PSO(Pakist an State Oil)

Miss Adeela
Quratulain, Nasir Ali

PSO (Pakistan State Oil)

COMPANY: 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 PSOs 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 architecture, rationalization of staff, employee empowerment and transparency in decision making through cross functional teams. This new corporate renewal program has divided the companys major operations into independent activities supported by legal, financial, informative and other services. In order to reinforce and monitor this structural change, related check and balances have been established by incorporating monitoring and control systems. Human Resource Development became one of the main priorities on the companys agenda under this corporate reform. Vision: To excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first. Mission: PSO is committed to lead in energy market through competitive advantage in providing the highest quality petroleum products and services to their customers, based on: Professionally trained, high quality, motivated 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.

Values: a. Excellence: Passion for customers, total quality management, corporate leadership. b. Cohesiveness: Team work, effective communication. c. Respect for Excellence: Respect for individuals, valuing contribution, equal opportunity. d. Integrity: Business ethics, honesty. e. Innovation: Creative ideas, new products and processes. f. Corporate Responsibility: Health, safety, environment, community development. Objective: PSOs main objective is to supply uninterrupted fuel nationwide. PRODUCTS: PSO caters to POL requirements of a wide spectrum of customers comprising the retail consumer, various industrial units, government, power projects, aviation and marine sectors of Pakistan. PSO is truly the driver of economy of this country. A network of 3612 retail outlets enables us to reach Pakistanis from Nagarparkar to Sost. We are proud to cater to the fuel and non fuel needs of approximately 2.8 million customers per day. PSO industrial consumer dominance in the government sector can be judged by the fact that all the major government entities like OGDC, Pakistan Army, Pakistan railways, Navy, NLC, PAF Wah and HIT have entrusted PSO to meet their POL needs. Besides supplying fuel to national power utilities like WAPDA and KESC, PSO is the sole furnace oil supplier to all Independent Power Projects (IPPs) in Pakistan with a share of over 80% in furnace oil market. Moreover, PSO is also playing its due role in meeting the growing energy demand of the country. PSO also supplies fuel to industrial units like textile, cement, agriculture, transport etc. Our industrial consumer base includes prestigious entities like the Presidency and the Prime Minister Secretariat, where PSO has developed consumer outlets for timely refueling of their fleets. Furthermore, PSO also serves the fuel needs of both national & international air carriers. We also provide jet fuel into-plane refueling facilities at 9 airports of Pakistan i.e. Karachi, Lahore, Islamabad, Peshawar, Multan, Faisalabad, Turbat, Pasni and Sialkot. We also supply fuel to ships at Karachi Port, Korangi Fish Harbour & Port Qasim. Moreover, we cater to the fuel requirements of Pakistan Navy, Maritime Security Agency, Karachi Port Trust, PNSC, Faisal Marine Oil Services (Pvt.) Ltd. Some of their products are listed below: Retail Fuels: Premier XL, Green XL, E10 Gaseous Fuels: CNG & LPG Alternate Fuels: BIO Diesel Cards: Fuel based cards includes PSO corporate & fleet cards and PSO prepaid card, Reward based cards includes Privileged loyalty card, Fleet management system, VIS, Strategic Alliances includes PSO UBL auto credit card. Lubricants: It includes PSO automotive oils, PSO industrial oils, PSO fuel oils. Aviation & Marine: Into-Plane Re-Fueling Facility, Marine Products includes Bunker Fuel Oil (BFO) commonly known as furnace oil, Marine Gas Oil (MGO) commonly known as high speed diesel, Marine Diesel Oil (MDO) commonly known as light diesel oil, Highly filtered High Speed Diesel Oil (HSDO) is supplied to Pakistan Navy. Non Fuel Retail: ATMs, Auto car wash, Shop stop, Quick service restaurant.

COMPETITORS:
PSO has strong position in the market. They are already ruling the market with 70% of share, which is why no other company can give them a tough competition. PSO enjoys the edge of providing fuel and services to government sectors. They always try to improve and maintain their relationship with the corporate customers as well as an individual. Earlier they were working only as a fuel distributor but now they are focusing on customer oriented services, therefore whenever you will stop by PSO petrol pump you will not only get fuel, but you will also find stop shop and get car washing services, window cleaning services as well. Although they have no competition, they dont ignore the upcoming oil companies in the market, to them Shell and CALTEX have a significant effect.

2. MANAGEMENT PRACTICES:
MOTIVATION: PSO focuses on creating an enthusiastic team to help them perform better. The company motivates its employees through proper placement, department rotation, appreciation, rewards which enhances the capabilities of people. Empowerment is a motivational factor which enhances an employees skill but at the same time is a responsibility by which he can be judged. With empowerment u r liable to show your capability to handle pressure, manage people, and complete your priority tasks within time. Motivation on the other hand can enhance a worst persons skill as it is said 'the worst men often give the best advice.' The company also gives recognition to their best performing employees by awarding them with excellence certificate as a token of appreciation to them. This deed reflects the Maslow theory of need as it enhances esteem of an employee. PSO considers Job satisfaction as the core of motivational factors therefore they provide excellent work environment, facilities which are mentioned in this report. Shaukat Mirza Award: Shaukat Mirza was one of the pioneers of the transformation process of PSO. This is one of the prestigious awards as it is given to an employee who has done something special for the company. MDA: It is a performance award given from the managing director of PSO to the employees for showing outstanding performance. Excellence Certificate: It is awarded twice a year to motivate their on job employees.

Loan Facilities: It is given for car and house. Fuel & Mobile phones: It is given to the senior management. Salary: Market based salaries for their employees which includes house, rent and medical allowance. Bonuses: It is given performance wise. Accommodation: This is for the employees hired from other cities. Hospitalization: It is completely free for the employees children and spouse. Provident Fund: It is given when leaving PSO. Group Life Insurance. LFA. PSO has also designed BELL CURVE SYSTEM to evaluate the performance of employees. This system tends to be a little demotivating for the employees as there is no transparency in evaluating the performance of a particular employee which is because of biasness and favorism in the evaluating process.

ENVIRONMENT:
PSO strictly follows their code of conducts to ensure an environment that is cohesive to the development and success of their people. These codes of conducts are mentioned below: 1. Unsatisfactory and negligent job performance. 2. Excessive and unauthorized absence from duty. 3. Unsatisfactory safety performance. 4. Reporting on duty under the influence of drug or intoxicants. 5. Absence from duty without notice or permission from the supervisor unless the cause of absence prevents giving notice. 6. Using influence for promotion, transfer or posting. 7. Conduct that violates common decency and morality. 8. Engaging in a fight or in activity that could provoke fighting on site property.

9. Insubordination or deliberate refusal to comply with reasonable requests or instructions. 10. Use or possession of weapons, ammunitions, explosives, intoxicants, illicit drugs or narcotics on site. 11. Acts of horse play on site property. 12. Gambling on site property or bringing illegal gambling paraphernalia on to the site. 13. Theft or unauthorized removal of site property or property belonging to site employee, contractor and vendor. 14. Intentional damage to site, employee, contractor or vendor property. 15. Dishonest act or fortification of records, including the giving of false information when required. 16. Bringing combustible material on site or having any type of match sticks, cigarette lighter or flame producing device in restricted areas. 17. Smoking except in designated areas. 18. Using or divulging without permission, any confidential information gained through employment at the site. 19. Physical, mental or sexual harassment of fellow employee including threat to do bodily harm. 20. Crime involving fraud, indecency, breach of dignity or public morals and other serious offences. 21. Any other commission or omission which, in the opinion of the company, requires/justifies dismissal/termination of employment. PSO believes in an open door policy where any employee can easily communicate with the higher management. They promote smoke free environment that is why they have designed HSE Committee to take care of the employees health. PSO has implemented a health, safety and environmental management system and related standards to carry out operations and other activities in a manner that is protective of human health and the environment. HSE have chosen champions from every floor or department to take care of the surroundings regarding the health and safety issues. PSO also provide lots of training which varies from individuals to individuals and departments to departments.

TRAINING AND DEVELOPMENT:

On annual basis PSO organizes almost 2600 training programs for their employees, so we can easily say that on average PSO spends 40 hours training on each employee. Not only they provide in-house training but they also send their employees abroad for training after doing their Training Need and Analysis (TNA). This system is designed for evaluating training needs and the plan for training on departmental basis. The training department designs a questionnaire and forwards it to different departments, by which they evaluate and select a particular topic for the purpose of training. On the other hand the department head can also send a request for training if he observes that there is a need of training for his employees. PSO have in-house trainers who help in building soft and hard skills of an employee. They have their own auditorium where they conduct these training sessions. The medium of these training sessions can be lectures, workshops, seminars, conferences, an interactive game which

needs full involvement of an employee, like they once organized a leadership training game and activity program at Golf Club for their employees. Some of the topics of their training session include time management, technical training, leadership training, building up communications skills etc. PSO believes in improving their employees to the level that they can excel in every field they are into.

STRATEGIES THEY HAVE:

Recruitment Policy: PSO hire individuals on merit basis and that is why their hiring process is quite transparent. When there is a need of hiring they give an ad in a newspaper to select the candidate according to their requirement who are going to appear in the test and if they are selected they go through the process of interviews which varies for different level of employment. PSO take deep interest in the career planning of their employees, for that purpose, they evaluate the performance of their employees time to time, and do job rotation if needed. PSO monitors that these strategies are being fully applied by the HR department strictly. CSR: PSO believe that Corporate Social Responsibility (CSR) is about making a difference. A difference that is able to permeate the very fabric of society uplifting the economic well being of our country and our people. PSO has been doing CSR activities since 8, 9 years but 2 years back theyve set up a proper committee consisting of 4 to 5 members. These committee members receive a request for such activities and then they analyze and evaluate the needs to get it approved by the board so that they can operate this function in a proper way. PSO every year plans a budget for CSR activities. They issue a CSR Bulletin on quarterly basis which demonstrates that what PSO has done so far as being socially responsible. For PSO CSR is not just a concept, but they are trying very hard to adopt it as a culture. Some of their CSR activities are: Flood Relief: Theyve deducted 1 to 2 days salaries of their employees to provide food, water, blanket etc. to the people affected by flood. Not only has that PSO also provided fuel for such activities. KARAVAN: It is an initiative to reach out to the school children through painting posters, quiz programs and skills to highlight the present crisis and explore different ways of energy conservation. PSOs managing director thinks that children can be the best ambassador of any social cause as their successfully influence their family and friends. Theyve constantly donating to UMEED foundation to educate the under privileged children.

Children Cancer Foundation: PSO donated a Daytona Biochemistry Analyzer to the lab of children cancer foundation. This instrument helped them to switch from the manual method to automation thus getting more reliable, accurate and quick results. Aziz Jehan Begums Trust: PSO has recently joined Aziz Jehan Begum Trusts mission. Their aim is to train educate and rehabilitate the blind to become physically and financially independent earning members. As a responsible corporate citizen, PSO has continued their support to the organization through financial aid. Book Groups Project Sponsored: This group works closely with the government and private sector schools. This group is known for producing alternative textbooks with their teacher guides, which serves as an instrument of change. It is a non-profit organization. PSO has supported this group for the printing of their upcoming books. Nigahban Welfare Association: It is a non-profit organization establish in Civil hospital. PSO has supported Nigahban welfare association by donating the Endoscopic Retrograde Cholangio Pancreatography (ERCP) to the Civil hospital Karachi for its surgical unit. LEADERSHIP: According to PSOs Deputy General Manager (HR) Sumera Manzar leadership is not just leading, but involving your sub-ordinates in such a way that they become the part of the system. A manager or team leader just cant tell their team mates that what to do, they have to set directions and combine the energies of the team members to hit a common goal proficiently. The most important attribute to be a successful leader is to have vision. A vision to take initiatives and set directions to achieve the companys mission efficiently. PSO considers that vision is the most important thing to be a leader even if you are a technical person or have good academic background. They have an Employee Leadership Team, which meets on regular basis to review succession plans and organizational development. Leadership skills are enhanced by PSOs trainer by placing challenging assignments, empowerment and promoting employees within the organization, wherever possible, to fill higher vacancies. They do career planning and development for the employees who have been continuously performing at their best. The young and experienced professionals who can bring a significant change and be a successful leader in the future are given assignments that are of a great deal of responsibility and autonomy. CHANGING MANAGEMENT PRACTICES: The most important practice of PSO is that they believe in team work. Whole PSO, may it be the top management, or lower management work as a team to achieve the companys mission.

Cross Functional System: This system is designed for different projects that PSO is involved in. The main aim of this system is solve the issues of employee. This system promotes the employees to raise issues or ask questions regarding the projects whenever they think its necessary. Management Committee: The management committee, or Man-Com, is a business strategy committee, meets on a weekly basis to make decisions about the projects from conceptualization to implementation. Man-Com also makes decisions on the budgets to be approved or not. When they approve a budget and make up a business for a project then it is sent for the final approval from the board. This committee also reviews major issues and take decisions accordingly. Decisions doesnt lie on one person only, the committee entertains all types of suggestions from the lower management as well. They also decide the new projects that they are going to undertake. The Executive Committee: The executive committee, or Ex-Com, is a high level committee which meets on every Tuesday to review the company affairs that takes place on daily basis. The Ex-Com shares their problems, that they are facing and how to overcome them with other committee members. They also talk about their accomplishments.

CRM Committee: This committee is designed to build strong customer relationship by not only providing fuel within the customers convenience but best quality services as well. The objective is to maintain their customers loyalty by improving the quality of their services time to time. Grievance System: This is an online system for their employees to log their complaints regarding to anything they are not comfortable with. These complaints are tackled with complete confidentiality. 3. SUCCESS STORIES: We have asked 2, 3 of PSOs management employees about the success stories that theyve witnessed, and the only answer we got from them was their transformational process. This process started from 1999 and ended in 2007 with totally a new PSO and a new work environment for their employees though PSO since then keeps its system up to date all the time. The first thing they talked about was the SAP system, which in the late 90s was considered to be a big achievement for any company. By applying the SAP system all of the PSOs data went online. Through this system PSO enhanced their purchasing system which was beneficial for its employees. This system gives global access to the employees avoiding the hassle that was done

through manual forms previously. All the data which went online was now secure and arranged purely. PSO then introduced Golden Hand Shake which was to hire fresh MBAs, which was not a usual practice at that time. By introducing this they started evaluating their old employees which made them to release the inefficient employees from their jobs. This improved PSO credibility in the job market. This was reflected through the efficient employees that joined PSO and played a major role in PSOs success and growth. PSO all over Pakistan runs 3500 retail outlets out of which 1700 outlets were completely revamped during the transformation process which was also a very big achievement for PSO. They completely changed the look of PSOs petrol pumps and introduced car washing and window cleaning services to give best value to their customers. Not just that they also created Stop Shop on their retail outlets. This added value of PSO in the eyes of the consumer. They completely rebranded their company through which the green colour became their brand recognition. Their transformation made the outlets more attractive and comfortable which was a major factor to boost up the outlet sales. In view of current scenario of severe energy crisis and increasing cost of power generation, all small to large scale industries in Pakistan have reduced their dependency on the fuel oils. The power driven industry is switching their fuel oil need to natural gas; comparatively a cheaper source in Pakistan. Increasing population of Gas Engines has created intense demand of Gas Engine Oils. To strive to get to the future first, PSO launched its Gas Engine Oils and is now making efforts to gain market share. With the intention of taping more market share, a joint effort was initiated for Karachi and Hyderabad market by its Consumer Business Divisions. Another achievement of PSO worth mentioning here is that not only our local universities IBA, LUMs but international university like HARVAD also did their case studies on PSO. Some of the things that were achieved during their transformation process were: They completely revamped their website The interior of PSO was changed, no more wooden tables and chairs. Computers were changed Tank truck automation system Online hiring system Tender qualification went online Mobile quality checking system Now the company is customer oriented Though they are a public sector company but their working style has completely changed and become one like of a private company. They became winner of Karachi Stock Exchange and received a top company award They became the first Pakistani public sector company to be a member of World Economic Forum (WEF) They became a company which was fully aware of health and safety environment standards and using them as a part of their continuous improvement process. Since many years, PSOs professional management team and the staff of PSO has been working together for the growth and remarkable performance of their company. Today PSO is not only the largest oil company but it is also the largest public sector source for business in

Pakistan with its rapid development, growth and marketing plans, PSO is dedicated to increase its market share, profits , and meet the need for energy. Pakistan Army has been using Galol Oil, an imported Ukrainian Oil, for Ukrainian Main Battle Tanks (MBT), T-80 UD. The T-80 UD is the most advanced Soviet designed battle tank. The Army has been dependent on the foreign supplier for the supply of Galol oil to meet the engine oil lubrication requirement of T-80 UD Tanks. Muhammad Amjad Ur Rahman, Senior Technical Services Engineer, PSO took initiative and started meetings with the defense high ranking officials at GHQ for developing a local tailor made tank engine oil to replace the imported Ukranian Galol Oil. The objective of this exercise was to make the product locally available for Pakistan Army and to minimize their dependence on foreign supplier. PSO tailor made product qualified the trial parameters and the defense authorities consequently have shown their satisfaction and have expressed their desire to register PSOs newly developed product as a proprietary grade against the Ukrainian Galole Oil. This is yet another milestone achieved by PSO with concerted team efforts which enabled the Pak Army to put an end to the foreign dependency and save foreign exchange. PSOs management appreciates the team behind this success and encourages more innovative ideas.

4. FAILURE STORIES: A company who is continuously supplying us with fuel and owns more than 70% of market share has never faced any failure. They rather talk about the challenges that theyve faced. Their main problem is of circular debt that they dont get their receivables back from the government agencies like KESC, WAPDA etc. They say it very proudly, that even if we are not covering back our receivables from our customers, PSO has never stopped the supply of fuel, from our part at all. This is because of PSOs responsible behavior and enough financial backup that they can still cater to its clients effectively. Media also plays an important role in getting PSOs money back as after few days it is heard that PSO has stop supplying fuel to WAPDA, though in reality it never happens. When talking about failure, the products that PSO have introduced until now have been a success. Though a slow progress is seen at some part but we havent had major failures. Our VIS service showed a slow progress, but ultimately it became quite progressing product. E10 fuel is also one of the slow progressing product as the demand is quite high and its supply significantly low. This is because E10 is still on test and PSO is waiting for market results. They have quite a few feedbacks from this product but still have the capacity to continue it at some of it major petrol stations.

5. FUTURE PLANS: Like any other company their future plan is related to growth, development and valuing their employees. Through market research and product development they plan to maintain, improve

their service, performance and grow its market share. They want to attend to the challenges faced by the company right now and make the future plans accordingly. PSO also aims to diversify and expand its Gas business. Gas keeps a significant market share in the oil market as it is being demand by many businesses and individuals. When it comes to lubricants PSO wants to have an edge and be a market leader in this. They are planning to introduce more products in this category and looking forward for a positive response. Not only a market leader in lubricants, PSO is also focusing on catering the needs of energy production as they want to turn themselves into an energy company. Through proper research and development they want to introduce the concept of Bio-fuels, which is to derive fuel from biomass. This will be done through vegetable oil, fermenting sugar, and animal fats. E10 fuel was launched in Punjab as well in July10 and PSO intends to grow its network throughout the country soon. PSO still wants to improve their retail marketing position through proper marketing campaigns and adding over more vision outlets in the country. The company aims to extend the Mother-daughter concept of CNG stations, which is to supply CNG at those outlets where piped gas is not available.

6. RECOMMENDATIONS: PSO should diversify into the related products i.e. creating some unique features in the products to attract their consumer. They should add some complementary products in the future which can increase their business even more. It is likely in the future that the organization is going to expand the business and enter into the new market. Ability to move with the better strategies i.e. applying some new ways to cover the losses, increase the financial resources or increase the market share can be of a significant effect to PSO. They should also continue introducing new product having the features that are very first in the market i.e. not in any other product offered by any competitor. PSO is lagging behind in the field of marketing research. So they should pay attention to make the research and development department efficient and active. This would definitely increase their market share. PSO has a huge network of retail outlets. Management should work in depth to know that which petrol pumps are more profitable and which are generating low sales so they can adopt new policies in order to increase sales. PSO has also to make its position stronger in this growing environment. It should appoint checking staff apart from sales men on retail outlets who can check the quality and quantity of oil products and can listen to the claims of people. Similarly, the R and D department should conduct research for promotion of its products and for exploring new ways of fascinating customers towards PSO products .For distributing its products in Northern Areas; PSO has to incur some losses due to higher transportation charges. So arrangements should be made to make PSO sell on at least breakeven.

7. CONCLUSION:
In the end, PSO should focus on these questions: 1. In which area is the competition not meeting customer needs? 2. What are the possible new markets? 3. What is the strength of the economy? 4. Are our rivals weak? 5. In which area does the competition meet customer needs more effectively? 6. Are there new competitors? 7. Is there a shortage of resources? 8. Are market tastes changing? 9. What are the new regulations? 10. What substitute products exist? The best strategy is one that fits the organizations strengths to opportunities in the environment. PSO continues to expand its physical, technical and marketing resources to meet the requirements of the country .To keep pace with growth, PSO has maintained International Collaborations to import latest technology. These are: 1. Castrol (UK) Blending and marketing of lubricants in Pakistan 2. Air Total (France) Technical and Commercial agreements in Aviation Services 3. Exxon Chemicals (Singapore) Petrochemical Business And Technology

Website: www.psopk.com