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analysis of financial statements pso

analysis of financial statements pso

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Published by MBA...KID

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Published by: MBA...KID on Jul 03, 2009
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04/18/2013

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Submitted to:
Sir Wasim Ullah
Group Members:

\ue000Muhammad Younus Baltistani
\ue000Muhammad Yasir Naran
\ue000Muhammad Zubair Jehlami
\ue000Sajjad Iqbal
\ue000RizwanBisharat

\u25e6MBA 19 b
INTERNATIONAL ISLAMIC UNIVERSITY ISLAMABAD
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PAKISTAN STATE OIL
INTRODUCTION

PSO is the market leader in Pakistan\u2019s energy sector. The company has the largest network of retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways, power projects, armed forces and agriculture sector.

Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in storage, distribution and marketing of various POL products. The company\u2019s current value of Rs. 75 billion, its 82.1% share in the black oil market and 61.2% share in the white oil market, alone speak volumes about its success.

The company has significant growth in sales and turnover, tells the status of being the first Pakistani Public Sector Company to become a member of the World Economic Forum (WEF), and winning the \u201cKarachi Stock Exchange Top Companies Award\u201d. PSO has the widest oil distribution network. This network consist of 29 storage depots and 9 installations, 860,000 MTs of capacity i.e. almost 81% of total national storage, (1060000 MTs) Product movement system includes a fleet of 6000 tank Lorries, tank wagons

and
pipelines..

With its 3612 distribution outlets, PSO has the largest network in the country. Out of these, 1,610 outlets have been upgraded as per the New Vision Retail Program, with most modern facilities like electronic dispensing units, convenience stores, business centers, Easy Payment Centers and customer friendly staff to provide better and diverse services to its customers, these are according to

international practices. PSO serves 2.8 million retail customers on daily basis, along with 2000 industrial units and business houses. The company has also been meeting the fuel needs of various government entities, armed forces, railways, agriculture sector, and industrial units. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports.

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Michael porter five forces analysis:
Threat of New Entrance

Threats of new entrance is very low, as PSO has a market share of about 71% in FY08 , 80% in black oil and 59% in white oil. Company has a huge capital. But the new company requires huge capital to enter in this sector. PSO supplies oil to large number of public sector firm. With its 3612 distribution outlets, PSO has the largest network in the country. Out of these, 1,610 outlets have been upgraded as per the New Vision Retail Program, with most modern facilities like electronic dispensing units, convenience stores, business centers. So threat of entry is low.

Bargaining Power of Customer

The company bargaining power of customer is moderately high. The reason behind it is switching cost problem. The product customer purchases from the company are undifferentiated. As The fact that PSO serves 2.8 million retail customers on daily basis, along with 2000 industrial units and business houses, is indicative of its vast customer base. The company has also been meeting the fuel needs of various government entities, armed forces, railways, agriculture sector, IPPs and industrial units. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports.

Bargaining powers of supplies

Bargaining powers of supplies is very high because. When there are many suppliers in an industry, they do not have much power. But there are few suppliers in industry. Here switching cost of supplier is very low.

Threats of substitutes

Threats of substitute are moderately high. The substitute is CNG, so automobile engine is switching to CNG engine. So there is buyer switching cost. Buyer switched to substitute because of High prices of oil at domestic as well as international market last year.

Threat of rivalry

Threats of rivalry are high. Because PSO peer competitors are Shell, APL. Caltex and they are also in profit. The industry is in profit due to growth in automobile industry, demand of generator increasing due to current load shading.

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