Name : Jovita Saras Putri

ID : 1611011030

Business Ethics

Chapter 4: Ethics in the Marketplace

PERTAMINA

Pertamina (was Perusahaan Pertambangan Minyak dan Gas Bumi Negara, lit. 'State Oil and
Natural Gas Mining Company') is an Indonesian state-owned oil and natural gas corporation
based in Jakarta. It was created in August 1968 by the merger of Pertamin (established 1961)
and Permina (established 1957). The firm is currently (2013) the second-largest crude oil
producer in Indonesia behind the US-based Chevron Pacific Indonesia. In 2013 for the first
time, Pertamina ranked no. 122 in the Fortune Global 500 list of companies with revenues
totaling to $70.9 billion, Pertamina is also the sole Indonesian company to be featured in the
list.

In the oil market, Pertamina is surely the leader yet there are some other competitors in the
market. The other companies are:

 Pertamina
 Shell
 Petronas
 Total
 AKR
 Ocean Petro Energy

There are three types of economic model:

1. Perfect Competition: perfect competition is a theoretical market structure in which the

following criteria are met: all firms sell an identical product (the product is a
"commodity" or "homogeneous"); all firms are price takers (they cannot influence the
market price of their product); market share has no influence on price; buyers have
complete or "perfect" information – in the past, present and future – about the product
being sold and the prices charged by each firm; resources such as labor are perfectly
mobile; and firms can enter or exit the market without cost.
 2. Oligopoly: Oligopoly is a market structure with a small number of firms, none of
which can keep the others from having significant influence. The concentration ratio
measures the market share of the largest firms. A monopoly is one firm, duopoly is
two firms and oligopoly is two or more firms. There is no precise upper limit to the
number of firms in an oligopoly, but the number must be low enough that the actions
of one firm significantly influence the others.
3. Pure Monopoly: A pure monopoly is a market structure where one company is the
single source for a product and there are no close substitutes for the product available.

Although Pertamina holds almost all the market share, and other companies gas station
usually don’t reach as much area as Pertamina, the market for gas oil is still identified as
oligopoly market. In the oligopoly market, there are three main views on oligopoly power:

1. The do-nothing view

2. The anti-trust view
3. The regulation view

In the oil and gas business like this the role of the government is really huge, that is why the
regulation view takes more place in this business. Although other private companies have the
right to sell non-subsidiary oil and gas, Pertamina takes control of subsidiary oil and gas
under the supervision of the Government of Indonesia. Other than that, since private
companies are only selling non-subsidiary oil and gas, they only open station in big cities,
targeting those who have luxurious car and also other big institution. While Pertamina has
gas station in every corner of Indonesia’s provinces, we can see it obviously that Pertamina
holds the biggest market share.