INTRODUCTION TO MANAGEMENT

Final report
On

Submitted by

SYED REHAN ALI
MBA-(Evening)

SP09-MB-

Mr.BABER WAHAB
(Course Mentor)

Faculty

Date of submission:

30 APRIL, 2009

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“How the Management functions performs in Pakistan State Oil.”
The content provides an introduction, history and how manager job is changing and tells significance of using latest technology in an organization. Pakistan State Oil (PSO) despite carrying a label of a public sector entity, and truly the drivers of economy of this country. PSO is continuously improving his product and services and improving the quality of the product. Government of Pakistan holds its 51 % share. PSO is a Pakistan’s largest company having an average turnover of around US billions of $ annually. These are solo distributor in the southern region and further it occupy greater market share. PSO has maintained a 30-year mutually-beneficial business relationship with Kuwait Petroleum Corporation (KPC) for the purchase of HSD and FO and also export its product to Afghanistan. PSO ranked 29th whose revenue as compared previous year was seen surged by 41 percent. Previous year PSO was ranked at 31st. “PSO shall undertake social, philanthropic or community development programs which are in alliance with its business strategies or that which will benefit the broader interests of the community.” We are proud to cater INTRODUCTION needs of approximately 2.8 to the fuel and non fuel million customers per day. & The report concludes on “SWOT ANALYSIS of PSO “ and some useful suggestion also added.” HISTORY Finally,

This report presents detailed information on

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YNOPSIS

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Oil is OVERVIEW COMPANY the life blood for a country as

Market Leader in Energy sector: PSO is the eart of economy Pakistan state oil is the market leader in Pakistan’s 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. PSO takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow. Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in storage, distribution and marketing of various POL products. 2

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CURRENT VALUE: the Company’s current value of Rs. 75 billion, MARKET SHARE MARKET SHARE in Black oil : 82.1% MARKET SHARE in white oil : 61.2%

The company’s astounding growth in terms of sales and turnover, combined with its status of being the

 First Pakistani Public Sector Company to become a member of the World Economic Forum (WEF)  Winning the “Karachi Stock Exchange Top Companies Award” has made PSO a notable
company world over. PSO has the widest strategic oil distribution network. This network comprises of 29 storage depots and 9 installations, 860,000 MTs of capacity i.e. almost 81% of total national storage, numerous pipe lines network and equity partnership in White Oil Pipeline Project (WOPP) from Karachi to Mehmood Kot. A most efficient product movement system for its POL products facilitates the operations at PSO. This system includes a fleet of 6000 tank lorries, tank wagons and pipelines. With the inception of white oil pipeline (WOPP) the pattern of supplies from Karachi has changed drastically as the entire white oil movement from Karachi has been switched over from tank lorries to pipelines. Moreover, to make this system more efficient and effective, new pilfer-proof tank lorries equipped with satellite tracking system have been introduced. Distribution outlets 3612: 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
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electronic dispensing units, convenience stores, business centers, Easy Payment Centers and customer friendly staff to provide unmatched and diverse services to its customers, all of which are comparable to international practices. 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. In July 2002, ‘PSO Loyalty Cards’ were introduced to reward the retail customers for their loyalty and patronage towards the company. In February 2003 PSO launched its ‘Fleet Cards’ and ‘Corporate Cards’, which are fuel-based credit cards for the business entities. These cards along with the company’s Prepaid Cards, provide convenience, flexibility and security to customers, while enabling them to earn redeemable loyalty points and avail attractive discounts on non-petroleum products.
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(1-1): http://www.psopk.com/about_us/ 3

* POL products
PSO products include:

        

Motor Gasoline, High Speed Diesel Furnace Oil Jet Fuel Kerosene LPG CNG Petrochemicals Lubricants

PSO’s leading retail brands includes:

 Premier-XL (petrol with multi-functional additive),  Green-XL (environment friendly diesel with an additive that provides more mileage,
smooth running & less black smoke), Deo (diesel engine oil) and Carient (passenger car motor oil).
In order to deliver the promised quality to its retail customers, PSO launched Mobile Quality Testing Networks (MQTU) in October 1998 which has now been extended to 21 units operating from 15 major cities of Pakistan. These units perform surprise visits to check the quality of the POL products at different retail outlets.
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PACRA ASSIGNS RATINGS TO PAKISTAN STATE OIL COMPANY LIMITED

The Pakistan Credit Rating Agency (PACRA) has downgraded the long-term entity rating of Pakistan State Oil Company Limited (PSO) to AA+ (double A plus), while maintaining the short-term rating at A1+ (A One Plus). These ratings indicate a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

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HISTORY

The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1st; the government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL) as Premiere Oil Company Limited (POCL). Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd 1976. Following that, the ESSO undertakings were purchased on 15th September 1976 and control was vested in SOCL. The end of that year (30th December 1976) saw the merger of the Premier Oil Company Limited and State Oil Company Limited, giving way to Pakistan state Oil (PSO). After PSO’s inception, the corporate culture underwent a comprehensive renewal program which was fully implemented in 2004. This program over the years included the revamping of the organizational
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*http://www.psopk.com/about_us/business_glance.php
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1974 The federal government took over the management of PNO (Pakistan National Oil) and DPL (Dawood Petroleum Limited). that PSO has been able to maintain its market leadership in a highly competitive business environment. 4 January 1.architecture. rationalization of staff. related check and balances have been established by incorporating monitoring and control systems. It is due to this effective implementation of corporate reform and consistent application of the best industrial practices and business development strategies. employee empowerment and transparency in decision making through cross functional teams.psopk. 1976 PSCDC renamed to State Oil Company Limited (SOCL) 5 4 (1-2): http://www. In order to reinforce and monitor this structural change. renamed into POCL (Premier Oil Company Limited) under marketing of Petroleum Products (Federal Control Act. financial. Human Resource Development became one of the main priorities on the company’s agenda under this corporate reform. informative and other services.php 5 5 . 1974) June 6.com/about_us/history. 1974 The government incorporates “Petroleum Storage Development Corporation’ PSDC August 23. This new corporate renewal program has divided the company’s major operations into independent activities supported by legal.

1976 The Government merges PNO and POCL into SOCL (State Oil Company Limited) and renames it Pakistan State Oil Company Limited (PSO) 1999 The new vision program is launched 6 . 1976 The Government purchases ESSO undertakings. vests their control in SOCL December 30.September 15.

 How manager is changing  Rewards  Quality Management (2.1) HOW MANAGER JOB IS CHANGING? 7 .

Biggest threats to Pakistan state oil is (Pakistan State Oil Head Office Building) costing Billions of rupees.  In strikes. In a current period. Till 1994-95 only two companies were in operation  PSO  SHELL At that time there is no issue of Quality & Quantity.5% Increase threats to security Increase Competitiveness In 1994-95.CHANGE IMAPACT In a global scenario. YEAR PSO PSO 1994-95 2009 PROFIT MARGIN 7 Paisa/L 3. In a current scenario:  Tank Lorries holds in Afghanistan. Eleven or twelve companies are in oil operation. competition is increasing very rapidly. tankers damages. 8 . All over the country threats is increasing. Technology plays a vital role in an organization. there is no issue of quality & quantity but today Quality & quantity has become significant for both companies and customers. Phillips Kotler quotes: Technology “ If company not use technologies. they are out of the business and only those companies compete in the market that adopts technological changes” Pakistan state oil uses latest technologies like  SAP & ERP  LOTUS Advantages of using technology is  To save time  Increase efficiency and productivity The company shall reinforce technology-driven value-added initiatives and shall work towards increasing income from nonfuel and gaseous fuel businesses.

(2-2) REWARDS Pakistan state oil gives rewards to their employees on the following performance basis. OUTSTANING/ EXCELLENT PERFORMANCE AVERAGE PERFORMANC E ABOVE AVERAGE PERFORMANC E MARGINAL PERFORMANC E BELOW PERFORMANC E 9 .

Around 1200 tank Lorries. The modes used for product movement of POL products by PSO include tank Lorries.  6 (2-2): Interview with the Public Relation Manager (PSO) Contact no: (9221)9207628: Ext 2061 : (0300)9201184 6 Sayed.Increme nt 15 % 10% 12% NO 5% Basic 4 2 3 - - PROMOTION Promotion based on EDR (Employees Development Report). Pakistan state oil is known as offering utmost quality products and highest performance ever. equipped with tracking 10 .com 1 Quality Management Quality is a factor that no one can ignore it longer. We have a fleet of around 6. PSO being fully committed to implement total quality management approach has achieved ISO 9000 certification for its six terminals while the balance storage would be made ISO compliant in the next couple of years.tameezuddin@psopk. PSO is continuously improving his product and services and improving the quality of the product. Mr.Tamiz uddin (To whom that I am making report) Awarded as Outstanding performance as a Divisional Manager in the year 2002-03 He got following rewards  Shield  Certificate & Recognition letter  Cash award & Umrah ticket And also got Laptops and digital camera. REAL EXAMPLE: On OUTSTANDING PERFORMANCE On outstanding performance.000 tank Lorries. tank wagons and pipeline.

1: http://www. have been upgraded as per international standards which are engaged in delivering quality fuels across the country.and pilfer proof system.com/suppliers/#?1 11 . To cater to the local lubricants requirements Free Lube Delivery Vans have been introduced. the pattern of supplies from Karachi have been drastically changed as the entire white oil movement from Karachi has been switched over from tank lorries to pipeline. With the inception of white oil pipeline (WOPP) from Karachi to Mehmood Kot via Shikarpur & MFM (Mehmood Kot / Faisalabad / Machikey) pipeline.psopk.

     Manager Views Strong or Week Culture Dimension of organization culture How Employee learn culture Environment • • Internal environment External Environment Organization stakeholder (3-1) Managerial view of management Symbolic / Omnipotent Top level management set targets..well enough If the goal is not achieve If the target not meets the management see it as a whole and search for a reason. While Middle level make planning to achieve the targets through Lower level staff. If the goal is achieve --------------. If the reason don’t justify then management takes steps towards that employees 12 .

Innovation and Risk taking ABOVE 7 25% (3-1 . on performance basis employee can exceed each other.(3-2) Pakistan State Oil and Strong Culture  PSO believe in sharing the key values of employees. Reason: PSO has policy that. 3-2. employees and the management cross questioning to each others and raise the issues and make solutions.  Co-ordination meeting between Managers/MD and their subordinates Schedule on Bi-monthly basis and meeting is mandatory on quarterly basis. Each year employees are nominated for two company-wide ceremonies viz  Shaukat Raza Mirza Management Excellence Award’  PSO Managing Director’s Performance Award’ Employees within the organization are aggressive to each other in order to achieve the targets. That’s motivating the subordinate. 3-3): Interview with the Public Relation Manager (PSO) Contact no: (9221)9207628: Ext 2061 : (0300)9201184 13 Sayed.com . (3-3) Dimension of Organization Culture PSO mainly emphasize on  Stability & Aggressiveness  Innovation and risk taking 7  Attention Detail Stability & Aggressiveness Employee Recognition: To boost the morale of employees a reward and recognition scheme is in place for the last few years and has been a great source of creating a spirit of healthy competition amongst employees.  In a meeting.tameezuddin@psopk.

which enables refueling in a vehicle without cash. Where the organization conduct a orientation plan. Innovation & Risk technology PSO encourage their employees to share creative and innovative ideas PSO-Innovation * Vehicle Identification System (VIS) is an innovative system introduced for the first time in this region by PSO at participating outlets. 50% 25% Example quoted: “If there are 04 EINSTEIN in an organization those above rules also apply”. In this orientation plan employee meets with their all heads/ boss. It is an advance Fleet Management Solution for your organization which guarantees fueling in the authorized vehicles only. 50% employees declare as Average performance. then Human Resource report to TNOD (Training and Organizational Development).AVERAGE BELOW 25% employees declare as Above performance.php *http://www. 25% employees declare as Below performance. and with the passage of time employees learn culture itself.com/products_services/vis. Benefits: Fueling of authorized fleet vehicles only Substantial Savings Automatic Odometer Reading 8 How employees learn culture When employee is hired.asp 14 .pakistaneconomist. PSO has Open & Candid communication culture ENVIRONMENT INTERNAL 8 EXTERNAL Further detail description can be seen on http://psopk.E53.com/pagesearch/Search-Engine2002/S. credit card or voucher.

With the passage of time culture of an organization also changes.. We value people of PSO as our greatest Resource Non management union exists in PSO. General INTERNAL Culture shows basic values & behaviors of a society. DGM co-ordinate time to time with the union Culture Employee Union *The company has strengthened its internal controls specifically in supply chain area by implementing computerized load acknowledgement system. IRE department control all the issues of union under the supervision of DGM. That’s why companies provide training to their new as well as experienced employees to increase the organization efficiency time to time. fleet management plan has been implemented at Karachi. Employees are the backbone of an organization and without employees no organization can achieve their goals. which would be extended gradually to other major cities of the country. which is aimed at preventing misappropriation of products in transit and ensures prompt delivery of products to customers and depots. To ensure proper supplies to local retail outlets. Specific . * 15 . Union election held after 03 years then revise terms and condition. But today women are competing male side by side in every department. Example: 15/20 years back female are restricted to specific fields only. Lahore and Islamabad.

SPECIFIC ENVIRONMENT 16 .

as well as aviation. marine and Government/Armed Forces sectors Major customers are:  KESC  WAPDA  DEFENCE  PAKISTAN STEEL MILL  IPP’s  Armed forces. of outlets in urban as well as rural areas. of Pakistan holds 51% share of PSO.6 % 70. being a customer friendly company passed on the benefit to this lower cost savings to the consumers. Supplier PSO export its product to Afghanistan only. Competitor Pressure group Govt. PSO purchase their product to  Pak-Kuwait  Pak Arab  Attock refinery limited  Pak refinery limited  NRL  PARCO  PARCO 11-12 companies are working in the oil & petroleum industry. Market share PSO Market share in 2007: PSO Market share in 2008: 68. out of which PSO is the leading company and other two major competitors are:  SHELL  CALTEX PSO has maximum no. 17 .6 % Example: Political parties/Govt ministers use their resources to contract with the PSO transportation to use their lorries and trucks But PSO has two policies and if they fulfill any one of the two then they PSO contract with them at their own reservation.Customer PSO gives his customer :a high value” Broad customer base including the retail and industrial. Railway etc. PSO. So they influence on the organization decision and make pressure to the top level of the organization.

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operation and logistics. We believe that excellence in our core activities emerges from a passion for satisfying our customers' needs in terms of total quality management. age. How?  Prices high  PSO takes Over draft  Pay high Mark-up. It needs also increases at a rapid rate that generate a threat of not fulfilling these needs. location. We value contribution of individuals and teams. but has also offered them attractive discounts for purchases at a large number of merchant outlets.and the try to get their influence on the decision making process. One of the most important tasks accomplished during the initial period of transformation was to inculcate the significance of information technology amongst the employees. which has not only enabled the customer to earn PSO Loyalty Points redeemable throughout the country. Open and transparent business practices are based on ethical values and respect for employees. dedication and commitment are the landmarks of our success. *The latest launch of "PSO Loyalty Card" has been the most 19 innovative marketing initiative. Demographic threat may be there due to the rapidly growing population. ERP solution SAP implemented at all locations Implemented SAP to streamline the information systems for obtaining and sharing up-to-date real time information on sales. occupation etc. Professional and personal honesty. Social cultural Demographic Technological A technological change is a way for Innovation. We are an Equal Opportunity Employer attracting and recruiting the finest people from around the country. economic condition of a country is directly influence to the PSO. sector organization) Political/legal Political and legal environment influence on the organization (Reason may be that Govt.Economic condition In a current recession scenario. Our foremost goal is to retain our corporate leadership. communities and the environment.* . Individual contributions are recognized through our reward and recognition program We uphold our values and Business Ethics principles in every action and decision. and establishing common data warehouse across the supply chain. Demographic environment is vital and organization is mainly interested in the population and growth of the size because people (customer) are the one who makes company profitable The reason is that human population according to size.  Low Receivable (specially from Govt. of Pakistan holds 51% share). density.

ORGANIZATION STAKEHOLDERS Major organization stakeholders are:  GOVT OF PAKISTAN 51%  HBL (Habib Bank Limited)  INVESTEMNET CORPORATION OF PAKISTAN 20 .

D ecision M aking P rocess DECISION MAKING PROCESS Problem: PSO lost their regular customer (EDHI) 21 .

Kazmi: call the representative.and found that their regular customer EDHI is not purchasing to the PSO. SOLUTION: CHARACTERS in a Real situation: ` Mr. Although PSO was also offering to them a special discount over the last few years. Mr. Kazmi : In charge of EDHI Mr.  Our ambulances engine is cease because of poor quality of fuel. Kazmi( EDHI incharge): Initially refuses the agreed. Mr. Ok . Area Incharge of the PSO (Mr. Kazmi he shocked because he knows him.tamiz uddin : Area incharge Mr. Area Incharge of the PSO (Mr. faisal Edhi : ADMINISTRATOR (owner) MR. PSO area incharge asked him that what you know about quality of the fuel.Tamiz uddin): call to the Mr. Kazmi( EDHI incharge) said: according to our representative  Other company (SHELL) is providing better quality than you.Tamiz uddin): When representative see the Area incharge of PSO in the office of Mr.Tamiz uddin): he courteously starts his message and asks him to tell the reason that you have stopped to purchase our product. Kazmi if you have any complaint then you should tell us. Area Incharge of the PSO (Mr. Representative: He stated the same reason as early described… Interview with the Public Relation Manager (PSO) (9221)9207628: Ext 2061 : Sayed. If you are not purchasing then doesn’t matter but i wanted to meet your representative to prove that whatever he is saying is true or fake? 9 Mr. XYZ : Area Incharge of the PSO (Mr.  There is difference of measure of quantity too. Kazmi (EDHI incharge) and said that he wanted to meet him. Then they both meet in the office of EDHI.Identification of a Problem Area manager of PSO check the sales volume of a petrol pump .Tamiz uddin): Mr.com (0300)9201184 9 Contact no: 22 .tameezuddin@psopk.

Otherwise that can cause a adverse affect on the company image and good will. Mr.Tamiz uddin): Area Incharge of the PSO (Mr. He proved that the PSO quality is the best among all. Faisal Edhi (the administrator of the EDHI) to be a client of Pakistan state oil. Intuitive Decision making Affect initiated decision PSO not take decision on the basis of feeling and emotions. After that Mr Kazmi was promise to the area incharge of PSO that he will take action against him and he will request to the Mr.Area Incharge of the PSO (Mr.Excellent quality). Kazmi (EDHI incharge): When he enforced to his representative he admit that he has done this thing only for the sake of getting commission from another company pump. 23 .Tamiz uddin): check / test the sample Area incharge takes sample of 03 different oil companies and the results are: PSO : 210 SHELL : 209 CALTEX : 208 (210 Shows ---.

sometime decision takes on the basis of subconsciously mental processing. The advantage of taking decision is not to repeat a mistake that happened in past. EXAMPLE: Experienced based decision Values or ethics based decision Subconscious mental processing In Supply department. PSO not take decision on the basis of values or ethics. 24 . It helps an organization to take better decision. like Whether we will purchase inventory from XYZ party or not. knowledge and perfection. PSO sometime take decision on the basis of subconscious mental processing.Cognitive based decision PSO take decision on the basis of skills. that will lead an organization PSO also take decision on the basis of Past experiences.

(1) FORMAL PLANNING Formal planning use in  BUDGETING  FORECASTING 25 .P LANNING  Planning: Formal & Informal  Purpose Of Planning  How do Manager Plans?  Types of Plan? Organization stakeholder • • Internal environment External Environment Planning? It can be formal or Informal.

Because they daily take 3000L petrol and that specific day their sales rapidly growth and they need extra fuel to met their customers need ) PURPOSE OF PLANNING Purpose of planning is     To achieve organization goals. (Above example is of Informal planning.(SCHEDULE BASIS) If the all fuel sold out then they contract to the PSO. EXAMPLE: Petrol Pump XYZ daily takes 3000 Litre fuel from PSO tankers on daily basis. To organize employees and resources effectively. 26 . They will immediately access the production to the pump. manager plans according to their mindset. To meet future deadline efficiently. all the Planning is called INFORMAL PLANNING. HOW DO MANAGER PLANS? In every department of an organization. FINANCING  SALES PLANNING ( in Retail department)  MARKET PLAN  INDUSTRIAL CONSUMER DEPARTMNET. Organization (Top level Management) just wants results.  LOGISTIC DEPARTMENT (from 1 depot to another)  SETTING STRATEGIES (2) IN FORMAL PLANNING Except formal (periodic) planning. To prevent from any risk or uncertainty in the future .

Sales manager keep in mind the last year sales record of _____ quarter.0 3.tameezuddin@psopk. And in current year he set his targets (10-15%) extra.com 27 .185 (15 % more than last year quarter) Financial objectives Strategic objectives     Increase revenue Increase profit margin High ROI Stonger Credit rating      Kept high market share High quality products Finest customer service Use latest technologies Provide training to the fresh employee as well as experienced. And to achieve these targets he/she works Example: (A S S U M P T I O N ) YEAR QUARTER 1 (SALES) (In Million Rs) QUARTER 2 (SALES) (in Million Rs) 2008 2009 3.25 (including 1st quarter sales) 7. 10 TYPES OF PLANS * Interview with the Public Relation Manager (PSO) Contact no: (9221)9207628: Ext 2061 : (0300)9201184 10 Sayed.30 (10 % more than last year quarter) 6.

In which Area managers discuss problems and changes. environment friendly and socially responsible business practices 11 11 * http://www.. 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.… …. Company research companies material or make marketing that how many are using that raw `or etc. which recognizes and rewards performance. working as a team in an environment.php 28 .BREADTH TIME FRAME SPECIFICITY FREQUENCY OF USE STRATEGIC It defines the broad goal for the organization. are decided by the Board of directors. Example: Sugar cane season is going to start. In a X-COM (executive committee) meeting tp level management of PSO discusses the issues and policies. safe * LONG TERM Pakistan State Oil Long Term Planning Duration is Five (05) Years. MISSION We are committed to leadership in energy market through competitive advantage in providing the highest quality petroleum products and services to our customers.psopk. innovation and creativity. The planning use is called single planning. motivated workforce. high quality. based on:  Professionally trained. the When PSO launch Additive Diesel …… …… ….com/about_us/vision_mission_values. The strategic goals of the company. However. They make directional planning that at this time that particular area need in that amount … they estimate all. planning is Single use. So company makes policies to provide more Lubricant and diesel to that particular area to meet the demand. they are reviewed every year in the meeting. DIRECTIONAL Departmental meeting held. along with the strategic plans. SINGLE Example: In Brand management.

TACTICAL These goals together with the plans to achieve them. In addition more than 10000 forecourt attendants have been trained on customer services as part of WOW experience launched. Which customer takes to which suppliers. STANDING ongoing training program to equip its workforce with necessary skills and knowledge. is the job of the director of each division. then order of next delivery SHORT TERM Pakistan State Oil Short term Planning Duration is within a Year. Focusing on customer demand. MEDIUM Pakistan State Oil Medium Planning is in between (01) to (05) Years. when he needed . Mainly through marketing. OPERATIONAL At an operational level daily distribution planning and Production scheduling occur. Operational decisions are the agreement with the suppliers. again. what amount he needed. To ensure that these objectives are achieved. 29 . WOW plan: Providing finest customer service to their customers and receive a sudden feedback (WOW). SPECIFIC Specific plan in an organization are clearly stated Example: If a divisional manager has given the task to the area manager to achieve XYZ target then area manager must define the procedure and policies to its subordinates. 10000 training inputs have been imparted. are devised by the top management of the company on an annual basis. to our employees since 2000 despite their being busy. taking orders form customers.

Organizing  Work specialization  Authority and Responsibility  Chain of command  Span of control  Centralization & Decentralization  ________ Departmentalization  Mechanistic or Organic 30 .

"We are now training our employees to solve customers' complaints to their satisfaction and not ours'. De centralization decision making: In a decentralization decision making employees also participates and openly gives their ideas. Chain of command Chain of command in an organization is clearly defined. The mentors have a lot of authority. executive committee.WORK SPECIALISATION: The work specialization is high.) Centralization & Decentralization Centralization decision making: In a centralization decision making NO employees participation involves. management committee. is confidential and even the consultants are not aware of it. particularly the financial aspects.  While settlement of strategies  Developing plan. with each manager/ leader responsible for a specific work and monitors his subordinate’s performance on regular basis. responsibility and information relative to the task on which they are working.  Which employee report to which boss. However all the information and authority relative to the organization as a whole.  How much time he will take to finish the task  Span of control Span of control vary form department to department level normally 10-15 employees work under 1 boss. It happened at following level    Divisional offices Field related planning Field pump ( if problem arise the operational department solve) 31 . Then they report to their leader whenever they are part of a team and to their respective departmental director as well. It happened at the following level  Top level basis." AUTHORITY AND RESPONSIBILITY: PSO has given authority as well as responsibilities to the manager that they can take a decision to achieve their target.

Cost savings have occurred due to strict vigilance and proper negotiations in supply and purchases. Similarly distribution systems and logistics have also been improved to a great extent and financial transactions as stated earlier show a remarkable change. coherent and consistent messages ensure that employees are able to integrate the inputs into their thinking Setting up of Cross-Functional Teams (CFTs) to promote team work and timely action.Cross Functional Teams  Encourage team work & group dynamics while inculcating a sense of ownership through empowered Cross Functional Teams (CFTs) Employ Business Process Reengineering (BPR) to maintain an international working environment by streamlining processes and removing unnecessary layers Interactive sessions are regularly held by the Managing Director at all levels because clear.    Quick and merit based decisions taken by respective cross functional teams have yielded important successes in terms of volumes and profit. Similarly security and HSE have also seen a turn around 32 .

Geographical Departmentalization: EDCS GM Retail GMIC DGM (South) DGM (Central) DGM (North) DGM IC FEUL DGM IC LUBRICANT Divisional Manager (04) Divisional Managers (06) Divisional Managers (04) Deputy Business Managers (07) Deputy Business Manager (07) Deputy Business Managers Area Incharge (05) Area Incharge (05) *Area Incharge 12 13 12 * Area in charge minimum (4) and maximum depend upon the size of the area 33 .

Functional Departmentalization: MD & CEO ED-CS GM Construction GM (retail) GM (Rc) GM Aviation GM Operations GM Supply GM Logistics GM Training & Organizational Development GM Lubricants and Chemicals GM Gaseous GM Brand management GM Legal ED .I Auditor DGM Security DGM procurement GM Finance GM IT (GM managers renamed as Business Managers) Source: Interview 13 34 .FINANCE & IT GM HR C.

We emphasize quick decision making in our style of management we strengthen teamwork promoted through formation of various cross functional teams to expedite decision-making and execution of policies. In a clear departure from the bureaucratic style of management. Division of labors Company rules and policies are strict Old PSO Distribution oriented Large and centralized Government control Operational based Diffused responsibility Technical orientation Risk averse Hierarchic and Bureaucratic setup Reliance on managerial authority Petroleum sale only Transformed PSO Customer service Oriented Lean and decentralized Managerial autonomy Strategic vision Ownership and accountability Commercial orientation Entrepreneurial attitudes Task driven organization Teamwork and delegation of responsibility Broader business base Strategy Mix Matrix Introduction of Matrix Management System with shared support functions. This is based on the Strategy Mix Matrix (GSM) which PSO has adopted.       Decision making centralized (on major issues) as well as decentralized. Clear chain of command to the employees Cross functional teams are also working Span of control vary (department to department). employee empowerment has been enhanced through delegation of authority and employee participation has been ensured through open invitation of suggestions. 35 . Mechanistic or Organic organization ??? Pakistan state oil is mechanistic as well as organic organization. By analyzing the organization seems to me more organic than mechanistic.

argues that your choice should be based on the situation. And. Leadership at Pso : Pso believes in highly empowered employees . of course. "contingency" means that your approach is dependent on/contingent upon the situation). and not on your personal preferences (here. These differences suggest a continuum of leadership behavior – with leaders being able to choose the style they use. a combination of 36 . In process of making a decision. Since Pso is a highly diversified organization in terms of business portfolio. So how do you choose the leadership style that's right for you? One popular approach to leadership. gets suggestions from them and then implements the decisions. Some are authoritarian and prefer to tell their teams exactly what to do. the "contingency" approach. leaders may use a style anywhere between these two extremes. the general procedure is that a manager presents a problem to his subordinates. Others use a much more participative style.L EADING 14 14 Expectations from the leaders at Pso :      Passion for business Contribute towards change and constant improvement Empower People (Sub-Ordinates) Excellent Execution Integrity and Accountability Leadership Continuum Leadership Continuum Leaders come in all shapes and sizes.

Pso is a follower of “Care and Growth” philosophy. Managers while making decisions are expected to be highly concerned for the people so that once the employee is satisfied.e. Hence. designating and directing from the managers towards the subordinates. coaching. managers are expected to show high concern for people so that they can be motivated to take responsibilities in order to produce the best possible results.Leadership styles is found. he or she can deliver best possible results under the given circumstances. at Pso. A combination of all such styles means that there is an even mix of supporting. the manager has liberty to choose from either the analytical style. managers believe that high concern for results and work can not be made possible if the concern for the employees is taken out of the equation. C ONTROLLING Market control Yardstick to measure employee performance Managerial decision in the control process. The manager decides what style to adopt in which situations i. Industrial rating Types of control balanced scorecard Benchmarking Workplace concern 37 . amiable style or expressive style of leading. driving style. At Pso.

mission.What he is Consider the degree to which employees personnel qualities contribute to his effectiveness.      15 Dependability Judgment Leadership Drive Initiative Source: *Interview with the Public Relation Manager (PSO) Contact no: (9221)9207628: Ext 2061 : (0300)9201184 38 15 Sayed. Therefore.com .How he works          Planning Working with others Delegating Problem solving skill and use of modern techniques Organizing Communicating Analysis Health.      Quality of work Quantity of work Profit objectives Developing people Commitment to company. * PSO YARDISTICK TO MEASURE EMPLOYEE PERFORMANCE A.tameezuddin@psopk. the company can be easily ranked some where between 400-450 in a typical Fortune 500 list of US Companies. values and corporate objectives B. safety environment Ethics C.Market Control Pakistan State Oil Company Limited (PSO) is Pakistan’s largest company having an average turnover of around US billions of $ annually. vision.What he accomplishes Consider result of employees work and that of his subordinate.

    Assigned work Related work Company philosophy and objectives Development in profession or field.What he knows What he knows regarding his functional related field and his understanding of environmental matters necessary to performance. 39 . on the basis of which they decided that whether employee deserve to promote or tends to be in the same category. SUMMARY OF POINTS IN (A-D) 5 A B C D 4 3 2 1 Average This is the proper way through which employee performance is measure in PSO. BENCHMARK: Pakistan state oil benchmark is to get   Market share Profit Internal Benchmarking: On the basis of past experience company set their standard.D. BALANCE SORECARD Employee development report is just like a balance scorecard for the higher management.

0 417.4 81. The ratings reflect the company’s leadership www.6 2. Obviously company anticipates the problem and issues. 40 .3 23.5 21. It ensure that either the company is going in the right direction or not.4 2007 22. while maintaining the short-term rating at A1+ (A One Plus).com FINANCIAL CONTROL FINANCIAL RATIOS FINANCIAL RATIOS Return on Shareholders' Equity (%) Earning per share (Rs Bn) Dividend per share (Rs Bn) Market value per share (Rs Bn) Debtor turnover ratio Net profit ratio 2008 45.94 27.5 24.14 Types of control Controlling is a reflection of planning and controlling in an organization is mandatory. FEED FORWARD CONTROL Company use feed forward control.5 1.4 32. These ratings indicate a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.24 391.PACRA ASSIGNS RATINGS TO PAKISTAN STATE OIL COMPANY LIMITED The Pakistan Credit Rating Agency (PACRA) has downgraded the long-term entity rating of Pakistan State Oil Company Limited (PSO) to AA+ (double A plus).pacra.

Then take decision against that/those employees Example: S North Quarter 1 (2008) Quarter 1 (2009) 180 M 200 m A L E S South 190 M 210M 41 If Business sales manager of North has set a target to achieve the sales of 200 million in a quarter year. At the end of the quarter they achieved the sales of 180 M.Managerial decision in the control process Objectives and standard set Measure actual performance versus standard performance Goal achieved Goal not achieved Well an good Search reasoning If reason satisfy If reason not satisfy then revise standard. Then they can balance or shift it to the other region (if the sale of that territory is rapidly growing). .

S 1. 3. 3. 4. 5. WOT ANALYSIS Strengths Market Leader in Oil Superior Quality Products Superior Customer Services Customers Loyalty Competent Human Resources Innovation Skill Socially Responsible Government Backed Entity Educate graduates through Quality Internship programs. 4. 8. 1. 3. Weaknesses Inequitable Compensation Package Employees Turnover Ineffective in Lubricant Market Fail to identify the reason of fall in Market Share. 2. 4. 2. 6. 5. 9. 6. 7. Opportunities Growth in Purchasing Power Growth in Vehicles Production Growth in Population Government Support Increase in Prices Increase in Demand Threats 1: Competition 2: Substitute Products 3: Inflation 4: High Cost 42 . 2. 1.

 PSO must organize events that will educate the people regarding consumption of a fuel.  PSO must look for extend its business / organization globally.5: Interest Rates 6: OPEC Policies RECOMMENDATION / SUGGESTIONS After analyzing the financial ratio and this report I would like to give some recommendation. (to open its branches in Afghanistan and other neighbors countries.  Provides Environment safety programs at school and university levels.  Must search for the substitute of oil and gas.  Must promote our Sports industry continuously. *************************** 43 .

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