The Acquisition Experiences of Kazoil-Free-Samples for Students

Question: Analyse the Case Study "The Acquisition Experiences of Kazoil. Answer: Background to the Problem Post-Soviet era in Central Eurasian countries in 1980 various countries were under political and social turmoil. High amounts of uncertainty prevailed in each of the countries that are a direct consequences of power vacuum. Various population from Kazakhstan left the country and some immigrants came in, the population gradually stabilized with Kazakh and Russian being the official language in the country with people from 120 nationalities(Chen, 2009). Kazakhstan rich in oil and mineral deposits majority of its investments took place in the sector, amongst which a leading company was Kazoil. Though there were multiple opportunities for exploring natural resources in the country there were challenges in regards to poor corporate governance systems, unstable economic environment, lack of transparency in tax and legal systems, weak infrastructure, crime and corruption, government intervention and high bureaucracy. KazOil being located in Kyzyl-Orda was one of the highest contributor of e mployment and development in the local community with Kazakh Ministry of Energy having control over it till 1996. The Company had highly central system of working, outdated business processes and technologies with high respect, authority amongst employees, there was communication challenges between members of the organization, with decisions being in top down approach amongst other challenges. There have been two acquisitions of the Company post the countrys transition from Soviet era. Initially it was sold for USD 120 to Hydrocarbons Ltd. a Canadian Company and in second time the Company sold it to China Petrol in 2005 for USD 4.2 billion. The scope of this report identifies possible causes leading to such repeated sale(Truss, 2012).In the initial phases of sale of KazOil to Hydrocarbons Ltd the Company flourished with rise in production capacities. There was increase in reserves with obtaining of exploration license. However, there was a drop in oil prices in Kazakh market that le d to unviability of exports associated with economic unviability(Young, 2009). The Company aimed to stabilize situation by having export contract with Russia and China. The background of the problem was associated with its external environment as it had stable internal policy. In the contract undertaking had aimed to maintain Kazakh staff for a period of 3 years with focus on cost reductions and redundancy of capital expenditure. the Company offered training to employees and also provided safety measures. The Canadian company offered training in English for employees as well as for their relatives and family members(Becker, 2006). They had open lines of communications, there was a positive spirit associated of employees with that of the Company. The Company had even taken steps to replace expatriate managers by locals such that they could get more confidence and support from employee level. The Company provided a motivated environment to work for with less accidents and a conducive spirit to work for the organization. There were several operational difficulties as well as market volatility Hydrocarbons remained optimistic regarding the Company until it decided to sell the business. With the second acquisition taking place of China Petrol there were a large number of challenges with the Company. As China Petrol entered agreement to construct Sino-Kazakhstan oil pipeline of 3,000 kilometers there were various changes brought about in the Company. China Petrol had transferred 30 managers of the Company and introduced a Chinese team for operations. The Company received resignation of over half of the employees from KazOil(Alvesson, 2009). While Canadian owners had a Westernized style of management with open interaction styles and communication with less intervention, Chinese counterparts shared values similar to those of Soviet structures. the Chinese viewed the Company to be nothing more than a profitable Western unit owning a large number of oil fields and did not view employees as a valuable part. Critical Statement by Parties Analyzing and drawing from various instances of the case pertaining to KAzOil, it can be said that Canadian Company did not at first impend their norms on the existing Company(Klaus, 2014). They took time to adapt to cultures of the country trained and bridged cultural gap with that of employees. Their procedure was seen as a positive approach by the employees as they stood to gain immensely. They also enhanced safety for employees of the organization. The expatriate managers were replaced by local employees hence generating more opportunities for locals. As the Company commented and was agreed by locals that in spite of operational and other challenges they intended to create a positive impact on employees, their family and relatives as well as the community in which they did business(Allen, 2007). The Chinese Company on the other hand replaced local managers with Chinese officials creating an ambience of mistrust. Employees stood to lose at the point when Chinese overtook the organization to undertake its operations. Though Chinese officials commented that they created more insurance and work atmosphere for employees, employees were adverse to the ideas. Employees viewed Chinese organization as to be overpowering them and diluting their opportunities and they felt as functional operators for the Company as against being a part of the same(Armstrong, 2014). Analysis While multiple countries faced challenges as in regards to which model they should adapt, Westernized society of free market, open economy or prevail with traditional systems, Kazakhstan decided to go for Westernized structure. Post Kazakhstan opening up of its market there were a number of FDIs that took place from Canada, USA, UK along with Asian countries as Indonesia, China, Japan and so on. There were a large number of operational challenges along with other inherent challenges of Kazakhstan that employees were not ready to face up to for the organization(Wright, 2009). With broken and non-existent lines of communication between employees and senior managers there are bound to be challenges impended upon the organization. While Canadian Company was handling internal issues and operational challenges well yet due to fall in prices they sold off the Company. Chinese Company after taking over applied various changed procedures and aspects that were difficult to ascertain resulting in high dissatisfaction and low morality amongst employees(Anderson, 2010). Action Plan Chinese in order to motivate employees and regain current foothold needs to adopt proper change management procedure. Chinese companys HR need to intermingle and understand the needs of employees as well as their expectations(Turner Parish, 2008). As employees were accustom to Canadian and Westernized ways of employee handling procedure they were currently against traditional methods. Remuneration based on performance, participation in decision making, both way communication, motivational practices are some steps that they can include as action plan to overcome current situation. Initially in the addressing of employees Chinese managers need to address the employees with dignity and self-respect with identifying their critical roles in the Company(Jimmieson, 2008). Recommendations While KazOil is facing immense number of challenges in regards to attrition rates and employee dissatisfaction, following are some recommendations given in order to overcome the same.. Recommendation 1: Chinese company counterparts needed to mix with Kazakh employees. As Kazakh employees have relatively less trusts and reliance on their Chinese owners this has resulted in high attrition rates and their feeling not being a part of the Company. Recommendation 2: Chinese Company senior stakeholders needs to engage in geocentric approach while handling their Kazakh employees. As they have adopted a bureaucratic approach and the employees have acclimatized with Canadian styles hence a more Westernized approach will yield higher and better results for the Company. Recommendation 3:The Company stakeholders needs to deploy employee engagement practices that can yield results better. such practices will help yield motivation and diverting employees attention to Companys present issues and challenges. Recommendation 4:While operating in an international ambience where there are a large number of FDIs taking place, the company need to adopt more professional approach. The Company can adopt a more centralized decision making approach that can yield higher levels of productivity amongst employees. Evaluation While the Chinese had adopted a more authentic approach and an employee management that are more traditional to Kazakhstan those were not yielding results. The Chinese managers and senior members of the organization had failed to implement and instruct employees such that they can be motivated. Hence, the traditional Chinese measures to function the organization was not effective as it was not fruitful in productivity and in reaching of Company goals and motivational levels. Employees could not take part in decision making process and there were no contribution made by the Company towards individualistic attitudes of employees. Thus, employees could not understand or make any connection with the Company. With lack of opportunities in the present Company head hunters were seeking opportunities to transfer a large number of capable employees to other companies. Thus, from the analysis of the case study and its perspectives it can be evaluated that Canadian Company was extremely success ful in handling of the process of change whereas Chinese Company were equally unsuccessful in carrying over the transition phase. While employees found suitability in Canadian Company, which took opportunities to acclimatize to the culture of the organization prevailing at that time in KazOil, Chinese Company did the reverse. The Chinese Company brought about traditional Asian culture where employees had less role to play in decision making process and there would be more bureaucratic top-down approach in handling employees. Reference Lists Allen, J. J. 2007. Uncertainty during organizational change: Managing perceptions through communication. Journal of change management, 187-210. Alvesson, M. 2009. Critical perspectives on strategic HRM. The Routledge companion to strategic human resource management, 52-67. Anderson, D. a. 2010. 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