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PART A INTRODUCTION TO THE COMPANY Background of the company The company that will be discussed in this paper is Petronas.

s. In July 1882, the British Resident of the Baram district in Sarawak officially recorded oil find in Malaysia. The local residents used the oil for medicinal purposes, lighting lamps and waterproofing boats. Commercial exploitation began in 1910 when the Anglo-Saxon Petroleum Company, the forerunner of the present Sarawak Shell which was granted the sole right to explore for petroleum in Sarawak, struck oil in the town of Miri, marking the start of the Malaysian petroleum industry. Only the traces of the petroleum were found and these were not large enough to justify drilling activities. As in many other developing countries, oil companies in Malaysia had been operating under what was known as a concession system. Under this system, large areas were made available to oil companies under very generous terms and the Government retained very little control. In return for these concessions, the oil companies paid a small royalty and taxes to the Government. During the Israeli war in 1973, several Arab oil-producing countries decided to stop oil shipments to certain countries. As a result, there was a mad rush for oil, prices shot up overnight and the world experienced its first energy crisis. The 1973 oil embargo also made oil producing countries of the world realise the importance of controlling their own petroleum resources. In Malaysia, it led to the promulgation of the Petroleum Development Act in 1974 and the formation of a national oil company to ensure that the nation's petroleum resources could be developed in line with the needs and aspirations of the nation.

Article 2 of the Act vests the entire ownership in, and the exclusive rights, power, liberties and privileges of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore of Malaysia in PETRONAS Business Nature There are 5 business activities in PETRONAS consist of: 1. Oil Business (Refining activities) Oil, in its crude form, has very few direct applications. To enhance its usage, crude oil first has to be processed or refined into many valueadded petroleum products. PETRONAS refines a wide range of petroleum products for domestic consumption as well as for export, including motor gasoline, diesel, lubricants, jet fuel, kerosene, naphtha and residual fuel oil. Its refining activities are undertaken by two refineries with a current combined capacity of 256,500 barrels per day (bpd). 2. Oil Business (Marketing Activities) PETRONAS sells both crude oil as well as refined petroleum products. While more than half of Malaysia's crude production is exported, the rest is processed into a variety of value-added finished products. These include motor gasoline, diesel, lubricants, aviation and bunker fuels, liquefied petroleum gas (LPG) and kerosene. PETRONAS sells refined petroleum products to the domestic market through its public-listed marketing arm PETRONAS Dagangan Bhd (PDB).

3. Gas Business Natural gas has many uses in the homes, industries, power stations and even in vehicles. With gas reserves three times more than oil, Malaysia is increasingly turning to natural gas, not only as a source of energy but also as a raw material in the manufacture of various petrochemical products. In line with Malaysia's energy diversification strategy, PETRONAS is promoting the utilisation of natural gas with the implementation of its three-phase Peninsular Gas Utilisation (PGU) project which started in 1984. In December 1997, the final phase of the PGU project was completed. The PGU project has become the backbone for Malaysia's industrialisation process. To promote the use of gas in the transportation sector, PETRONAS has embarked on the Natural Gas for Vehicles (NGV) programme where NGV dispensing facilities are available at selected PETRONAS service stations located in high traffic density areas. Internationally, PETRONAS makes further inroads into the Atlantic Basin LNG market by acquiring an interest in the Egyptian LNG Project and involving itsel in the development and operation of LNG liquefaction plant and related infrastructure. 4. Petrochemical Business Malaysia's abundant gas reserves and the implementation of the Peninsular Gas Utilisation (PGU) project have opened up vast opportunities for PETRONAS to embark on various large-scale gasbased petrochemical projects with its joint venture partners. Besides adding value to the natural resources, the development of these projects is also in line with PETRONAS' aspiration to transform the country into a regional petrochemical hub.

PETRONAS is actively pursuing the development of integrated petrochemical complexes (IPCs) with all the necessary common infrastructural facilities and ancillary utilities to maximise synergy and to ensure a well-planned development of the industry. 5. Logistics & Maritime Business Logistics & Maritime is a relatively recent addition to PETRONAS' list of core activities. The company first ventured into the shipping business in 1994 with the delivery of the first of its liquefied natural gas (LNG)

Objectives and Goals of the Company Goal PETRONASs goal is to contribute to the well-being of the people and the nation where it operates, improve efficiency and control by automating activities via straight-through processing. Objectives To fulfill this role, all of its business activities must be viable and profitable. PETRONASs contributions is designed to assist in enhancing the quality of life of the people and help in the development of the nation, include the provision of quality petroleum and related products and services at a fair price; promoting and creating business and job opportunities in the petroleum industry; enlarging the country's industrial base; and ensuring a safe and clean environment. o Straight through processing, eliminating manual faxes and processes, reducing errors and error rates. o Reduced costs (staff overtime, telex, fax, etc.) o Enhanced controls around and visibility to transactions, notifications and confirmations.

o Streamlined operations and increased Treasury staff efficiency and productivity. o Fewer bank interfaces to support. o Increased security for transmissions.

Stakeholders As an integrated oil and gas multinational with operations across a broad spectrum of oil and gas operation worldwide, PETRONAS strives to recruit and retain the best and brightest in a variety of exciting and challenging fields. Each year, PETRONAS discovers these talents from amongst the local and overseas graduates. In tandem with our continuous business growth, we carry out regular talent search exercises to meet our increasing human resource needs. At present, PETRONAS has a workforce of more than 30,000 operating in more than 30 countries the world over. This number represents 28 nationalities with varying capabilities, knowledge and skills to undertake various upstream and downstream projects in a variety of geographic and business environments. PETRONAS offers occupational mobility along either the technical or managerial tracks, or ample opportunities for learning and growing. A career with PETRONAS means unleashing your truest potential.

PART B KNOWLEDGE CREATION Petronas Company approach to use the knowledge creation based on Nonakas model to optimize the work process: 1. Socialization In Petronas Company, this mode enables the conversion of tacit knowledge through interaction between individuals. One important point to note here is that an individual can acquire tacit knowledge without language. Apprentices work with their mentors and learn craftsmanship not through language but by observation, imitation and practice. In a Petronas Company, on job training (OJT) uses the same principle. The key to acquiring tacit knowledge is experience. Without some form of shared experience, it is extremely difficult for people to share each other thinking process. The tacit knowledge is exchanged through join activities such as being together, spending time, living in the same environment rather than through written or verbal instructions. In Petronas, socialization involves capturing knowledge through physical proximity. The process of acquiring knowledge is largely supported through direct interaction with people. 2. Externalization Externalization requires the expression of tacit knowledge and its translation into comprehensible forms that can be understood by others. In philosophical terms, the individual transcends the inner and outer boundaries of the self. During the externalization stage of the knowledge-creation process and individual commits to the group and thus becomes one with the group. The sum of the individuals' intentions and ideas fuse and become integrated with the group's mental world.

In Petronas Company, externalization is supported by two key factors: First, the articulation of tacit knowledgethat is, the conversion of tacit into explicit knowledge involves techniques that help to express ones ideas or images as words, concepts, figurative language (such as metaphors, analogies or narratives) and visuals. Dialogues, "listening and contributing to the benefit of all participants," strongly support externalization. The second factor involves translating the tacit knowledge of people into readily understandable forms. This may require deductive/inductive reasoning or creative inference (abduction).

3. Internalization The internalization of newly created knowledge is the conversion of explicit knowledge into organizations tacit knowledge. This requires the individual to identify the knowledge relevant for ones self within the organizational knowledge. That again requires finding ones self in a larger entity. Learning by doing, training and exercises allow the individual to access the knowledge realm of the group and the entire organization. In Petronas Company, internalization relies on two dimensions: First, explicit knowledge has to be embodied in action and practice. Thus, the process of internalizing explicit knowledge actualizes concepts or methods about strategy, tactics, innovation or improvement. For example, training programs in larger organizations help the trainees to understand the organization and themselves in the whole. Second, there is a process of embodying the explicit knowledge by using simulations or experiments to trigger learning by doing processes. New concepts or methods can thus be learned in virtual situation.

4. Combination Combination involves the conversion of explicit knowledge into more complex sets of explicit knowledge. In this stage, the key issues are communication and diffusion processes and the systemization of knowledge. Here, new knowledge generate in the externalization stage transcends the ground in analogues or digital signals. In Petronas Company, the combination phase relies on three processes. Capturing and integrating new explicit knowledge is essential. This might involve collecting externalized knowledge (e.g. public data) from inside or outside the company and the combining such data. Second, the dissemination of explicit knowledge is based on the process of transferring this form of knowledge directly by using presentations or meeting. Here new knowledge is spread among the organizational members. Third, the editing or processing of explicit knowledge makes it more usable (e.g. documents such as plans, report, market data). In the combination process, justification the basis for agreement takes place and allows the organization to take practical concrete steps. The knowledge conversion involves the process of social processes to combine different bodies of explicit knowledge held by individuals. The reconfiguring of existing information through the sorting, adding, recategorizing and recontextualizing of explicit knowledge can lead to new knowledge. This process of creating explicit knowledge from explicit knowledge is referred to as combination.

Recommendations to become knowledge-creating companies, Petronas Company should: create a knowledge vision (top management should define the boundaries of organizational knowledge and outline what kind of knowledge ought to be created) develop a knowledge crew (of employees with diverse talents) piggy back on the new product development process adopt middle-up-down-management switch to hypertext organization construct a knowledge network with the outside world(meaning external stakeholders such as customers) build a high-density field of interaction(an environment in which frequent and intensive interactions take place) at the front-line

Nonakas theoretical framework, in both its original and revised forms, provides an excellent source of inquiry for this research. Nonaka addresses the key question of how to make tacit knowledge explicit. Even though he does so for a different purpose and in a different context, the underlying question is the same. Many of the related concepts that were identified in the previous sections are also useful for the present study and as data from Petronas Company is collected and analyzed, these concepts will form the basis of inquiry.

First and foremost, the concept of externalization will be used as a possible way to fulfill Petronas Company need to make their tacit knowledge explicit. Externalization relies upon the use of metaphor to make tacit knowledge explicit. One of the benefits of accomplishing this process is to be able to share knowledge (that cannot be well articulated) within an organization with individuals outside the organization. Put another way, Petronas Company will increase their conceptual knowledge assets.

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Petronas Company has identified this inability to accurately share knowledge of how Petronas Company operates as an important reason for conducting this research. Representing Petronas Company practice in such a way that their tacit knowledge can be articulated in some efficient fashion could result in a number of benefits including an increased capacity for all facets of strategic planning.

Nonakas framework also provides the basis for understanding tacit knowledge at Petronas Company. The focus group and interview questions will attempt to articulate, through themes, the mental models and beliefs that are taken for granted at Petronas Company and therefore no longer articulated among the participants but simply a part of their daily practice.

Nonakas identification of the organization as dynamic, and later dialectic, is also important. The dynamic element of an organization is patently evident in a community-based organization like Petronas Company, where problems are often of an immediate nature. Problems require a quick solution and often facilitate a new method or new way to solve issues in the organization.

Viewing an organization as dynamic is also recognition that the organization has a relationship to its environment. An organization both reacts to its environment and has an impact on the outside environment. Again, this relationship with the environment is likely important to a community-based organization (CBO) like Petronas Company, which is partially in existence to improve, aid, or otherwise provide support for Petronas Company.

By this concept, knowledge needs a context in order to be created, then to fully understand Petronas Company, the context of the organization and its employees must be explored. By conducting this research, we are engaging in a shared context with participants from Petronas Company and we are

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therefore engaging in the knowledge creation process together. Thus, it will be important to keep in mind that whatever results from this study is not a static representation of the organization at a particular time, but an emergent understanding of the organization subject to future change and adaptation. This section has outlined some of the key components of Nonakas knowledge creation theory and how they are important to the research and are potentially applicable in this context. Once data collection and analysis were completed, this theoretical framework and the concepts defined here were used to answer the research question and provide Petronas Company with an organizational model that represents their day-to-day operations.

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PART C KNOWLEDGE TRANSFER AND KNOWLEDGE SHARING How knowledge is transferred and shared among the staffs, suppliers, consultant, and clients. The outcomes achieved through the Petronass approach to knowledge transfer include the establishment of policy statements which known as PMU K-Policy, groups or communities and new operating protocol, practice, habit and mindset to transform to a Knowledge Management based organisation. Knowledge transfer is complex because the knowledge has to be shared within the organizational includes staffs, tools, tasks, and the people related to the company as well. Moreover, the knowledge in the organisation is hard to articulate or tacit since the information that has been gathered by the members cannot be expressed in words, sentences and numbers because it is context specific. That knowledge transfer activities are characterized by their responsiveness and relevance to economic, social and environmental issues respectively. To establish the initiatives that are aligned with organizational goals and integrated into PMU (Petroleum Management Unit) business processes, they implement a sharing knowledge method which is by having an expert interview system. This system involves sharing expertise, experience and lesson learnt. Within a Community of Practice, the members share their knowledge collectively among themselves, suppliers, consultant and clients by: Learning from each other that involves members from different department to work together. They deal with change more effectively because they believe that by being adaptable to new changes and environment is moving toward an excellent achievement.

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They also improvise, apply and evaluate new innovative work practices within the organisation. The members come out with best ideas and suggestions which can be shared with their suppliers and expertise in that field.

Communities of Practice Knowledge transfer in Petronas community members seek to create, organize, capture and distribute knowledge to ensure that it is available for future users in the organisation. The combination of domain, community and practice enables communities of practice to manage knowledge according to the objectives and aim of the organisation. It is considered to be more than just a communication problem which means to share and transfer the knowledge, one should able to explain the information with appropriate language in communicate with each other. The Petronas management emerges within social networks and around Business Process. The Communities of Practice involved with sharing and transferring of data management which is also a part of keeping the company continuous improvement that focuses on exploration and production activities. In such of the environment networks, they: a. Create trustful relationships that achieve a cultural equilibrium To enable the goals of Knowledge Management in the organisation, the team members should trust and support each other by developing wide channel of communication not only within the organisation but with the people that they are related in sharing knowledge. b. Share same work practices and tacit knowledge The members able to discuss and share their knowledge together that has generate teamwork to produce good quality of results.

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c. Achieve cultural equilibrium Due to achieving Community of Practice, the staffs makes deals and decision which proceed at the same rate and balance each other to avoid any further change. d. Expand their ability to learn and communicate To enable the function of Community of Practice, the members should able to learn on managing and communicate with different people at the same time during sharing and transferring the knowledge. People become members of a CoP through shared practices by having: Coffee talk during the break time hours All the members are having their own discussion and shared their information from their work or tasks so that they can gain more knowledge and ideas from each other. Department meeting where they can share and discuss the matter arises weekly Due to problem that may arises, the members gathered and hold a meeting every week to ensure that the staffs can bring their matters to the leader and other staffs and discuss the problem together in order to fulfill the objective in the organisation. Through online portal which known as PMU Teamspace online portal. The program must be assessed, measured, analyzed to find the gap, improve and then control it to meet the company business goals. In order to meet the approved the standards in the organisational, benchmarking must be done internally and externally. It is to assess, analyze and report the results to all employees and management in order to communicate at what level actually has been implemented.

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Furthermore, it is to improve the Community of Practice within the company itself to gain awareness as well as to immediate enforce and enhance the initiatives necessary. By benchmarking with specific method or to the other KM implementers, the employees can learn what the program gaps and weaknesses and put some planning effort for future enhancement.

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PART D KNOWLEDGE MANAGEMENT TOOLS AND PORTALS Discuss the technology involves in the company for knowledge sharing and transferring. Its members using database or repository to enable Knowledge Management practices in the organisation. They shared and transferred the correct information to the right person at the right time which related to the business work or matters to discuss. It is how the workflow of the organisations business process flows from one department to another department at the same time. Notes Teamspaces and collaboration tools in sharing and transferring their knowledge within the organisation. They focused on connecting with each other by sharing the information to the people in order to apply the CoPs in the organisation. The implementations include all needed and standardised databases, knowledge repository and e-Learning through knowledge portal programs as well as running the community of practices (CoP). The tools that involved are simple and workable in order to fulfill the requirements of enabling the knowledge portals program. Furthermore, the organisation develop new or leverage from others that ha known results of using the technology to perform the useful of the program in organisation. The collaboration tools are fit for purpose of implementing Knowledge Management to achieve business goals. One of the most important factors is the value of sharing knowledge. As data exists in every corner of the organization and data between different entities are rarely shared, a lot of information and knowledge is currently unutilized. If not considering security and confidentiality, ideally, all 'information' should be available to every employee and each employee should be able to contribute

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to the information and knowledge base. Some examples of knowledge that would be beneficial to share are given below:

Knowledge

Main owner of Other and knowledge data,

potential Other info and data,

potential of and info,

data, information contributors knowledge Traffic planning RF planning Customer care

of receivers knowledge Traffic planning RF planning & Optimization Customer care

How

will

the Marketing

market to a new service?

MSC engineering

What the average

type

of Customer care has

Optimization

MSC engineering Marketing RF Optimization MSC engineering

subscribers

highest

complaint rate? Why do we RF Optimization experience QOS region in low this today,

RF planning & Optimization Customer care

Customer care RF planning & Optimization

when it was high yesterday? Where should I RF planning locate a new site to maximize traffic coverage, and profit? Marketing Customer care Traffic planning MSC engineering Customer care Traffic planning MSC engineering Marketing

Petronas Companies in the field of nuclear power generation are active in a knowledge based business: They are faced with the close interaction of quite different technologies, the complexity of large projects especially in

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constructing new plants and the challenges of the long lifetime of their product. In the past daily needs have pushed the introduction of diverse procedures and tools for knowledge handling in the different organizational units of Framatome ANP, e.g. project documentation systematic, knowledge transfer to young engineers, or co-operation with external institutes. There are very few tools, Petronas Company providing a truly integrated set of functions to support the tasks associated with knowledge management. The following lists some tools that have been used to support various aspect of managing knowledge: 1. Knowledge Capture: PC PACK is a portable package of integrated tools for requirements and knowledge engineering. Clementine Data Mining (or Knowledge Discovery) Software package from ISL Intelligent Miner another data mining tool this time from IBM The Information Discovery System (IDIS) a data mining tool from Information Discovery. 2. Knowledge Sharing: ART*Enterprise - object-oriented client/server tool with casebased retrieval of both structured and unstructured information from Brightware GrapeVINE - two versions one for lotus notes and one for Netscape in which users can set up an interest profile that identifies what is useful to them and so filter information. Knowledger Software - two products PKM (the Personal Knowledge Manager) and PDP (the Personal Development Plan) both based on Lotus Notes. Knowledge Xchange - TM Knowledge Management System - a Lotus Notes based system, the current users are Andersen Consulting professionals.

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PART E BENEFITS OF KNOWLEDGE MANAGEMENT IN THE COMPANY

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The concept of treating organizational knowledge as a valuable asset to leading organizations has been popularized by leading management and organization theorists. Organizations are being advised that in order to remain competitive, they must efficiently and effectively create, locate, capture, and share their organization's knowledge and expertise, and have the ability to use that knowledge on specific problems and opportunities. Firms are showing a tremendous interest in implementing knowledge management processes and technologies, and are even beginning to adopt knowledge management as part of their overall business strategy.

A company that is going to succeed at knowledge management will need a culture of confidence, trust, mutual respect and mutual support which encourages the application of knowledge, and a willingness to share power through shared information. Sharing knowledge will only be successful when a market demand and supply for knowledge is created. Eventually, the shared knowledge base will lead to the erosion of private power bases, as highquality information becomes available online.

The concept of the KM Benefits Tree, which was developed by David Skyrme Associates, a networked management consultancy specializing in advising senior executives and policy makers on how to create and implement successful knowledge-based strategies, highlights the interrelationships of three major categories of benefits commonly associated with successful KM initiatives. The categories are: 1. Knowledge Benefits, 2. Intermediate Benefits, and 3. Organizational Benefits.

KNOWLEDGE BENEFITS 21

Benefits under this category include: 1. Access to best/latest thinking, 2. Faster access to knowledge, 3. Better knowledge sharing, 4. Knowing whos doing what. These benefits result from making use of improved and more efficient processes to generate information and knowledge for use in decision making. These improvements and efficiencies may arise because of the elimination of a number of non-value-adding steps in a series of processes or perhaps increasing the productivity of the workers involved in a specific task so that time is saved.

One concrete example is the organization of numerous physical files of a manufacturing firm or an academic institution or a government agency. Categorization and segregation into working databases allows the employees who need specific information to access it more efficiently through word or category searches rather than having to sift through so many folders. Updating of these databases will also result in having the most recent and relevant information and knowledge stored and easily accessible by any employee who may need them.

INTERMEDIATE BENEFITS Benefits under this category include: 1. Novel approaches and new ideas, 2. Faster problem-solving, 3. New hires become effectively quicker and 4. Minimizes duplication/re-invention.

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The key point to remember in this benefit category is improvements in terms of efficiency and effectiveness. As a result of, for example, systematic documentation of activities and tasks in a systems development project, the teams involved in similar projects can look at what was done and learn from the experiences chronicled in the project documentation.

Thus, duplication of mistakes would be minimized if not eliminated and knowledge gained from doing a certain activity or task can be passed on for the benefit of other teams.

Going back to physical file organization example because everything is organized, the decision maker can now proceed more efficiently with the decision making process. He does not have to use the "Im sorry but I dont have that information with Me." or "I dont know what you want to get from all this." excuses anymore.

ORGANIZATIONAL BENEFITS Benefits under this category include: 1. Better/faster innovation, 2. Improved customer service, 3. Reducing knowledge loss and 4. Increase in productivity/better performance. All these benefits impact on the way an organization thinks and does things to achieve its objective, whether it is to provide quality education, quality products and services or quality programs to bring about the good of civil society.

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In a constantly evolving and competitive environment, organizations are faced with having to continuously improve especially in the area of creating innovative products and service that would be meet the also constantly evolving needs and wants of their customers. Ultimately, without patronage from customers, the organization will die a natural death.

In physical file organization example, as a result of organized databases, the decision maker has the necessary information and knowledge to substantiate or justify R&D initiatives that would lead to more innovative and create products and services.

These initiatives may cost the company at the start but, looking at the longterm perspective, we can see that, when the products and services are created and then sold to a market that needs or wants them, then the company will actually reap the rewards of satisfied customers translating into increased sales revenues which helps offset the initial capital sunk into the R&D initiatives.

As the amount of content within a company increases, two specific needs arise: The ability to organize this content using taxonomies and workflow. Taxonomy is a way to classify information resulting in a catalogue or map of an organization's content. Once employees find the information they need, workflow can improve the quality of collaboration among employees by automating interactions between them. This is especially useful if employees are frequently travelling or out of the office. The ability to search and locate answers or insights from this information. Whether searching the Web, documents, or databases or

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seeking insight into specific questions, a federated search solution can help employees easily access information stored in a company's file servers, databases, E-mail servers, and even the Web, from one location. Employees spend less time re-creating the wheel and more time conducting business. Once a company has established a classification for stored content, it needs to focus on expertise location, which helps users pinpoint and collaborate with experts within their organizations. No matter how much information is available, effective business decisions require the input of other experienced people. When an employee has access to these experts, partners and customers receive improved responsiveness and service, while the organization reduces cycle times and ultimately achieves a competitive advantage.

In order to ensure the success of a knowledge-management strategy, company leadership needs to wholly support the implementation of the strategy. Strong leadership will identify possible challenges, enforce a change-management policy, and set metrics to measure the success of the implementation. The best knowledge-management strategies are focused on solving a business problem and enabling that company to become an on-demand organization--one that's integrated, flexible, and responds with speed to customer demands and market opportunities. Those that follow a systematic methodology such as the one described here are the ones that achieve the highest return on their knowledge-management investments. References:

PETRONAS, 2000-2005, Company Background

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http://www.petronas.com.my/internet/corp/centralrep2.nsf/Src/WebDoc *Company+Background/?Open NetIndustries, LLC, 2007, Company Profile, Information, Business Description, History, Background Information on Petroliam Nasional Bhd http://www.referenceforbusiness.com/history2/79/Petroliam-NasionalBhd-Petronas.html Wikipedia http://en.wikipedia.org/wiki/Malaysia_Liquified_Natural_Gas_Corp oration The benefits of knowledge management http://www.itmatters.com.ph/columns.php?id=manuel_100404

Satyadas, 2003, Other Voices: Growing With Knowledge Management, Information Week http://www.informationweek.com/news/software/enterpriseapps/showAr ticle.jhtml?articleID=15200114 Argote, L., P. Ingram (2000). "Knowledge transfer A Basis for Competitive Advantage in Firms." Organizational Behavior and Human Decision Processes 82(1): 150-169. Nonaka SECI http://www.cyberartsweb.org/cpace/ht/thonglipfei/nonaka_seci.html Nonaka, I. and H. Takeuchi (1995). The knowledge-creating company. New York, Oxford University Press.

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