Professional Documents
Culture Documents
Company Profile
Summary: Company profile for Pakistan State Oil
Pakistan State Oil came in to being on January 1, 1974, when federal government took over management of Pakistan
National Oil (PNO) and Dawood Petroleum Limited (DPL) and renamed them Premier Oil Company (POCL) under
the marketing of petroleum products (federal control) Act, 1974. On June 3, 1974 the Petroleum Storage
Development Corporation (PSDC) was taken over and renamed the State oil company limited. Government merged
Pakistan National Oil and Premier Oil Company in to the State oil Company Limited and then on December 30,
1976 renamed it Pakistan State Oil Company limited. The Company has approximately 3,700 retail outlets across
Pakistan, including 1,609 New Vision Outlets. During the fiscal year ended June 30, 2007, it sold 11.8 metric tons of
petroleum, oil and lubricants products.
Location
Head office in Clifton Karachi
Branch Offices in Various cities of Pakistan
Key people
• M. Jalees Siddiqui, Chief Executive Officer
• Sardar M. Yasin Malik, Chairman
Products
• Oil
• Natural gas
• Petrochemicals
Financial facts
Revenue ▲PKR 349.7 Billion (2007)
Net income ▲PKR 4.7 Billion (2007)
Market Share
Pakistan State Oil is currently enjoying over 82 % share of Black Oil market and 61 % share of White Oil market. It
is engaged in import, storage, distribution and marketing of various petroleum products including mogas, high speed
diesel (HSD), fuel oil, jet fuel, kerosene, liquified petroleum gas (LPG), compressed natural gas (CNG) and
petrochemicals. Pakistan State Oil also enjoys around 35 % market participation in lubricants and is blending /
marketing. Castrol brands, in addition to a wide array of its own. The company has retail coverage of over 3,800
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outlets, representing 80% participation in total industry network. (Pakistan State Oil, 2008).
Personnel
There are 1952 employees in the company.
Website
www.psopk.com
Competitiveness
The petroleum, oil and lubricants (POL) industry in Pakistan is made up of two major players, Pakistan State Oil
and Shell Pakistan. Caltex came in third whereas Total Parco is on fourth. Attock Petroleum has the smallest share of
the market. Pakistan State Oil is the largest oil marketing company which is facing competition from these
competitors.
Overcoming Obstacles
• Rising Oil Prices in the international market
• New employees are dissatisfied with the working conditions of the company
It overcame these obstacles in the following way:
• As alternative to fuel, Pakistan State Oil is developing Ethanol which would be available at reasonably less
price.
• Pakistan State Oil is creating customer friendly environment at its petrol pumps: contracts with United
Bank Limited and Pizza Hut are in progress
• Pakistan State Oil is developing environment friendly products which emit less smoke.
Problem identification
The 19th World Energy Congress in Sydney (Corporate turnaround of Pakistan State Oil, 2004), very clearly
mentioned the problem identification and the purpose of turn around strategy of Pakistan State Oil.
• Pakistan State Oil was loosing its market share, the overall performance of the company before the year
2000 had been sliding downwards. The company was also encumbered with several litigations and had
difficult dealers and transporters to deal with.
• Internally it had no sound business model to undertake short and long term business planning supported by
proper capital budgeting system.
• Quality of its products was continuously declining. Shell earned a big name in quality.
Purpose of change
• As Pakistan State Oil was loosing its market share which was deteriorating its profitability so the change
was inevitable in order to increase the profitability.
• To increase the efficiency of the employees.
• Old as well as new employees feel dedicated towards the work.
can not say that Kirmani was the pioneer of the change, because before him Shaukat Mirza the Managing director
(2000) had designed and suggested all the change policies but after his death in 2001, Kirmani just implemented
those policies, so one can say that Mr. Shaukat Mirza took the first step in the turn around strategy.
According to Pakistan State Oil's Senior Officers the process of change took place by taking the services of highly
qualified and experienced professionals by designing new business models. After a long time Pakistan State Oil
implemented the change process including the four main changes as:
1. Leadership
2. Social responsibility
3. Check and balance on employee's attendance
4. Quality of products
In this regard, integral to their strategy was the "New Vision Program" that symbolizes their new outlook towards
the future while the "New spirit" guides them to become even more competitive
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2. Social responsibility
Before the change the company was not much involved in the social activities but due to management team after the
turn around Pakistan State Oil has succeeded in creating a culture, built on their strengths and best practices, not
only in terms of operating excellence and exemplary standards but also in their proactive approach to quality of life.
At the heart of this position is their commitment to zero pollution, zero accidents and zero occupational illness.
In this context:
• It introduced its product by the name of Green XL which does not contain any toxic material.
• It also created visual parks at different places like one is in Islamabad.
• It also took certain steps to protect the animals as well. In this context it has also celebrated Wetland
Program for saving turtles specie. ( Pakistan State Oil, 2008).
Pakistan State Oil created a lot of awareness about environment by fixing banners along the road side like: "Your
environment is you." or "Keep your environment clean." In this way by efforts of management Pakistan State Oil
proved the slogan of environment friendly products after the change strategy was implemented.
3.
Check and balance on employee's attendance
Before the change the condition of Pakistan State Oil was such that the employees never stay full time at their work
place. Every employee was free to leave their work and could easily get out form their offices without any strict
control. This change brought in to context a new rule of keeping an eye on employees. For that purpose Pakistan
State Oil introduced a specific hand scan system which used to scan the hand of employee while entering and after
leaving the workplaces. This system also displays the time being worked by employee, so it is a very effective
system applicable till now which leading to change the attitude of the workers.
According to Industrial Consumer Officer:
"Mr. Kirmani was a very straight forward kind of person; he used to attend each and every workshop related to any
subject matter. He just wanted everyone to work hard and if he saw anyone not working, he could straight away
throw him out of his organization." (Personal Communication, May, 05, 2008).
4. Quality of products
According company's profile (Pakistan State Oil, 2008) the image of Pakistan State Oil was not so good in
customers mind, its quality was low as compared to its competitors but efforts of the Mr. Kirmani led to creation of
quality control vans and testing units which kept on ensuring the quality control. Pakistan State Oil introduced total
quality management system in its operational activities.
Now Pakistan State Oil 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,
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 Pakistan State Oil'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
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In this situation Kirmani handled all these propagandas perfectly; he did not give up but work more hard to convince
the employees. In the end only 10 % people were left who were not convinced about the company's' change strategy,
but Kirmani thought that they were convincible.
go - a necessary (and the most difficult) step to moving on to a new beginning. The model actually is a three-stage
design, and behaviors that are characteristic of all major transitions are identified.
The first stage of the model is the "Ending" or letting go of the past, which acknowledges that change begins with
starting something new, but transition starts with an ending. This process can be very difficult because of the
ambiguity it renders. Generally, people have difficulty letting go of the past because it is comfortable; the future is
unknown. The second phase, which is referred to as the "Neutral Zone" is one of transition, and is marked by low
stability, personal stress, and conflict. The third stage is the "New Beginning," marking a time when real change
begins, and there is a focus on the future. Creativity flourishes in this phase, as individuals feel a sense of relief and
promise.
The above explained "Bridges Transition Model" has great resemblance with Pakistan State Oil turn around strategy.
It reflects the three phased change management process. In the first phase the employees let go off traditional ways
of working on typewriters, in congested environment under the threat of a strict and critical manager who never
liked to take feedback from them. During the second phase workers faced some difficulties in adopting entirely new
office set up and new working conditions. It must have developed some stress leading to personal conflicts also.
Gradually they became used to new working environment. They started working better and produced useful ideas
which eventually lead to high profitability.
Customers at Pakistan State Oil are still dissatisfied with the services provided at Pakistan State Oil. (Personal
communication, May 03, 2008). The revitalization in Pakistan State Oil was done with a purpose of making Pakistan
State Oil a customer focused organization but this purpose still seems to be unachieved. Customers complaint that
the attendants at pumps of Pakistan State Oil are not well-trained and they do not know how to deal with the
customers. They are in haste and try to send customer away as soon as possible. On the other hand managers at
Pakistan State Oil claim that the attendants are well trained and we properly educate them how to deal with
customers. They first check the meter and then put the fuel (Personal communication, May 05, 2008). The situation
is opposite if we see it with perspective of customers as well as managers, showing the inefficiency of change
policy.
The employees are also not fully satisfied with the intervention process. The salaries at Pakistan State Oil are not up
to that level which competitors like Shell and Caltex are paying because to cut down the expenditures, Mr. Kirmani
ordered to cut down salaries as well as allowances of employees at Pakistan State Oil.
High Turnover
Turnover rate at Pakistan State Oil is high due to lack of facilities provided to the permanent employees. A senior
manager at Pakistan State Oil (Personal communication, May 05, 2008) told that at first employees were given
excellent medical facilities and other allowances and the parents of employees were also entitled for the medical
facilities but now theses facilities have been reduced to cut down the cost of company similarly we are paid less at
Pakistan State Oil as compared to other competitive organizations that’s why often the young managers find better
opportunities and leave the organization which lead to high cost.
Older employees still resistant to change
"Change management requires thoughtful planning and sensitive implementation, and above all, consultation with,
and involvement of, the people affected by the changes. Change must be realistic, achievable and measurable.
Before starting organizational change, self assessment is important: Change needs to be understood and managed in
a way that people can cope effectively with it. Change can be unsettling, so the manager logically needs to be a
settling influence." (Stone, 1998, p. 573)
During interview with a senior officer at Pakistan State Oil we came to know that young employees are energetic
and motivated towards the organization but the older ones are still resistant to change (Personal communication,
May 05, 2008). They argue that we like to work on paper rather than using computer and modern skills. According
to Stone (1998) the managers should use face-to-face communications to handle sensitive aspects of organizational
change. It is important to understand about people's personalities, and how different people react differently to
change. A psychiatric could be hired to take personality tests of all the employees and calm down those who strictly
negated the change. For organizational change that entails new actions, objectives and processes for a group or team
of people, workshops could be used to achieve understanding, involvement, plans, measurable aims, actions and
commitment because it is the best way of group communication as it is easy in a large organization like Pakistan
State Oil to communicate in groups rather than personally comforting the workers one by one.
Change Must Involve the People - Change Must Not be Imposed Upon the People
(Anderson, 1997). Only those organizations conduct successful change processes which fully involve all the
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employees in change process through proper communication at proper time. Now in case of Pakistan State Oil the
only problem was that the change was imposed upon people, as Pakistan State Oil had many old middle managers
who resisted it. But it was their right to resist because they were not being involved in the change process, instead of
telling before hand the change strategy by Mr. Kirmani was totally opposite to it.
Ways of Communicating Change
The change strategy of Pakistan State Oil was not properly communicated to all level of managers and employees. It
was just a top down approach which was totally a wrong thing. For this purpose workshops are very useful
processes to develop collective understanding. Staff surveys are also a helpful way to repair damage and distrust
among staff – provided it is allowed to be filled anonymously with the assurance that proper secrecy will be
maintained and provided you publish and act on the findings.
According to Dunn & Stephen (1972) management training, empathy and facilitative capability are priority areas -
managers are critical to the change process - they must enable and facilitate, not merely convey and implement
policy from above, which does not work.
You cannot impose change - people and teams need to be empowered to find their own solutions and responses, with
facilitation and support from managers, and tolerance and compassion from the leaders and executives.
Help employees to make the change
It is futile to make the change if the employees are not with you. Employees should also be given enough time to
change. Though in case of Pakistan State Oil the change was quick but the employees were not given the time to
float their ideas and to cope up with change which led to resistance from employees. Pakistan State Oil should
inform at least the employees before hand about the turn around strategy.
Effectiveness of strategy
• After the change strategy Pakistan State Oil's overall market share rose to 80%. Now it has highest share in
black and white oil which proved very fruitful. This market share shows the earning of Pakistan State Oil
has climbed high as compared to old earnings.
• The change strategy played an effective role in developing New Vision retail outlets 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 Pakistan State Oil, provides the lube change facilities at
customers' doorsteps.
• As a result of Kirmani’s change strategy, Pakistan State Oil launched many innovative ideas regarding the
environmental friendly products.
• "The image of Pakistan State Oil in customers improved to greater extent. Exactly after the change it
opened many more outlets for its customers, it also engaged itself in providing shop stop facilities to its
consumers, and now as a result of the change strategy it is having a contract with pizza hut for giving its
customers every opportunity to enjoy a quality life. It also launched Loyalty Card, Corporate Card, Fleet
Card and Prepaid Card, for its customers. These cards provide added convenience, flexibility and security
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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." (Bashar, 2001)
• The new policy of change led to creation of many young and energetic employees who could work more
actively by using new technology and machinery.
• Due to proper technique of check and balance on attendance system of employees, Pakistan State Oil got
very positive results. The productivity level per employee went up. The hand scan system changed the
employee's attitude towards the work, they became regular and worked hard to achieve the productivity
standards.
• It was because of change that Pakistan State Oil created quality testing units which ensured the quality of
the products. About 21 Mobile Quality Testing Units ensure top of the line quality of products and services.
(Hoovers, n.d.).
Recommendations:
1. Alternative for Fuel
We can see the inflationary trend in the market and the prices of oil are very high in the international market
nowadays. People prefer to use alternatives of petrol and other fuels such as diesel which could be of low price. In
Brazil, ethanol is used in place of fuel in vehicles and cars. Pakistan State Oil being the largest company of oil in
Pakistan should also develop such alternative for people so that people could get high quality products at reasonably
low prices. As there is a need, people would greatly respond to this new product which can further help it in rising
its sales, market share and profitability.
2. HRM Department at Every Office
Human resources are a great asset for any company and companies undertake effective measures to look after their
greatest asset. Human Resource Department is important in each and every office or division of the company in
every city but things are different at Pakistan State Oil, the employees are not satisfied with this thing because they
complaint that for every problem related to Human Resource we have to write to the manager at head office in
Karachi. The local administrator evaluates the employees in the office and report to HR manager at Karachi. This is
not an effective strategy. Human Resource Department should exist in each and every office of the company. It will
reduce the problems of employees and they would be better able to get the solution of their problems.
Motivation for Employees
Employees at Pakistan State Oil are dissatisfied due to comparatively low salaries. During interview with the senior
officer at Pakistan State Oil we came to know that (Personal communication, May 05, 2008) engineers at Shell and
Caltex are getting starting salary of Rs. 40,000/- but at Pakistan State Oil they get almost Rs. 20,000/- which is a big
difference that is why turnover rate is high here. Similarly taxes are deducted at gross salary due to which take home
income is low here. Pakistan State Oil is in the development phase of its some of the products, so it needs to keep its
official expenses low which are demotivating employees.
Constructive Environment for Managers
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The environment which is provided to managers at Pakistan State Oil is not favorable due to presence of managerial
and clerical staff at the same place. Managers have to take decisions and undertake projects which require great
concentration at work but the non-managerial staff creates hustle-bustle and disturbs the environment. There must be
separate rooms for managers and non-managerial staff workers so that managers could completely concentrate on
their work.
Lewin's Change Process—Suggested Model
The best model of the change is that of Lewins which says that change process contains three steps:
Unfreezing: Reducing the forces that are striving to make status quo
Moving: Developing new behaviors values and attitudes
Refreezing: Introducing of new systems and procedures.
If we see at Pakistan State Oil one can conclude that change was sudden unfreezing step was not so properly done.
Yes, moving was quickly processed and finally refreezing was done. But more emphasis of change was on
refreezing than other two steps, so the Lewin's change process model is the suggested model for Pakistan State Oil.
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Conclusion:
Pakistan State Oil has earned a big oil marketing company but due to certain reasons, the manager of the company
brought some changes in it. As we have seen that these changes proved very fruitful in the way to development and
increasing the market share and profitability of the company so one can say that the turn around strategy of Pakistan
State Oil was very effective. This strategy was implemented effectively and positive results were achieved. Every
strategy has its pros and cons but ignoring the weaknesses the overall strategy was a success for Pakistan State Oil.
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References
Anderson, H. Alan. (1997). Effective Personnel Management. Mumbai, Calcutta, Bangalore, Hyderabad, Chennai,
Bashar, Amanaullah. (2001). Pakistan State Oil. Retrieved April 25, 2008, from
http//www.psochange.htm
Burack, H. Elmer., & Smith, D. Robert. (1977). Personnel Management. United States: West Publishing Company.
http://www.businessballs.com
Corporate Turnaround of Pakistan State Oil. (2004). Retrieved April, 28, 2008, from
http://www.wec-geis/congress/paperfull.asp?paper=285
Dessler, Gary. (2005). Human Resources Management (10th ed.). New Delhi: Prentice Hall of India.
Dunn, D. J., & Stephen, C. Elvis. (1972). Management of Personnel: Manpower Management and Organizational
Finanacial Gadget (n.d.). Pakistan State Oil Financial and Profit Review. Retrieved April 25, 2008, from
http://www.fingad.com/review/pakistan_state_oil_financial_and_profit_review
Gordon, R. Judith. (1986). Human Resources Management. United States America: Allyn & Baycon Incorporation.
Hoovers (n.d.). Business Intelligence: Pakistan State Oil Company Analysis. Retrieved April 26, 2008, from
http://www.hoovers.com/pakistan-state-oil
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Pakistan State Oil. (company profile). Retrieved April 23, 2008, from
http://www.wikipedia.com
Pakistan State Oil [Image] (n.d.). Retrieved April, 28, 2008, from
http://images.google.com.pk/images?hl=en&q=Pakistan%20State%20Oil&um=1&ie=UTF-8&sa=N&tab=w
http://www.psopk.com/
Stone, J. R. (1998) Human Resource Management (4th ed.). Australia: John Wiley & Son's.