low cost natural gas compared to its competitor, which in turn, means a higher gross profit margin.

2) PCG is backed by PETRONAS group, which also owns other 4 PLC units: i) MISC Bhd
ii) Petronas Dagangan Bhd
iii) Petronas Gas Bhd
iv) KLCC Property Holdings Bhd
This shows a strong support and wide recognition for PCG for its better operations, management and resources with its vertical and horizontal integration.

3) 22 petrochemicals-related companies are being consolidated to form the group. From the consolidation, the group will benefit from a high degree of integration within and across its production facilities to achieve better production and resources management. The consolidation will also improve its products portfolio in terms of range, quality and quantity.

4) Petrochemical industry in Malaysia is dominated by two major producers including PCG Bhd and Titan Chemicals Group Bhd. Titan primarily focuses on olefins and polyolefins productions. PCG has a comparable scale in olefins and polyolefins productions, however it offers wider range of petrochemical products including methanol, ammonia, urea, aromatics and other derivatives.

5) Currently, PCG have a marketing network of over 25 countries internationally and approximately 550 customers locally. From the consolidation of all sales and marketing functions into MITCO (Malaysia International Trading Corporation Sdn Bhd), the group have better facilitation of the flow of products to end customers. This will enhance its market visibility, coordination and revenue growth.

6) Demand for diversified petrochemical products is growing steadily driven by growing global gross domestic products and rapid...
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