PSO PROFILE

Submitted To Sir Zaffar Mannan

Muhammad Saad
FA08-MM-0081
Managerial Policy

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 TABLE OF CONTENT

S.NO PARTICULARS PG NO

1 Company Profile & Background 3

2 Corporate Social Responsibility 4
3 PSO Products 5
4 Oil Market Share Pie Chart 6
5 Vision & Mission Statements 7
6 IFE & EFE Matrix 8
7 IE Matrix 9-10
8 SWOT Matrix 11-13
9 Competitive Profile Matrix 14
10 Space Matrix 15-16
11 BCG Matrix 17
12 Grand Strategy Matrix 18
13 QSPM 19
14 Suggestions & Recommendations 20

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COMPANY PROFILE:
Pakistan State Oil (PSO) is the oil market leader in Pakistan enjoying over 79%
share of Black Oil market and 58% share of White Oil market. It is engaged in import,
storage, distribution and marketing of various POL products, including Mogas, HSD, Fuel
Oil, Jet Fuel, Kerosene, LPG, CNG and Petro-chemicals. This blue chip company, the
winner of "Karachi Stock Exchange Top Companies Award" and a member of World
Economic Forum, has been a popular topic of case studies in Pakistan and abroad based
on its radical corporate turnaround over the last few years.

EXCELLENCE IN CUSTOMER SERVICE:

PSO serves a wide range of customers throughout Pakistan, including retail,
industrial, aviation, marine and government/defense sectors. Professionals at PSO strive
for providing unmatched and diverse services to the customers in line with best
international practices. PSO's state-of-the-art New Vision retail outlets are equipped with
the most modern facilities, including auto car wash, electronic dispensing units,
convenience stores, business centers, internet facilities and Easy Payment Centers for
payment of utility and Citibank credit card bills. The concept of Quick Oil Lube Vans
introduced by PSO provides the lube change facilities at customers' doorsteps. About 21
Mobile Quality Testing Units ensure top of the line quality of products and services. As
innovative customer service initiatives, PSO has launched Loyalty Card, Corporate Card,
Fleet Card and Prepaid Card. These cards provide added convenience, flexibility and
security to the customers while enabling them to earn redeemable loyalty points and avail
attractive discounts for purchase of non-petroleum products at a large number of merchant
outlets in various cities on use of Loyalty and Corporate Cards.

For efficient handling of customer complaints, queries and suggestions, PSO has
developed Customer Service Centers at all its 14 divisional offices. Furbished with

A toll free telephone number (0800-03000) and automated customer feedback

registration system, these centers provide an efficient system of 24-hour customer care.
An attractive and comprehensive.

TOTAL QUALITY CONTROL:

PSO has been meeting the country's fuel needs by merging sound business sense
with national obligation. In order to satisfy the customers' needs while ensuring the
highest quality of products and services, PSO has introduced total quality management
system in its operational activities. Consistent conformance to prescribed standards and
specifications across the whole range of activities from receipt, storage, transportation and
delivery of products is the cornerstone of PSO's quality management system. In addition
to quality assurance in upkeep and maintenance of existing facilities, compliance with
quality standards is ensured in construction of new facilities like recently developed state-
of-the-art facilities for Aviation customers at Lahore Airport.

HEALTH, SAFETY AND ENVIRONMENT:

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 Ensuring the health and safety of PSO employees, contractors, customers and
members of public likely to be affected by the Company's operations is one of the basic
corporate objectives, and as a priority it ranks equally with market share and profit.
Accordingly, it is the Company's policy to perform work in the safest practicable manner,
consistent with best industrial practices while adhering completely to the requirements of
health and safety codes and practices. The Company's Health, Safety & Environment
(HSE) Steering Committee monitors HSE compliance on regular basis while HSE Site
Committees ensure that HSE Requirements are met at all operating locations, including
Depots, Terminals, Plants, Retail Outlets and Airports. Use of relevant safety equipment
at work is mandatory for employees. Regular HSE audit of facilities and HSE training of
relevant staff is carried out and commissioning of new facilities is subject to HSE
clearance. Adequate resources are made available to ensure the success of HSE policy.

CORPORATE SOCIAL RESPONSIBILITY:

PSO is highly committed to fulfillment of its corporate social responsibility and
believes that the benefits of the Company's progress and financial gains must flow down
to public at large up to the grassroots levels, particularly to the under-privileged and
deprived sections of the populace irrespective of ethnicity, caste and creed. PSO has
undertaken a wide range of initiatives to support several social, health and educational
programs. Such initiatives include instituting gold medals, cash awards and scholarships
for top students of leading professional educational institutes, providing computer training
to students and other residents of Badin district in rural Sindh province through a well
facilitated training institute established for this purpose, providing moral and financial
support in form of donation on compassionate basis to charitable institutions, installing
direction signs and traffic signals at major streets and thoroughfares, supporting Citizen
Police Liaison Committee and sponsoring road awareness programs like Karavan Karachi
for the children.

REFORM OF CORPORATE GOVERNANCE:

PSO's comprehensive and far-reaching corporate renewal program resulting in
dramatic corporate transformation has been widely appreciated at various national and
international forums, by world's leading consulting and financial advisory firms and by
leading educational institutions. This program covers the revamping of the organizational
architecture, rationalization of staff, employee empowerment and development, and
efficiency and transparency in decision-making through cross functional teams.

PSO's corporate structure has evolved into a matrix, which has divided the
Company's major operations into independent activities supported by the financial, legal,
information and other services. These activities operate in an autonomous and collegial
manner in the form of Strategic Business Units based on the clear and transparent
allocation of responsibility and accountability. This Structural change has been reinforced
and putting in place several corporate monitoring and control systems have established
related checks and balances.

One of the top priority areas of PSO's corporate reform is Human Resource
Development. The Company has undertaken several initiatives to ensure induction and

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training of professionals with the objective of ensuring high level of professionalism and
productivity at all levels of its employees. Through computer training, various in-house
courses, sponsorship of staff for studies at professional institutions and seminars, the
Company is providing its employees the opportunities for continuous development and
learning.

Effective implementation of corporate reform and business development strategies

in line with best international practices has enabled PSO to maintain its market leadership
position in a highly competitive business environment.

PSO LUBES
o PSO is the largest lubricants marketing company in Pakistan

o PSO has the complete range of automotive lubricants.

o PSO is totally committed to quality and excellence and its lubricants department is
ISO 9001:2000 certified. For testing and processing facilities of all automotive
lubricants.

o PSO extends lube testing facilities and advisory services for costumers to drive
maximum benefit from its products.

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OMC MARKET SHARE:

SHEL
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Vision statement:

“To excel in delivering value to customers as an innovative and

dynamic energy company that gets to the future first.”

Mission statement:

“Professionally trained, high quality, motivate workforce,

working as a team in an environment, which recognizes and
rewards performance, innovation and creativity, and provides
for personal growth and development.”

“Lowest cost operations and assured access to long-term and cost

effective supply sources.”

“Sustained growth in earnings in real terms. Highly ethical, safe

environment friendly and socially responsible business practices”

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IFE, EFE & IE metrics:

IFE (Internal Audit):

Key internal Factors Wt Rate Wt.

Score
Strengths
• Brand Equity country-wide 0.14 4 0.56
• 42% of petrol business 0.07 2 0.10
• Consumer Loyalty 0.14 3 0.33
• Successful items 0.15 3 0.39
• Product quality 0.10 3 0.30

Weaknesses
• Declining market share 0.08 2 0.16
• Weak product development 0.07 2 0.14
• Disgruntled franchisees 0.06 3 0.18
• Lubricant market 0.12 2 0.24
• Slowed revenue and income growth 0.06 2 0.12

Total 1.0 2.8

EFE (External Audit):

Key internal Factors Wt Rate Wt.

Score
Opportunities
• CNG and LPG expansion 0.15 4 0.6
• Only serving 18% of the lubricant market 0.12 3 0.36
• Growing number of cars 0.12 3 0.36

Threats
• Research in the alternative energy 0.13 3 0.39
• Strength of competition 0.14 4 0.56
• More environment conscious consumers 0.11 2 0.22
• Changing demographics 0.10 3 0.30
• Current economic crisis 0.13 4 0.52

Total: 1.00 3.31

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IE (Internal & External Matrix):
Strong Average Low
3.0 to 4.0 2.0 to 2.99 1.0To 1.99

High
3.0 to 4.0

WEIGHTED
Medium

THE EFE

SCORES
2.0 to

TOTAL
2.99

Low
1.0 to 1.99

THE IFE TOTAL WEIGHTED SCORES

Interpretation:
IFE
The company has an IFE score of the 2.8 which means that there is room for much
improvement in the sector that the company specifically the lubricant sector. Other things
can also be improved for example employee morale, their skills and company promotion.

EFE
The company has an EFE score of the 3.31 which means that the rivals of the company
are far behind the company. This is true as the company has more then 50% of the total
fuel market. But the company also has to increase the market share in the engine oil
lubricants sector as well.

IE
The company has a combined score of 2.8 & 3.31 from the IFE EFE matrices which mean
that the company lies in the high external and medium internal factor. From this the

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company is suggested to focus on the internal factors and its competitive advantage and
try to put barriers for any upcoming competitors.

SWOT Matrix:

STRENGTHS:
1. State-owned entity.
2. Professional management.
3. Largest retail network.
4. State of the art LMT.
5. Dedicated Staff.
6. Pioneer in cards.
7. Country-wide storage network.
8. State of the art ERP system (SAP).
9. Tracking system for logistics.
10. Quantity and Quality assurance

WEAKNESSES:
1. Human Resource with no or little technical knowledge.
2. Focus of company on fuels (Make 90% GM).
3. Low spending on A&P.
4. Weak positioning.
5. Weak distributors’ network.
6. Lack of CRM.

OPPORTUNITIES:
1. Increased Environment Conscious Society.
2. Consumers becoming more Brand-Conscious and loyal.
3. Growing Number of private service station.
4. Lower Interest rate for Car Financing Schemes given by banks.
5. Consumers are more inclined toward one-stop service.
6. Upcoming OEMs into Pak auto market.
7. Government supports towards foreign investment in industry.
8. Construction and infrastructure development.
9. Toll blending opportunities.
10. Untapped Niche Markets.
11. Growing awareness about alternate fuels

THREATS:
1. Global procurement of raw material by our competitors.
2. Fuel/BO/Additive prices increasing.
3. Global base oil crisis.
4. No entry-barriers for local producers/importers.

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 5. Reduce awareness of product quality and specs amongst consumers.
6. Low pricing of local blenders.
7. Acquisition of only monopolized base oil refinery by an OMC.
8. Smuggling of branded lubricants.
9. Spurious products available at cheaper rates.
10. Global shortage of oil.
11. Various other OMC’s entering the market such as Bakri, OOTC, HASCOL,
Attock & Admore

SO STRATEGIES:
 Use the tracking system feature to capture the logistics market. (S9, O11)
 Use the various cards to increase the customer loyalty. (S6, O2)
 Use the dedicated staff to gain edge in the construction and other infrastructure.
(S7, O8)

WO STRATEGIES:
 Use the loyal customers to market and advertise the company.(W3, O2)
 Turn the company focus from only fuel sector and gather the lubricant market as
well.(W2, O5)
 Use the growing number of the stations to increase customer relationship.(W1,
W9, 03)

ST STRATEGIES:
 Use the law enforcing contacts to put an end to the smuggling of oil and other
lubricants. (S1, T8)
 Use the countrywide storage network to buy oil at bulk prices in order to escape
the oil crisis. (S6, T10)
 Use the large customer base and quality of products to put barriers for other
OMC’s entering the market such as Bakri, OOTC, HASCOL, Attock & Admore.
(S9, T11)

WT STRATEGIES:
 Prepare the employees in order to retain customers or else other competitors will
take over the market. (W1, O11)
 Improve the distribution network to counter the low prices of the local blenders.
(W5, T6)
 Transfer the focus from only the fuel oil market and cover other lubricants in order
to make them more competitive with other brands.(W2, T9)

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 CPM
PSO Shell
Critical Success Rating Rating
Weight Score Score
Factor
Product Quality 0.25 2 0.50 3 0.75
Price Competition 0.15 3 0.45 3 0.45
Financial position 0.10 2 0.20 3 0.30
Customer Loyalty 0.15 2 0.30 3 0.45
Market Share 0.20 2 0.40 4 0.80
Global Expansion 0.15 2 0.30 3 12
0.45
Total 1.00 2.15 3.20
Interpretation:
The company even though is performing better then its major rival Shell in terms
of the fuel market but is lags behind due to the other things. So it should improve the
performance in the various other elements especially expansion.

SPACE Matrix:

Financial Strength (FS)

Price earning ratio = 1
Return on investment = 1
Cash flow = 1
=3

Environmental Stability (ES)

Rate of inflation = 3
Competitive pressure = 1
=4

Industry Strength (IS)

Financial stability = 2
Productivity, capacity utilization = 3
=5

Competitive advantage (CA)

Customer loyalty = 1

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 Product quality = 1
=2

 Financial Strength (FS) =3

 Environmental Stability (ES) =4
 Industry Strength (IS) =5
 Competitive advantage (CA) =2

X-axis = CA + IS = 2 +5 =7
Y-axis = FS + ES = 3 + 4 =7

X-axis = CA + IS = 2 +5 =7
Y-axis = FS + ES = 3 + 4 =7

Aggressive

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Conservative

Defensive Competitive

BCG Matrix:

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 II I
Star Question Mark

III IV
Cash Cows Dogs

BCG STRATEGIES:
 Backward Integration.
 Forward Integration.
 Horizontal Integration.
 Market Penetration.
 Market Development.
 Product Development.

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II
Grand Matrix:

III IV 16
-As PSO is lying in Quadrant I therefore the following strategies should be adopted:
 Market Development
 Market Penetration
 Product Development
 Forward Integration
 Backward Integration
 Horizontal Integration
 Related Diversification

QSPM:

Key internal factors Wt AS TAS AS TAS

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STRENGTHS
1. Brand Equity country-wide 0.20 4 0.80 3 0.60
2. 42% of petrol business 0.15 2 0.30 1 0.15
3. Consumer Loyalty 0.15 2 0.30 2 0.30

WEAKNESSES
1. Declining market share. 0.20 3 0.60 2 0.40
2. Weak product development. 0.20 2 0.40 2 0.40
3. Disgruntled franchisees. 0.10 2 0.20 3 0.30

Key external factors 1.0 2.60 2.25

Opportunities
1. CNG and LPG expansion 0.20 3 0.60 4 0.80
2. Only serving 18% of the lubricant market 0.15 2 0.30 2 0.30
3. Growing number of cars 0.10 2 0.20 3 0.30

Threats
1. Research in the alternative energy 0.20 3 0.60 2 0.40
2. Strength of competition 0.20 2 0.40 2 0.40
3. More environment conscious consumers 0.15 2 0.30 1 0.15

Key internal factors 1.00 2.40 2.35

5.00 4.60

RECOMMENDATION & SUGGESTIONS:

The recommendation and suggestions received can be categorized into 3 basic categories
i.e.

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 1. Improvement of the quality of service offered at PSO petrol pumps.
2. The need to promote PSO lubricants.
3. Targeting the future customers.

Analysis of the recommendation and suggestions:

1. A number of respondents found themselves running short of time while on road.

They expect quick and efficient service while getting their motor vehicles
refueled. Long waiting lines at petrol stations not only creates problems for them,
it also discourages them from using certain petrol stations. PSO must take this
customer requirement into account. Increasing the size of petrol stations to cater to
a greater number of customers simultaneously, during rush hours or increasing the
number of petrol pumps on the same route were some of the suggestions received
in this regard.
Cheating and unfair malpractices were highly resented by some of the
respondents. Filling less than the required amount or overcharging the customers
were some of the complaints received. PSO must keep an extremely vigilant eye
on all such practices as it not only adversely affects customer satisfaction; it also
reduces the level of trust PSO customers have in the organization. Thus strict
action must be taken against any attendant found involved.
Other suggestions received with regards to the quality of service included keeping
a check on the proper functioning of ATM machines at PSO petrol stations and
extending this facility to all the PSO petrol stations spread across major cities of
Pakistan. Suggestions were also received regarding the attraction and
entertainment aspect at PSO petrol stations. Installation of television sets on the
petrol stations were suggested so that the customers may kill their boredom while
they are waiting in line to get their motor vehicles refueled.

2. PSO strongly needs to promote its line of lubricants as more than half of the
sample surveyed was unaware of the PSO lubricants Deo and Carient. Effective
advertising campaign through media, newspapers, billboards, etc should be used to
help PSO achieve this objective.

3. Along with catering to the needs of existing customers PSO should have a long
term planning, focusing on the future customer base. Strong advertising
campaigns in which appeal is made to people’s sentiments, their values and
culture should be use so that they can identify with PSO products as their own.
PSO is the only major Pakistani organization working in this sector in Pakistan;
they should make use of this fact and use the Pakistani factor to induce a feeling of
Patriotism among its customers.

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