PSO(Pakistan State Oil) Short Overview

syedanousheen syedanousheen
10 years ago
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Organizational Structure:is an idea in the field of organizational studies and

management which describes the psychology, attitudes, experiences, beliefs and
values (personal and cultural values) of an organization. It has been defined as “the
specific collection of values and norms that are shared by people and groups in an
organization and that control the way they interact with each other and with
stakeholders outside the organization.

ORGANIZATIONAL CULTURE IN PSO: (Example)

ORGANIZATION CULTURE: Organization culture is a system of shared meaning

within an organization that determines in large degree how employees act.

IMPORTANCE OF CULTURE IN PSO

According to the opinion of the PSO’s sales officer PSO is a sales oriented company.
Strong culture is a symbol of more profit more earning and sense of responsibility. It
is also a monument of well-disciplined enterprises in which every organ of that
organization is well concerned with the ultimate objective of the organization. As it’s
a fundamental truth that every individual from worker to Top manager is aware of his
rights privileges responsibilities and outcome of efforts being invested.

SIX DIMENSIONS OF CULTURE

Innovation and risk taking: According to our survey what we have found is that
employees are not much encouraged to be innovative and take risks.
Attention to detail : According to our survey employees have given importance.
Outcome Orientation: The manager’s focuses on both results or outcomes and the
techniques needed to achieve those outcomes.
People Orientation :Management decisions do not take into consideration the effect of
outcomes on people within the organization. They have made their employees a
central part of their culture.
Teamorientation: They emphasize on team orientation i.e. work activities are
organized around them.
Stability: PSO is maintaining the status in contrast to growth.
PLANNING AT PSO

Planning: a process that involves defining the organization objectives or goals and

developing an overall strategy for achieving those goals and developing a complete

hierarchy of plans to integrate and coordinate activities.

CORPORATE PLANNING

PSO is striving to add value to its business by introducing modern efficient and

innovative business practices to boost corporate performance. Benefits of this value

will be given to shareholders and the employees of the company. Corporate planning
is about competitive advantage; at this most challenging juncture in PSO’s history the
focus is on forward thinking of on cutting edge issues. Staffed with professionals
having a diverse background in business engineering and computer technology and
international experience CP is endeavoring to prepare PSO for the challenges ahead to
ensure its sustainable corporate leadership in future based on the best industrial
practices. The development of a financial model that resulted in the company’s first in
depth study on product wise and business wise profitability as well as the
establishment of an effective procedural framework for capital budgeting mark the
first year of the corporate planning activity in PSO. This has led to classification of
authority and criterion for investment decisions efficient project appraisal based on
computer modeling and effective monitoring of the status results of investments
undertaken. These systems have been adopted by the company for periodic review of
corporate performance through management committee meetings.

CONTINGENCY FACTORS IN PLANNING

LEVEL ON ORGANIZATION

Outstanding performance of company was recorded by the board of management and

noted by the

secretary petroleum during his recent visit. It was because employees worked hard
delivered efforts and produced results. During the last six months unnecessary
expenses had been curtailed to a great

extent; operations improved depot losses cut down and cartage fleet upgraded.

ORANIZATIONAL STRUCTURE & DESIGN

The organizations formal framework by job tasks is divided in groups but is

coordinated.

The basis on which jobs are grouped in order to accomplish organizational goals is

functional departmentalization.

BRAND MANAGEMENT AND COMMUNICATION DEPARTMENT Branding is

the reputation and the image of a company, which is conveyed via names logos, acts
packaging and word of mouth. Corporate branding used to focus on logo and name
but today it has a broader meaning. The need for branding arises when consumers
expect more than a good product at a fair price. They seek service experiences that
compliment their life styles and brands that align with their personal aspirations. And
that’s exactly what company try to convey to target market.

VM&C department at PSO follows the following two approaches:

Expanding the depth and breath of brand awareness by improving brand recognition
of

consumers during purchase or consumption settings. Improving the strength favor

ability and uniqueness of brand associations making up the

brand image.

The above goals are achieved primarily through:

ü Corporate Advertising

ü Sales Promotion Campaign

ü Sponsorships

CUSTOMER SERVICE DEPARTMENT

PSO has recently set up a dedicated service department that is major step towards

company’s overall objective of becoming a customer-oriented company. Located at

the company’s head office in Karachi the CSD is the first point of contact for the
customers on day to day concerns and provides centralized customer service across
Pakistan

Trained and professional staff attends to and solves the customers concerns and

complaints quickly and effectively

PUBLIC AFFAIRS/PUBLIC RELATIONS DEPARTMENT (PRD)

The major function of the PRD is to ensure the projection of the company’s image as
the country’s premier public sector organization and conscientious citizens. This is
achieved by highlighting positive stories about the company in the media. Other
functions of the department include event media management speech writing and
keeping Managing Director and the company hierarchy informed. The department
also tackles press queries and sets up interviews of the Managing Director with the
media. It also coordinates with the brand management and other departments in the
planning of events press conferences workshops seminars etc. The department is also
involved in giving banners and tackling adds requests not related to advertisements
campaign. The department personnel are also involved in the preparation of the
annual report and writing of articles.

CHAIN OF COMMAND
It is an unbroken line of authority that extends from the upper levels of the
organization

to the lowest levels and defines who reports to whom.

As PSO follows traditional objective setting decision are made totally by the top
management. The authority is given to the managers to give orders and employees are
bound to follow them. It is the responsibility of the employees to perform those duties
assigned to them.

UNITY OF COMMAND

On PSO the unity of command hoes in the following sequence:

· C h a i r ma n
· Managing Director
· 7 General Managers
Divisional managers
· 1 sale Executive
· 8-12 Sales officers
Managing Director is answerable to the Chairman. MD has 7 general managers
working under him. Every G.M has 8 DMs working under him. Every DM has a Sales
executive and under him there are 8-12 sales officers.

CENTRALIZATION
PSO is a highly centralized company i.e. decision-making is concentrated in the upper
levels of the organization. The Top management makes the company’s key decisions
with little or no input from the lower level employees. PSO is more centralized
because the environment is stable company is large and lower level managers are not
as capable or experienced at making decisions as upper level managers.

MECHANISTIC ORGANIZATION

PSO is a mechanistic organization with a highly controlled structure. In the

mechanistic

structure work specialization creates jobs that are simple routine and standardized.

Extensive departmentalization increases impersonality and the need for multiple

layers of management to coordinate these specialized departments. There is also a
strict adherence to the unity of command principle. As the distance between the top
and the bottom of the organization is wide, top managers tend to impose rules and
regulations to control the employees’ behavior.

DECISION MAKING

Decision-making is an important aspect of the company, which needs to be

thoroughly evaluated before making a final and firm decision. The working of
organization depends upon top management; so good and firm decision in the
organization will have a direct impact on the working environment of such
organizations. The manager is responsible for taking the decision of effected matter
keeping in view the after effects. The decisions must be in interests of the
organization

DECISION-MAKING STYLES
ANALYTICAL STYLE: (LONG RUN)

As PSO is sales oriented company and it has many competitors like Shell, Caltex etc.
So they have to consider more alternatives after making a decision. The managers in
this condition have the ability to cope with unique situation.

DIRECTIVE STYLE

In short run, the decision making are more in directive style i.e. managers made fast
and logical decisions. The manager is the focal point in the organization and he is
appropriate authority to a problem arise by his observation or reflected by someone
else from the organization.

TRAINING TYPES AT PSO

In order to main the sustainability of the workforce following many types of trainings
are

conducted.

New Technology and methods

Personal Skills Development
Organizational Development
Emergency Training
Environment and Safety Trainings
One- and two-day open enrollment workshops Certification Programs
Project Related Training
Cross Functional Training

CONCLUSION AND RECOMMENDATIONS

Pakistan state oil (PSO) is the largest company of Pakistan not only in the field of

oil marketing but also otherwise. It has been included in Asia’s top 1000 companies
and thus is surely a pride for Pakistan. Although up till now it is Govt owned but it is
about to be privatized in a month or so. As expected after privatization the company
would be further more prosperous and generative in terms of revenues.

PSO certainly has a competitive advantage over all it’s competitors because of the
vast network of it’s outlets all over Pakistan but at the same time a great deal of

responsibility is required by them as they are not only an oil marketing company

but they have some responsibilities towards the people of Pakistan.

Take an example of a PSO outlet in Chitral, while deciding to undertake this

project or not the feasibility report rejects the idea of building it but being a Pakistani
socially responsible company if even one public transport bus goes there then they
have to build a petrol station over their.

PSO has been very innovative and successful since it realized the competition has
actually started after SHELL came and acquired the market share from PSO. But after
coming up with all those “new vision” outlets, PSO has proved to be never far behind.
Marketing strategies starting from “Gold card” to………………….. “PSO
LOYALTY CARD” has been amazingly good and can be rated as first class

strategies.

A major problem faced by PSO is the misconception in people’s mind that the oil
used by shell is imported and of better quality, as shell is a foreign company in
Pakistan. Although the sources are same but still shell is also aware of this fact and is
exploiting it. PSO should do something about it like printing brochures that could
explain people about the only sources available in Pakistan, emphasizing upon the fact
that no oil is coming to Pakistan from any direct abroad sources.

Caltex basically has some control over the market because of the lubes it sells and the
profit margin on lubes is much higher than on petrol. But as PSO and CASTROL have
come together to make the right combination of “Top two together” they can
overcome this problem as well.
PSO has done very well in the financial sector, since its new vision period and will
continue with the pace. Innovations and up to dating of the outlets in accordance with
the needs of the changing world is a very important step towards both marketing and
financial prosperity.
The other problem faced by PSO because of the competition is that the land
acquiring at old or new places the bid gets too high that the land acquired becomes too
expensive.

ü PSO is becoming better day-by-day and after privatization the modifications and
changes they are expected to bring

ü “Sky is the limit”.

ORGANIZATIONAL CHART OF PAKISTAN STATE OIL COMPANY

Board of director

Manager Director

MD’S Secretariat

Internal Audit

Purification and transmission

Distribution division

Engineering service division

Commercial division

Management service division

Finance and material division

Human resources
Sales

Planning and development

Purification

Karachi

Account

Budget

Treasury

Billing

Consumer services

Transmission

Sindh(Exl karachi)

Construction
Comparison

Baloc Histan

Services

Administrative services

Privatization

Legal Services

Information technology

Safety healthy & environment

Procurement and inventory management

External Relations

Measurement and meter manufacturing

SWOT (Strength, Weakness. Opportunities, Threats)

A situation (SWOT) analysis is critical to the creation of any strategic plan. The
SWOT analysis begins with a scan of the external environment. Organization must
examine their situation in order to seek opportunities and monitor threats. Sources on
information include customers (internal or external), supplier, government (local,
state, international) professional or trade association (convention and exhibition),
journal and reports (scientific, professional and trade).

SWOT is the assumption and facts on which a plan will be based. Analyzed strengths
and weaknesses comprise the internal assessment of the organization. Assess the
strengths of the organization. What makes the organization distinctive? How efficient
is our manufacturing? How skilled is our workforce? What is our market share? What
financing is available? Do we have a superior reputation? Assess the weakness of the
organization. What are te vulnerable areas of the organization that could be explored/
Are our facilities outdated? Is research and development adequate? Are our
technologies obsolete? What does the competition do well?

Analyzing opportunities and threats comprises the external assessment of the

environment. Identify opportunities. In which area is the competition not meeting
customer needs? What are the possible new markets? What is the strength of the
economy? What is the strength of the economy? Are our rivals weak? Identify threats.
In which area does the competition meet customer needs more effectively? Are there
new competitors? Is there a shortage of resources? Are market tastes changing? What
are the new regulations? What substitute products exist? The best strategy is one that
fits the organization’s strengths to opportunities in the environment.

The SWOT analysis is used as a baseline for the future improvement, as well as gap
analysis. Comprising the organization to external benchmarks (the best practices) is
used to assess current capabilities. Benchmarking systematically compares measures
such as efficiency or outcome of an organization against similar measure from other
internal or external organization. This analysis helps uncover best practices that can
bee adopted for improvement. (See camp, R. C> Benchmarking: The search for
industry best practices that lead to superior performance. Norcross, GA: Industrial
engineering and management press 1993) Benchmaking with other organization can
help identify a gap. Gap analysis identifies the progress required to move the
organization can help identify a current capabilities to its desired future state. In this
way, the organization can adapt the best practices to improve organizational
performance.

Strengths

1. Market Share of 70% is one the main strength of PSO.

2. Company reputation in the industrial sectors adds the strengths for PSO.
3. Product quality is also strength especially in industrial sector.
4. Service quality like plastic cards and non-fuel activities adds the value.

5. Distribution & Fleet network, which covers 81% country retail network, is the key
edge on PSO its competitors.

6. Promotional activities add value in brand awareness and attraction of new

customers.

7. Innovation like Auto Car Wash helps PSO to differentiate with its main
competitors.

8. Storage capacity, which holds 80% of total storage capacity of the country, is also
key advantage over its competitors.

9. Technical skills in Fleet management are strength for PSO.

10. Visionary, capable leadership adds value to PSO strength like their NVRO
operations.
11. Financial Stability with strong reserves, paid-up capital adds the trust of
stakeholders.
12. Product line width adds long range of products for more revenue opportunities.

13. Castrol brand affiliation with PSO adds strength in terms of brand awareness.

14. Relations with Government one of the key strength of PSO in order to get legal
protections.

Weaknesses

1. Lost & Dissatisfied customers are major weakness of PSO as they are causing the
perception of inefficient PSO.

2. Old retail outlets are major weakness for PSO as they are not enough capable to
compete the Shell, Caltex or Total outlets.

3. Untrained staff at outlets is causing inefficient services.

4. Quality assurance is not so effective to build the image of “Quality & Quantity”.

Opportunities

1. Afghanistan’s Market is the biggest opportunity for OMCs in Pakistan.

2. De-regularities of Oil industry in Pakistan add the opportunity to fill the deficiency
in few sectors of petrochemicals markets.
 3. Export Opportunities of Black Oil Products is also adding the

opportunities by exporting Black Oil products, which is facing downfall due to the
introduction Gas Oil.

4. Industrial & Trade growth in Pakistan is also the opportunity for PSO as they are
adding revenues in Power sector that is the major customer of PSO.

Threats

1. Risk of forward integration of Supplier is the key threat for PSO and other OMCs
in Pakistan. As the example, the PARCO who is one of the main POL product
suppliers to OMCs adopt the forward integration strategy by introducing its own
OMC with its new business alliance TOTAL and named its OMC as TOTAL-
PARCO.

2. Risk of Diversification in technology is also a key threat for PSO as due to new
technology used in industrial sector is causing decline in particular POL products.

3. Substitutes in Black Oil Market are causing a solid reason for the declining trend in
Black Oil Products, which is major threat for PSO.

Overview: At this organization culture there are six dimension are defined above one
of the dimension is Innovation and risk taking is very important one therefore in this
terminology we can define Organic part and decentralization Decisions are significant
when using open communication but there is Low-formalization as compare to
Mechanistic and centralization approach.

To Conclude this short report I want to suggest that randomly both structure i-e
Organic and Mechanistic is use in Pso Company but somehow the rules and policies
are stable cannot be change but when it comes up with huge amount of data or Loss or
may be Profit then Innovative ideas use and it’s like taking risks.

Management of Change System

During the FY 16, PSO attained another milestone by establishing Management of Change System. The purpose of this
procedure is to ensure that HSE and Operational risks arising out of proposed changes are managed to an acceptable level
(ALARP – As Low As Reasonable Practicable). 
This is a major step in the direction of Process Safety Management (PSM) and will further enhance operational efficiency
and effectiveness of the company while keeping in check the risk levels.

SWOT analysis is a strategic planning technique used to help a person or organization identify strengths,
weaknesses, opportunities, and threats related to business competition or project planning
Purpose

SWOT Analysis is a simple but useful framework for analyzing your organization's strengths, weaknesses,
opportunities, and threats. It helps you to build on what you do well, to address what you're lacking, to
minimize risks, and to take the greatest possible advantage