PSO internship

1
Summer Internship Report 2015
Pakistan State Oil (PSO)
Internee name # Muhammad Arsalan Khan
Reg. No # 04151213035
Class # BSBA-6 (Finance)
Supervisor (QASMS)# Mr. Sufyan Anjum
Supervisor (PSO)# Mr. Akhtar Rahman (Territory Manager)

2
Acknowledgement
I take this opportunity to express my gratitude and deep regards to my supervisor Sir
Sufyan Anjum for his exemplary guidance, monitoring and constant encouragement
throughout the internship. The blessing, help and guidance given by him, time to time
shall carry me a long way in the journey of corporate life.
I also take this opportunity to express my gratitude to my supervisor at Pakistan State Oil
(PSO) and thankful to all my company’s staff for their valuable guidance in preparing
this report in a presentable fashion.
Lastly, I would like to say thanks to my parents for their constant encouragement
throughout the internship and during the preparation of this report without which this
assignment would not be possible.

3
Executive Summary
This report is a thorough essence of my study which I conducted as an internee in
a period of six weeks in Pakistan State Oil (PSO), Islamabad Divisional Office. It is also
the head office for the north region. I have exclusively studied and observed the
organizational structure, customer service, accounts & management and personnel
administration of the company. The purpose of this report is to evaluate the performance
of PSO and give concrete recommendation for further improvement. Although the
company is functioning satisfactory, even then some drawbacks have been pointed out in
the operation of the PSO.
Six weeks period is too less to understand the operation of PSO, but still it was a
great experience for me to have a feel of the practical world and keeping in view the
limitations of the study, this seems reasonable attempt.

4
List of Abbreviations
PSO..............................Pakistan State Oil
SOCL………………...State Oil Company Limited
PNO………………….Pakistan National Oil
POCL………………..Premier Oil Company Limited
PSDC………………..Petroleum Development Corporation
COCO……………….Company Owned Company Operated
HSD………………….High Speed Diesel
KSE………………….Karachi Stock Exchange
SECP…………………Securities and Exchange Commissions of Pakistan
FBR…………………..Federal Board of Revenue
CFT…………………..Cross Functional Teams
BU……………………Business Unit
MQTU……………….Mobile Quality Testing Unit

5
Table of Contents
Organizational introduction………………………………….5
Steps towards Formation of PSO……………………6
Organizational Structure……………………………..8
Vision Statement………………………………………10
MissionStatement…………………………………….10
Departments of PSO………………………………….13
Personal working……………………………………………..14
Accounts & Finance Department……………………15
Human Resource Management Department……….18
Facilities Department…………………………………20
Marketing Department………………………………20
Lubricant Sales Department…………………………21
SWOT analysis………………………………………………..24
Conclusion & Recommendations…………………………….34
References……………………………………………………..37

6
Chapter # 1
Organizational introduction and Departmental description
1.1 History of PakistanState Oil (PSO):
After the separation of East Pakistan and transfer of government from military
rulers to elected government, the vision of government entirely changes. Government of
Pakistan now focuses on nationalization and development of assets. For this purpose,
government start its efforts to establish the first national oil Marketing Company of
Pakistan in 1974. To convert the vision of the government into reality, two oil companies,
Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL) were merged to
form a single company named as Premier Oil Company Limited (POCL).
After the establishment of POCL, government established Petroleum Storage
Development Corporation (PSDC) on 3rd June, 1974 and after some time, renamed it as
State Oil Company Limited (SOCL). Following the event, the ESSO undertakings were
purchased by government in September 1976, and control was given to SOCL. But
before the end of the year, the government again decided to merge Premier Oil Company
Limited (POCL) and State Oil Company Limited (SOCL), thus forming the company
named as Pakistan State Oil Company Limited (PSO).

7
After the formation of PSO, comprehensive renewal corporate cultural program
was designed and implemented in 2004. The basic aim of this program is to revamping
the organizational architecture, empowerment of employees, rationalization of staff and
transparency in decision making through cross functional teams (CFTs). This corporate
renewal program transform the company’s major operations into independent activities,
which were supported by legal, financial, informative and other services. Monitoring and
control systems were established to reinforce and check this structural change. With the
aim to be a No # 1, and to work with the best workforce of the nation, Human Resource
Development (HRD) become one of the main priority of the company under this
corporate cultural renewal program.
Pakistan State Oil possess 62 percent of market share in oil industry which depicts
the successful implementation of corporate reforms and enable business to maintain its
position as a market leader in a highly competitive business environment.
Steps towards formation of PSO
1. January 1, 1974:
Government takeover PNO and DPL and merged them to form POCL under
Marketing of petroleum products (Federal Control Act, 1974)
2. June 6, 1974:
Government establishes “Petroleum Storage Development Corporation” PSDC.
3. August 3, 1976:

8
PSDC renamed as State Oil Company Limited (SOCL)
4. September 15, 1976:
Government of Pakistan purchases undertakings of ESSO, and give their control
to SOCL.
5. December 30, 1976:
Merger of PNO and POCL into SOCL and rename it as Pakistan State Oil
Company (PSO).
6. 1999:
New vision program with new logo of PSO is launched.
PNO &DPL Merged
into POCL (Jan 1,
1974)
Formation of
PSDC (June 6,
1974)
PSDC renamed
as SOCL (August
3, 1976)
Purchase
undertaking of ESSO
(Sept. 15, 1976)
Formation of
PSO (December
30, 1976)
New Vision
Program (1999)

9
1.2 Introduction:
Since its inception, PSO is a market leader in the industry and company maintain
its position till the preparation of this report. PSO is a government owned company
with 51% shares in government hand while 49% are available to general public
through Karachi Stock Exchange (KSE). PSO have biggest network of retail outlets
with more than 3500 retail outlets country wide. PSO also has a biggest fuel storage
capacity of more than 1 Million liter.
1.3 OrganizationalStructure and Company Information:
Organizational structure of Pakistan State Oil (PSO) is as follows:
1.3.1 Board of Management:
1.3.1 Mr. Mujahid Eshai…………………………. Chairmen
1.3.2 Mr. Amjad Pervez Janjua…………………... Managing Director & CEO
1.3.3 Mr. Muhammad Naeem Malik…………….. Member
1.3.4 Mr. Umar Azim Daudpota…………………. Member
1.3.5 Mr. Bilal Ijaz………………………………. Member
1.3.6 Mr. Adeel Rauf……………………………. Member
1.3.7 Mr. Shahzad Saleem………………………. Member
1.3.8 Mr. Salman Ansari………………………... Member
1.3.9 Mr. Shahid Islam………………………… Member
1.3.10 Mr. Hussain Islam……………………….. Member
1.3.2 Company Secretary:
Ms. Ayesha Afzal

10
1.3.3 Auditors:
M/s. KPMG Taseer Hadi & Co.
M/s. M. Yousuf Adil Saleem & Co.
1.3.5 Registrar Office:
THK Associates (Pvt.) Limited, Ground Floor, State
Life Building No. 3, Dr. Ziauddin Ahmed Road, Karachi.
Phone: 021-35689021
Fax: 021-35655595
1.3.6 RegisteredOffice:
Pakistan State Oil Company Limited, PSO House,
Khayaban-e-Iqbal, Clifton, Karachi – 75600, Pakistan.
UAN: (92-21) 111-111-PSO (776)
Fax: (92-21) 9920-3721
Website: www.psopk.com

11
Vision Statement:
“To excel in delivering value to customers as an innovative and dynamic
energy company that gets to the future first”
Analysis of Vision Statement:
Vision Statement consist of four components. Customers, customer needs,
your business values and your product and services. The above vision statement shows
customer concern as it depicts delivering value to customers. PSO is operating in oil and
gas industry, produce homogeneous product which is petrol and other, and these products
are the basic needs for customers. So everyone buy these products whether to exploit
customer needs or not. Hence, in my view, this is a proper vision statement and it do not
need any change.
MissionStatement:
We are committed to lead in energy market through competitive advantage
in providing the highest quality petroleum products and services to our customers. We
have:
 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.
 Sustained growth in earnings in real terms.
 Lowest cost operations and assured access to long-term and cost-effective supply
sources.

12
 Highly ethical, safe environment, friendly and socially responsible business
practices.
Analysis of MissionStatement:
Mission Statement consist of nine components. These are customers,
products/services, markets, Technology, concern for survival, growth and profitability,
philosophy, self-concept, concern for public image and concern for employees. In the
mission statement stated above, company is not focuses on customers because their
product belongs to a category of basic needs. Instead, they focus on their employees,
rewards and their professional growth. As an oil marketing company, they do not require
advanced technology and innovation, so their mission statement isn’t focuses on that
aspect. Instead they shows concern for employees, have a self-concept and concern for
public image.
Our Values
Excellence:
We believe that excellence in our core activities emerges from a passion for
satisfying our customer’s need in terms of total quality management. Our foremost goal is
to retain our corporate leadership.
Cohesiveness:
We endeavor to achieve higher collective and individual goals through
team. This is inculcated in the organization through effective communication.

13
Integrity:
We uphold our values and business ethics principles in every action and
decision. Professional and personal honesty, dedication and commitment are the
landmarks of our success. Open and transparent business practices are based on ethical
values and respect for employees, communities and environment.
Respect:
We are an equal opportunity employer attracting and recruiting the finest
people around the country. We value contribution of individuals and teams. Individual
contributions are recognized through our reward and recognition program.
Innovation:
We are committed to continuous improvement, both in new product and
processes as well as those existing already. We encourage creative ideas from all
stakeholders.
Corporate Responsibility:
We promote health and safety environment culture both internal and
external. We emphasize on community development and aspire to make society a better
place to live in.
PSO as a market leader:
PSO is the only government based and government supported oil marketing
company. This advantage make the company as a market leader in oil industry within the
domain of the country. The company has a largest branch network of retail outlets which

14
is able enough to serve a large portion of automotive sector. Besides that, company is a
major fuel supplier to aviation, armed forces, railways, power projects and agricultural
sector. PSO also provide jet fuel at 9 airports and ship fuel at 3 ports. Currently PSO have
more 62% market share in the oil industry, which is one of the proof of company’s
success.
Retail fuel is one of the core business of company. Company have more
than 3500 retail outlets to fulfill the needs of the automotive sector, and their team is
working day and night to provide the finest quality fuel and lubricants to their respected
customers without any hassle and delay. Company provide premier XL (petrol), green
XL plus (diesel) and HOBC to its approximately 2.8 million retail customers daily. PSO
retail department is spread across the nation with 14 divisional offices. Each retail outlet
and division is linked with a SAP software.
Departments at PSO:
Pakistan State Oil (PSO) have many department and with such a huge base
of fixed assets and large operational expenditure, it is not a surprising thing. The function
of each department is explained in the next chapter along with personal working and
learning experience. Here is a list of departments operated by the company.
1. Finance Department
2. Marketing
3. Human resource Management
4. Facilities
5. Lube sales & LPG

15
6. Taxation
7. Cards
8. Mobile Quality Testing Unit

16
Chapter # 2
Personal working & learning experience
Pakistan State Oil (PSO) is a professional organization and play a key role in
national economy. PSO have many functional departments, which help in running the day
to day business of company and also to achieve long-term goals. These departments
includes Finance department, Human Resource Management, Marketing, Facilities,
Cards, Lube Sales & LPG and Mobile Quality Testing Unit (MQTU) departments. I work
personally in many of these department and the remaining one like marketing
department, I get insight through introductory sessions given by the respective heads of
these departments. My personal working and learning experience, while doing my
internship is explained in following lines.
2.1 Accounts & Finance Department:
Accounts & Finance Department is headed by Mr. Hakeem Muhammad Tayyab.
Being a student of Finance, it appears to be of special interest for me. He teaches me a
number of different things and mechanisms. The finance department of PSO usually have
to monitor and control 4 different general accounts. The first one is Fixed Asset account.
This account didn’t need much monitoring. The fixed assets were only revalued once at
the end of the company’s fiscal year. Moreover, if some new fixed asset is purchased or
acquired by the company, it will be treated by using the Matching Principle.
The second account comprises of stores accounting. It contain all the information
of inventory and other general items which do not classify separately in the balance sheet.

17
Special Project is a third general account, which involve in dealing the finances of any
special project being carried out by the company. Necessary funds were allocated for this
purpose at the start of the year and continuously monitored by the department to prevent
any misuse of funds. The last account is named as payroll and provident fund. Salaries of
employees were paid from this department. Employee insurance programs, pension plans
and retirement funds were also present here. It is the responsibility of finance manager to
correctly forecast the minimum amount needed for pensions, salaries, insurance and
retirement of employees for the whole year. But the funds were not allocated once,
successive payments were made so that capital couldn’t stuck in one account.
Working of finance department is further subdivided into 4 different categories.
These were written as follows:
2.1.1 Accounts Payables:
As PSO is an oil marketing firm with lots of purchases, so it is quite
obvious that company would have large accounts payables too. To deal only with
accounts payables, a separate person is appointed and here I learn to process bills timely
and then made payments within the given time in order to meet the company’s
commitment. We clear all our bills within the stipulated time period, so that our suppliers
always remain happy from us and our goodwill and reputation in the market continues to
prevail. Besides that, I also learn to make payments of all capex & revex items, which
constitute more that Rs. 4 billion/year. Ensuring of expenses in correct accounts and
reporting of monthly expenditure status are also some functions of accounts payables
sub-department, which I learn during my internship.

18
2.1.2 Treasury:
Treasury sub-department in present in PSO Karachi Head Office. Through
introductory sessions, I’m able to understand the purpose and working of this department.
It perform some very key functions, like all the transactions and dealings with associated
banks were handled and performed by this department. Receive payments from
international clients, they called it as “import foreign exchange”. At the beginning of
every month, bank reconciliation statements were prepared. The purpose for preparing
the statement is to check whether there is any outstanding cheque or not. Each of our
bank send the statements of our accounts to treasury. Here, they have their own records
too. So, by comparing both of the statements, any outstanding cheque if present can be
figured easily. If there is any outstanding cheque, then an adjustment for this cheque is
made in company’s record.
Insurance of raw material carriers mainly ships is also one of the key duty of
treasury. Other than that, petty cash is also held by the treasury. Petty cash is an amount
in cash use to meet small day-to-day expenditures like purchase of ball points, papers etc.
2.1.3 Financial Reporting:
Financial reporting comprises of preparation of company’s monthly performance
and then presentation of it to the top management both at Head Quarter and Divisional
offices. Moreover quarterly and semiannually financial reports were also prepared under
financial reporting. An internal auditor audit these reports but the annual report is being
audited by some external auditor. Besides that, representatives from financial reporting
are responsible to deal with any issue arises with Securities and Exchange Commission of

19
Pakistan (SECP) or any other monitory institution. Annual Expense budgets are also
compiled by them and they have to forecast the expected financial position of the
company for the next year. So that management may able to decide their future goals and
to redefine them, if necessary. Individuals from financial reporting have many powers
and have direct link with company owned and company operated (COCO) outlets and
they are responsible of monitoring financial activities of these outlets.
2.1.4 Shares:
PSO is a public limited company with 49% of its shares operated in Karachi Stock
Exchange (KSE). Due to this reason, they have to maintain their books as it is a
compulsory condition form SECP to all the listed companies in stock exchanges. Other
than that, for dividend payments, book keeping is mandatory. This sub-department
actually deals with shareholders, stock exchanges and related monitory and regulatory
authorities. They have to maintain record of withholding tax, organize Annual General
Meeting (AGM) and to remain in touch with Central Depository Company (CDC) for the
transfer of shares and to prevent any fraud from the end of brokerage firms.
2.2 Human Resource ManagementDepartment:
Human Resource Management is divided into two sub-departments. The first one
deals with people especially hiring process while the other one is related with
organizational development. During my internship, no hiring take place in Islamabad
divisional office because there is a ban on hiring from federal government. So there is a
little work to do. They have given us manuals to read and from these manuals, I extract

20
that they value people as their greatest resource and want to achieve their goals through
people. Their basic aim is to build an ideal working environment which appeal
individuals and motivate them. To achieve specific goal or to accomplish certain task,
cross functional teams were formed. Mostly these teams consist of senior management
officer, one individual from finance department, one from engineering and one from the
human resource department. This is not hard n fast rule. Cross Functional Teams (CFT)
can be mold according to the tasks. Other than that, they introduced a concept of
Business Unit (BU) in which each BU is responsible for sales volumes, profitability and
investment. Moreover, un-necessary layers were removed from the hierarchy for effective
and fast movement of information. Besides that, interactive sessions are regularly held by
managing director at all levels.
The second sub-department is organizational development. Here, I learned the
culture of PSO and how a planned change can be made possible. It seeks to change
beliefs, attitude, values, structure and practices so that the organization can better adapt to
technology and live with fast pace of charge.
They follow the following model for Organizational Development:
Decision by management to use OD……………….diagnosis of need by
management and consultant………………….collection of appropriate
data……….data feedback and confrontation……………..action planning and
problem solving……………….team building……………intergroup
development………Evaluation and follow

21
2.3Facilities Department:
This department deals with retail outlets and provide maintenance function at
minimum cost. Through introductory sessions, I come to know that PSO is converting its
old vision outlets with new vision outlets. New vision outlets includes Main building,
steel canopy, spreaders, dispensing Pump Island, steel storage tanks, slogan wall,
Driveway, underground piping, C-store, Masjid, tyre shop, lubricant display racks,
monolith, graphics and signage. According to them, there are three type of outlets.
Company based (COCO), Dealer Financed category A (DFA) and Dealer Financed
Category B (DFB). This classification is based on equipment (building etc.), signage
(company logo etc.) and civil work (human resource, tiles etc.). In company financed
outlets, company bear all expenses. The owner only provide land and the minimum limit
of land is 2 Kanal. The total expense on such an outlet is almost Rs. 25 million. PSO F-8
outlet is company financed outlet. The owner receive 70% and company get 30% from
net income while everything is controlled by company.
In dealer financed outlet (DFA), company provide equipment and signage while
civil work is done by the dealer. In case of DFB outlets, company only provide signage
while equipment and civil work is done by the dealer. To deal all these outlets and to
ensure minimum monthly sale, facilities department and territory managers work in joint
functional team to get the desired result.
2.4Marketing Department:
This department do not have sufficient resources and skilled workforce to market
PSO products worldwide. PSO only face competition in sale of lubricants. When I ask the

22
marketing manager about their marketing techniques, he replied to me that with limited
resources and with strict check and balance from finance department, we were unable to
work at full potential. We devise marketing campaigns but these campaigns start from
our outlet and ends at our outlet. We were unable to go for media advertisement or buzz
marketing. Sometime, we print brochures and banners and hanged them on some public
place for a very limited time because of heavy rental expense.
2.5Lubricant Sales Department:
During my internship at lubricant sales department, I come to know that PSO
lubricants were very good as compared to their competitors. But the low sale of lubes is
due lack of awareness in people. To increase the sale of lubes, company gave target to
each territory manager to sell 16,000 liters of lubes per month. This department monitor
the sale of lubes and issue notices to respective managers, if they were lacking behind
from the target.
PSO have many other department but due to lack of time, I’m unable to work in
those departments. These includes cards department and taxation department. Taxation
department is not present in Islamabad Divisional Office, so only the Cards department
left, where I didn’t work but I gather sufficient knowledge regarding this department with
the help of other internees. According to them, PSO offer four type of cards, corporate
cards, Fleets Cards, Loyalty Cards and Prepaid Cards. This department monitor sales
through cards and issue reminder to clients, if their accounts got empty.

23
Mobile Quality Testing Unit (MQTU) is another separate department. I saw their
working at F-8 outlet. They planned surprise visit at different outlets in their special
laboratory cum vans. At outlets, they collect samples and check whether these samples
are meet the standard requirements. Initially they took sample in their bottles and check
the accuracy of dispensing unit. Then, they perform some test to check the quality of fuel.
If there is some adulteration, then severe actions were taken by the company and
sometime, it may result in cancellation of license.
Working at Retail Outlet
During my internship, I worked at two different retail outlets. Both outlets are
company financed or in common term, COCO outlets. The first one is PSO F-8 outlet and
the other one is PSO Foreign Office outlet. My working and learning experience at these
two outlets is written below.
F-8 Outlet:
My supervisor at F-8 outlets are Mr. Ibrar (outlet manager), Mr. Faisal
(Accountant) and Mr. Umar (Forecourt Manager). When I started 2nd part of my
internship at PSO outlet (Petrol Pump), on the very first day I was briefed by team of
internees who are at the company owned, company operated COCO outlet, sector F-8.
Company operated outlets have assigned amount for day to day running of
business commonly called as working capital. Working capital of this outlet is 6.5
million. Management at outlet use this amount of money for purchasing of fuel and lube,
and day to day running of business. After the sale of this product, that amount would be
added in the original balance. If any difference appear, management would be

24
answerable. The earned money is deposited in the bank on the daily basis. At the end on
month, bank provide bank reconciliation statement, which is used to match up with our
registers operated manually as well as electronically.
Pump managers maintain the cash register, which includes the credit, sale and
balance, the sum of these amount is known as cash in hand. Moreover he maintain the
cash book, which includes opening balance, purchase cash, fresh balance and deposit
cash. Pump manager also maintains the stock register. This register stores the information
about the inventory at the pump. Two petrol tanks of capacity 23,500 liters each, one
diesel tank of capacity 15000 liters and HOBC tank contain 15000 liters product. This is
all managed by the pump manager and he is responsible to maintain the supply.
DIP rod method is used on the pump to check the quantity of fuel which is being
brought by the tanker and is available in the underground storage tanks. The dip road is
inserted very slowly into the tanker so as not to produce any friction, because a little
amount of friction can produce spark. A ring of fuel is formed which tells about the last
contact of fuel on the dip rod. This scale reading of the dip is taken and then compared
with the dip chart, issued by the company after proper experiments. The values of the
physical measurement may vary from the stock register, this difference in values of the
fuel stock is arise due to human error, and it can be reduced by taking precautions while
taking reading.
The monthly profit of the F-8 pump is approximately PKR 2.2 million. The pump
is totally financed by the PSO, but the total monthly profit is divided between the land
holder (70%) and PSO (30%). The pump sells retail fuel, and non-retail fuel. The non-
retail has car wash and ATM facility. The car wash pays the company 50,000 per month

25
and the ATM pays 30,000. The maximum cash is on Monday due to the bank holiday on
weekend.
ForeignOffice Outlet:
This outlet is under Mr. Baaz gul. He is also in charge of all the COCO outlets in
Islamabad/ Rawalpindi region and one of the most senior person in this field.
Unfortunately, I didn’t work under his supervision because he has some serious health
issues. In his absence, I work under supervision of Mr. Muneer (Successor of Mr. Baaz
gul, now outlet manager) and Mr. Kamran (Forecourt area manager). As this outlet is also
a COCO outlet, so there is no difference in working. This outlet is a bigger one with 5
fuel storage tanks. Two for Petrol with capacity 23,500 liters each, two for diesel with
same capacity and one for HOBC with capacity of 15,000 liters. At outlet, I have to
maintain several registers on daily basis. These registers include gain & loss register,
stock register and cash book. Besides that a daily activity sheet is also prepared on a daily
basis. Its working capital is Rs. 15.5 Million. This outlet gave fuel on a subsidized rate to
Aiwan-e-Saddar. The reason is that they won’t pay full amount. According to them, the
owned company and being an owner of company as well as Pakistan, they won’t pay
sales tax. Hence, company is force to provide fuel to their cars at Rs. 57/Liter.

26
Chapter # 3
SWOT Analysis
In 1960’s Albert Humphrey is said to have developed this strategic planning tool
using data from the top companies of USA. The SWOT analysis looks at the strengths,
weaknesses, opportunities and threats that are relevant to an organization in a new
venture. A SWOT analysis is a tool which allow users to look at the direction, an
organization or company may wish to move forward in the future. A SWOT analysis is a
useful tool, which help in summarizing the current state of a company and helps to devise
an informed plan for the future. That plan must circled around the existing strengths, re
dresses existing weaknesses, exploits opportunities and defends against threats. One
important thing to mention is that in SWOT analysis, strengths and weaknesses are comes
from the company’s internal environment while threats and opportunities are due to
external factors.
3.1 Strengths:
3.1.1 Identify your skills and capabilities.
3.1.2 What can you do particularly well, as compared to your rivals?
3.1.3 What is your strength in the eyes of analysts?
3.1.4 What resources do you have?
3.1.5 What is your reputation in the market?

27
3.2 Weaknesses:
3.2.1 What your rivals do better than you?
3.2.2 What do you do poorly?
3.2.3 Which thing generates the most customer dissatisfaction and complaints?
3.2.4 Which thing generates the most employee dissatisfaction and complaints?
3.2.5 What processes and activities can you improve?
3.3 Opportunities:
3.3.1 Where can you apply your strengths?
3.3.2 How is technology changing your business?
3.3.3 Are there new markets for your strengths?
3.3.4 Are your rival’s customer is dissatisfied?
3.3.5 How are your customer and their needs changing?
3.4 Threats:
3.4.1 What are your competitors developing?

28
3.4.2 Are there is someone in the market, who is able to meet the demands of your
competitors?
3.4.3 Are your rivals improving their services?
3.4.4 is your cash flow and debt position is healthy?
3.4.5 is new competition is coming?
3.4.6 Are your revenues are growing slower than the industry average?
The above points are the some basic things, which we have to keep in mind during the
SWOT analysis.
3.5 SWOT analysis of PSO
Pakistan State Oil (PSO) is an oil marketing company. They have many
competitors, and it may include both local as well as international competitors. While the
biggest threat for them are international competitors like Shell, Total and Caltex. As all
these companies are dealing in the same products with same quality and same profit
margin, it is difficult for them to show fast growth in short span of time. In that particular
industry, the real competition is in between customer care, lubricant sales and to attain
large tenders. The company which is fast and strong enough to get tenders, provide best
customer care and produce a quality lubricant will be able to shoe somewhat fast growth
then the competitors. The following proceedings consist of SWOT analysis of PSO,
which enable us to figure out the areas where the company is good, where it need

29
improvement, what are the possible problems and what are the possible advantages that
could be availed by the company.
3.5.1 STRENGTHS
3.5.1.1 Talented & Experienced Staff:
PSO Islamabad division is equipped with an experienced staff. Few of
them are working from last 20 years but they didn’t switch the company even when
attractive packages were offered to them by their competitors. I think they build an
emotional attachment with the company. Due to this, in hard times when company faces
some crises like the issue of circular debt and other managerial problems, they work day
and night to retain their customers and try to resolve their queries. In return company
rewarded them with bonuses when the financial position is good.
3.5.1.2 No. of clients:
PSO is the oldest oil marketing in the country and also 51% of its shares
were owned by the government. They have more than 62% market share which is a proof
of its large customer base. As it is a semi government firm with good reputation,
customers put their trust in the company. Whenever there is a shortage of fuel, COCO
(company owned company operated) outlets never got dry. They always provide fuel and
this will help company to increase their customers and goodwill too because a satisfied
customer is also a marketer in itself. Moreover, with government support, company is
able to get contracts with the government institutions like PIA, ARMY, WAPDA,

30
Railways etc. These contracts are of great worth and constitute a large portion of revenue
of company.
3.5.1.3 Low tender margin:
Company offer lowest rates to achieve big tenders from independent
power producers (IPPs), manufacturing industries and multinational corporations. This
will enable company to get those contracts and make potential clients but on the other
hand, profits will not grow accordingly. One of the official said on this issue, “No doubt,
we decrease our profit margin but we get giants. We achieve our expected profit because
these giants are not buying a 1,000 or 10,000 liter fuel, they were buying hundreds of
thousands liters of fuel, so our expected profits also increases with it. One more thing is
that these giants not make a contract for 1 shipment, when we enter in the contract, it will
be long lasting and benefitted company in the longer run”. So the company’s ability to
give low bids, in facts enable it to get long term gains.
3.5.1.4 Resources:
PSO have more than 3000 employees all over the Pakistan and more
than 3500 retail outlets spreading around the country. Moreover, they were dealing in
those products which now become as a basic necessity of daily life. This will enable the
company to raise their net profit after taxes above 21.8 billion rupees annually, keeping in
mind the all-time prevailing issues of circular debt. Share price of PSO is more than Rs.
350/share, which assures that company is strong because its share is strong. Hence, we

31
can say that company is financially strong and sound enough to overcome any alarming
situation and in a position to start mega projects.
3.5.2 Weaknesses
3.5.2.1 Less Marketing:
PSO and its competitor obtain fuel from Attock oil refinery through
Sihala Depot at same price. As the price is same and the quality is also same, it will not
give an advantage. But the quality and prices of lubricants is different. In that field, PSO
can get an advantage, if management focus on marketing of its lubricants as its
competitors like Shell, Caltex and Total do. The competitors were using latest marketing
techniques like television and radio ads, banners and bill boards, and through mobile
SMS service. PSO on the other hand, didn’t market its lubricants. Due to this, company is
very much behind from other companies in the sale of lubricants. If company market its
lubes, then there are very high chances of increase in sale of lubes due to its strong
customer base and goodwill in the market.
3.5.2.2 Less COCO outlets:
PSO have very few COCO (Company owned company operated)
outlets. Only seven in north region. All other outlets were controlled by different dealers.
These dealers include Politicians, Retired Generals, Industrialists, Bureaucracy and other

32
powerful persons. These dealers run their outlets in their own way like they didn’t follow
company dress code, do not maintain registers, do not sell the least amount of lubes,
purchase fuel from other companies and many more things which company cannot allow.
As they were powerful, sometime company won’t be able to do any corrective measure
and this will eventually hurt company reputation and goodwill. On the other hand, COCO
sights were fully controlled by company and working properly under the instructions
provided by the management. So, it is advisable to increase the COCO sights gradually.
So that the effect would be nullified.
3.5.3 Opportunities
3.5.3.1 New Markets;
With successful implementation of war against terror, there are strong chances of
improvement of peace in northern areas. If peace is provided to those areas, then
economic activity will surely be generated and this won’t happen without fuel. This is an
opportunity for company and management must took comprehensive decisions to avail
that particular opportunity. Furthermore, with increase hope in betterment of economy
and possible arrival of large groups and multinational companies, a handful pool of
industrial consumer would be established. If company is able enough to forecast and avail
fully that opportunity, it will surely multiply their revenues and help to overrun the
impact of circular debt on performance of company and its income.
3.5.3.2 New Technology:

33
Now a days in developed countries, companies’ measure fuel in tanks through
automatic devices, which increases accuracy and decreases the chances of error. PSO on
the other hand, uses the old Dip Rod method, which contain heavy chances of human
error. Currently, no company in Pakistan uses automatic device method. If PSO do this, it
will decrease its losses and chances of theft, thus increases its revenue. Furthermore, in
foreign countries at far furlong areas, companies installed automated dispensing units.
Any person can scratch its card and put fuel in his/her car on its own. No need of specific
person. If PSO try this, it would surely give them good results, decreases their fixed costs
(Salaries of pump attendant), increase the sale of their cards, and no doubt, the first
mover advantage too.
3.5.4 THREATS
3.5.4.1 Competition:
Few years back, there was no serious competitor of PSO in any field. But now
Caltex, Shell, Total are its biggest competitor in lubes and if the current management also
follow the footprints of previous one and do nothing, they will surely create competitors
in fuels too. Despite of foreign competitors, local competitors are also there to challenge
the company. For example, Mehr’s have more than 40 outlets and they grow rapidly, and
may be in near future, they will be in a bargain position with PSO. So to survive and
prosper in this highly competitive market, PSO must have to take same bold steps.
Management must decide whether to safeguard their own interest or the interest of the
company.

34
3.5.4.2 Political Involvement:
One of the disease and biggest threat for sound and peaceful growth of PSO is
political involvement. The Islamabad divisional office, where I do my internship is a best
example of political involvement and references. During the course of my internship and
discussion with different office bearers, I came to know that each and every employee in
Islamabad division attain job due to political references or some army personnel
reference, even the peon gets job due to reference of some ex. Chairman FBR (Federal
Board of Revenue). From this, I figure out that how big reference is needed to get a job in
PSO. I’m worried that if the same course of action continues and management at head
office didn’t decide to move against the political will, PSO might face the same future as
faced by steel mills and Pakistan International Airlines (PIA). So in my opinion,
management must have to take series of steps to prevent the sinking ship of PSO and save
it from the politicians and competitors.
Strategies based upon SWOT Analysis:
S4W1 Market Development:
PSO have more revenues than any other company operating in the particular
sector. Their revenues were in billions and we can say that the company is somewhat
financially sound and capable. PSO is facing difficulty in sale of lubricants. Although
company ordered every territory manager to sell 16,000 liters of lubricants per month, but
this target is same time unachievable in some areas. To increase sale of particular
product, company have to focus on Market Development. For this purpose, they have to
market their lubricants in every possible manner. They can run media campaigns, buzz

35
marketing and more importantly advertise their products in front of visiting customers at
their outlets. To do all that stuff, obviously funds will be needed and currently company
is in a position to bear advertisement expenses.
S4W2 Expansion:
Company have resources but little presence in northern areas. As the war against
terror is going towards its end and the outcome will obviously be peace. And it is quite
certain that peace will create economic activity. To fuel up that economic uplift, someone
have to do something. It is a good opportunity and with resources in hand, PSO must go
for expansion and explore new markets. The mode of expansion will totally be dependent
upon the management’s will. Whether they go for COCO outlets or go for dealer based
outlets. In my opinion, they have to focus on dealer based outlets in northern areas and
COCO outlets in developed areas of country.

36
Chapter # 4
Conclusion & Recommendations
Pakistan State Oil (PSO) is one of the largest company of Pakistan and it’s been
an honor for me to be a part of this prestigious organization as an internee. Before joining
the company, I believe that it is easy to sell oil related products as it almost become a
basic necessity of life. But during my internship, I faced different realities. There are
competitors in the market which put obstacles and make it difficult for you to do
business. To overcome competition, a great level of effort and skills were required. PSO
is doing quite well in competition. Its position as a market leader is a proof of its
greatness and efficiency. Overall company is performing well but management must have
to focus on some areas particularly take steps to increase the sale of lubes either through
market development or product development or any other suitable way, because in that
particular area, competitors were posing a serious threat and company is way behind.
Early and timely collection from industrial client is also a major job. If receipts
were delaying and delaying by the clients, amounts will get stucked, this will lead to late
payments and fines, eventually decreasing the goodwill of the company and creation of
circular debt. Political involvement is one of the major threat in steady growth of
organization. Management must have to fire unskilled and incompetent employees and
hire eligible candidates on merit and do not accept any pressure.
During the course of my internship, I figure out that company isn’t charge
General Sales Tax (GST) from “Aiwan-e-Sadder”. This is a total discrimination and it
must be eliminated. Every client must be treated at Par. If management didn’t decide

37
today and didn’t take back this discount facility, then maybe in near future, some other
institution like PM House or Supreme Court of Pakistan stands up and demand for the
same discount. So, this activity must be stopped otherwise it will seriously hurt company
at some point of time in future.
Staff members at PSO outlet should be strictly instructed to wear the specified
dress and follow the dress code during work hours. Moreover, if company can change the
uniform and made it somewhat attractive, it make will make a good impact. Other than
that, I knew one dealer based outlet on G.T road, the owner gave certain gifts to its
customers upon refueling from the same outlet. If PSO follow the same model, allot
points on each time, when person get fuel and when certain limit is crossed, gave them
reward in form of free fuel or some other gifts, it surely increase their sales and
eventually profits also increases.
Old vision outlets are now lacking behind from new vision outlets. This will
seriously disturb the war against competition. To compete effectively, old vision outlets
must be replaces with NVROs (New Vision Retail Outlets). Obviously a huge amount is
needed but a gradual process of up gradation can make a difference.
PSO is a large and prestigious organization and lot of people dream to be a part of
it, either as an employee or as an internee. But when internees like me join the company,
they were very disappointed because of its current prevailing culture under which
employees sometime do nothing and only talk with their co-workers all day. Instead if
they teach internees about their skills and work and give them sessions, it will be very
helpful for students.

38
In short, I would like to say that PSO has potential to be a part of fortune’s 500
companies but what create hurdle in its way is political involvement, lack of correct and
timely decision and somewhat in its vision. Company must have to redefine its mission
and vision. Allocate tasks and goals to each team and made possible that every employee
work on its full potential. If company succeeded in doing so, I will be very hopeful that
PSO can make a difference in coming decade.

39
References
http://www.psopk.com/
http://www.psopk.com/investors/financial_reports.php
http://www.psopk.com/about_us/
http://www.psopk.com/products_services/
http://www.psopk.com/suppliers/
http://www.psopk.com/ogra/index.php
http://kse.com.pk/
http://dps.kse.com.pk/
https://en.wikipedia.org/wiki/Pakistan_State_Oil
https://en.wikipedia.org/wiki/Pakistan_State_Oil#History

PSO internship

More Related Content

What's hot (14)

Similar to PSO internship (20)

PSO internship