BBA VIII

(Final Semester)

Immediately Following Pages:

Pakistan State Oil Company Limited

A Strategic and Competitive Analysis
This report was prepared as a semester-end assignment. The information comes from two sources, one, directly from website of PSO; two, from matrices, that is all discussion-based. The group of six that was involved in this assignment is as follows:
A Prefatory Note

Acknowledgement

Table of Contents

Disclaimer

Mansoor Ali Seelro Adeel Ahmed Larik M. Younus Shaikh Waqar Hussain Memon Javed Anwar Zulfiqar Ali Magsi

May 10, 2013

ACKNOWLEDGEMENT

We are very thankful Sir Ali Raza, our Strategic Management instructor, who provided us with the opportunity to write a report on PSO with special focus on its strategic and competitive position. Literally, this assignment broadened our hands-on knowledge, experience, and exposure. We came to learn things that we never bothered to get into in our four years academic career of BBA at Sukkur IBA. Once again we would like to express our warm gratitude to Sir Ali for all this.

Cordially, Mansoor Ali Seelro Adeel Ahmed Larik M. Younus Shaikh Waqar Hussain Memon Javed Anwar Zulfiqar Ali Magsi

A PREFATORY NOTE
This report is divided into three parts labeled Part 1, Part 2 and Part 3. Information covered in Part 1 is exactly extracted from the website of the company. Part 2 contains the information that is wholly discussion-based and comes from matrices and other competitive analyses that we have performed based on information gathered from PSO directly and other sources like Google. Finally, Part 3 contains appendices where we have presented some additional facts about the company that again come from website of PSO. Our main purpose is to focus on the information in Part 2 since it was our main task assigned by our strategic management instructor namely Sir Ali Raza. In addition, the Part 2 of the report is not intended to show effective or ineffective handling of the system. Rather, our purpose of this report was to see the gap that exists between the theory and practice. To recap, this was simply a term assignment for which our group chose PSO Company for examining its competitive position in the market. One final point, in References section at the end of this report, weve referred the readers of this report to this note i.e. Prefatory Note because virtually entire information in the report is discussion-based & we are the actual writers of this report except the info in parts 1 & 3 that has been taken from the website of the company. Other than this, we havent referred to any sources. Address of the Company: PSO House, Khayaban-e-Iqbal, Clifton, Karachi-75600, Pakistan. Contacts: Mr. Rizwan-ul-Haq, Manager Training & OD +92-21-35636430 Mr. Rana M. Idrees, General Manager HR +92-21-99203782 Ms. Ayesha Mansoor, Executive HR +92-21-35636437 Website: www.psopk.com

Cordially, Our jovial group

DISCLAIMER

As mentioned earlier, the information in Part 2 is wholly interpretation-based; thus, we have tried to the extent possible to interpret the results and findings as significantly, accurately and logically as possible. Since the world is dynamic and things change in seconds; a thing that is innovative today may render obsolete and useless tomorrow. So, we disclaim any misinterpretation or any change in the facts that would have taken place after we gathered information from various sources. Plus, at some points, if it necessitates, we have interpreted and elaborated the things our own way, at our discretion, to add value to the report.

Cordially, Our jovial group

TABLE OF CONTENTS
(Page numbers are labeled as per pdf count)

PART 1
(INTRODUCTORY PART)

Executive Summary .... 06 Introduction .............07 Company Profile ..... 07 Vision ... 09 Mission ..... 09 Values ... 09 Business Units ......10

PART 2
(STRATEGIC ANALYSIS PART)

SWOT Analysis ... 11 Internal Assessment 12 IFE Matrix for PSO ........... 13 Discussion & Interpretation of IFE Matrix ........... 13 External Assessment ........... 14 EFE Matrix for PSO .......... 15 Discussion & Interpretation of EFE Matrix .......... 15 Competitive Analysis .. 16 CPM for PSO ......... 16 Discussion and Interpretation of CPM .. 17 Porters Five-Forces Model ... 18 Rivalry Among Competing Firms ...... 18 Potential Entry of New Competitors .......... 19 Potential Development of Substitute Products .. 19 Bargaining Power of Suppliers ......19 Bargaining Power of Consumers .......19 Analysis-based Conclusion .20 References 21

PART 3
(APPENDICES)

APPENDIX (A): A Glimpse at PSO History in Brief ... 22 APPENDIX (B): PSO Network ...... 23 APPENDIX (C): PSO Growth Rate .... 24 APPENDIX (D): PSO CEO & MD ..... 25 APPENDIX (E): Some Commonly Come across Acronyms in Oil & Gas Sector .... 26

PART 1

(Introductory Part)
Information in this part of the report thoroughly comes from the website of the company. Since, this part was supposed to be more fact-based, so we did not add any value in this part. We add value, however, in second part of the report which is entirely analysis-based. We start with a brief executive summary of the entire report followed by a brief introduction to the company.

Executive Summary
PSO is the largest OMC in the country operating since 19741. It deals in various POL products. The major business units include customer services, Finance, IT and HR. It would not be wrong to say that PSO is having a brand and loyal image in the industry. But the sad is that this image might not well be maintained in the face of emerging competitors unless astute moves are taken. The report is aimed to see the competitive position of Pakistan State Oil in the oil and gas sector of Pakistan. An assessment of internal factors reveals that the company is performing fairly well, while the assessment of external factors reveals quite the opposite. This situation is exactly in line with RBV view which postulates that internal factors are more important than external ones. But for gaining and maintaining competitive edge, both internal and external factors are equally important. Therefore, the importance of I/O view of gaining competitive edge cannot be denied. A firm that needs to fortify itself externally (e.g. market share, growth, etc.), it first must fortify itself internally (resources to support growth-share). Our analyses in the report suggest that PSO needs to be more astute and proactive in spotting changes in the market in order to keep its longstanding market share, image and reputation sustained. Otherwise rivals are here to surpass with relatively better services, competitive prices and enhanced quality.

Most of the sources cite 1976, but the fact is that company was founded in 1974

Introduction
Pakistan State Oil is the market leader in Pakistans energy sector. The company has the largest network of retail outlets to serve the automotive sector and is the major fuel supplier to airlines, railways, power projects, agriculture sector and armed forces. The company takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow. Pakistan State Oil is the largest oil marketing company in the country. PSO is currently engaged in storage, distribution and marketing of various Pakistan Oil Limited (POL) products. The company currently enjoys market share of 82.3% in the black oil market and 59.4% share in the white oil market.

Company Profile
Pakistan State Oil (PSO) is the nations largest energy company, and is currently engaged in the marketing and distribution of various POL products including Motor Gasoline (Mogas), High Speed Diesel (HSD), Furnace Oil (FO), Jet Fuel (JP-1), Kerosene, CNG, LPG, Petrochemicals and Lubricants. In addition to these products, PSO also imports other products based on their demand patterns. A brief overview of each of PSOs business facets is presented below:

Marketing & Distribution

PSO possesses the largest distribution network in the country comprising of 3,689 outlets out of which 3,500 outlets serve the Retail sector and 189 outlets serve our bulk customers. Out of the total of 3,689 outlets, 1,691 Retail and 167 Consumer Business outlets have been upgraded with the most up-to-date facilities as per the visualization of the New Vision Retail Programmed.

Acquisition of Products
The automotive sector is the main consumer of Motor Gasoline (Mogas) and High Speed Diesel (HSD) whereas Furnace Oil (FO) is marked for power plant usage.

To meet the supply deficit of the country, PSO imports Mogas, HSD, JP 1 and FO as and when required. The total import of black and white oil in Pakistan last year was 12.4 million metric tons and PSO had the lions share of this import with 11.2 million metric tons which came to over 90% of the total fuel imports of the country. Other than product imports, PSO acquired 1.75 million metric tons from various refineries based in Pakistan in order to cater to our market needs.

Storage
PSO possesses the largest storage capacity in the country. The companys infrastructure stretches from Karachi to Gilgit. With 9 installations and 23 depots located across the country PSOs storage capacity of approximately a million metric tons represents 74% of the total storage capacity owned by all the oil marketing companies.

Product Movement
PSO uses three mechanisms for the movement of POL products namely, tank Lorries (road), tank wagons (railways) and pipelines. We currently have a total fleet of 8,595 tank Lorries out of which 2202 tank Lorries are New Vision tank lorries which are complying with the latest ADR standards and are equipped with pilferage proof tracker systems. With the commencement of operations of the White Oil Pipeline Project (WOPP) from Karachi to Mehmood Kot via Shikarpur and the MFM (Mehmood Kot/Faisalabad/Machikey) pipeline, the supply pattern for white oil from Karachi has switched from tank lorries to pipelines. PSO is present as a partner in this project and holds a 12% equity share in this venture.

Lubes Manufacturing & Sales

PSO is steadily progressing in the field of lubricants. With state-of-the-art Lubricants Manufacturing Terminal (LMT) located in Korangi Industrial Area, Karachi we are catering to a number of sectors including automotive, Hi-street and industrial consumers through the provision of sectors including automotive, Hi-street and industrial consumers through the provision of products.

Vision
To excel in delivering value to customers as an innovative and dynamic energy company that gets to the future first.

Mission
We are committed to leadership in energy market through competitive advantage in providing the highest quality petroleum products and services to our customers, based on: o 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 o Lowest cost operations and assured access to long-term and cost effective supply sources o Sustained growth in earnings in real terms o Highly ethical, safe environment, friendly and socially responsible business practices

Values
Excellence
We believe that excellence in our core activities emerges from a passion for satisfying our customers' needs 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

Respect
We are an Equal Opportunity Employer attracting and recruiting the finest people from around the country. We value contribution of individuals and teams. Individual contributions are recognized through our reward and recognition program.

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 the environment.

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, Safety and Environment culture both internally and externally. We emphasize on Community Development and aspire to make society a better place to live in.

Business Units
As per the business needs and to hold on to a customer focused image, we have an organizational structure comprising of three (03) main business units that encompass all the major functions of the company: o Customer Services o Finance & Information Technology o Human Resource & Services

PART 2

(Strategic Analysis Part)

This part of the report contains the information that is discussion- and analysis-based and thoroughly comes from the matrices that are prepared below. In this part, we perform internal audit, external audit and competitive analysis for PSO. In addition, we look at PSO from Porters five-forces model perspective. And finally we conclude the report based on the analyses done in this part. So, we start with SWOT analysis which is prerequisite for above mentioned analyses.

SWOT Analysis
Listed below are the select Strengths, Weaknesses, Opportunities and Threats for PSO:

trengths:

First public company to pass PKR 1 Trillion revenue Storage capacity of nearly 74% of the nation's total storage capacity Market share of 70% Wide-spread retail network of over 3500 retail outlets in the country Distribution & Fleet network covers 81% countrys retail network Major fuel supplier to aviation, railways, power projects, armed forces, marine and agriculture sectors The only Pakistani company listed in top 1000 Asian companies Easy legal approvals being government organization

eaknesses:
Operating expenses are very high Performance management system is not strategically aligned

Obsolete & old retail outlets are not capable of competing Poor R&D compared to rival Shell plc Untrained staff at outlets is causing inefficient services Hiring and firing virtually on the mercy of government

O
T

pportunities:
The heightened ever demand for energy and fuel Non-retail market is untapped by other oil and energy competitors Exporting Black Oil Products ATM facility and electronic car wash Facets of exploration, refining, transportation and shipping PSO being on good terms with PARCO

hreats:
Existing competitors like Shell, Total, Caltex & Attock Petroleum Chances of energy sector going private Adverse government policies and interference High political instability in the country Availability of substitutes in Black Oil Market Demand for petrol & HSD is in danger in the face of increased use of CNG as fuel for vehicles

Internal Assessment
For any organization, internal assessment requires collecting information on internal strengths and weaknesses, and then taking necessary steps to capitalize on strengths and avoid or improve on weaknesses. After this is done, strengths and weaknesses should be enumerated in an understandable form, better they should be tabulated. But this all will give qualitative results that tend to be abstract. In order to have more concrete results, we need to quantify all this information. Quantitative information is relatively easier to understand and makes decision making quicker and more effective. After analyzing a list of strengths and weaknesses presented in previous section, we have designed the following IFE matrix for PSO:

Internal Factors Evaluation (IFE) Matrix for PSO

Key Internal Factors Strengths: 1. 2. 3. 4.

First public company to pass PKR 1 Trillion revenue Storage capacity of nearly 74% of the nation's total storage Market share of 70%

Weight2

Rating

1 0.10 0.12 0.10 0.12 0.08 0.10 0.05 0.04

2 3 3 2 4 3 4 4 4

Weighted Score (12)

Wide-spread retail network of over 3500 retail outlets in the country 5. Distribution & Fleet network covers 81% countrys retail network

0.30 0.36 0.20 0.48 0.24 0.40 0.20 0.16

6. Major fuel supplier to aviation, railways, power projects, armed forces, marine and agriculture sectors 7. The only Pakistani company listed in top 1000 Asian companies 8. Easy legal approvals being government organization Weaknesses: 9. Operating expenses are very high 10. 11. 12. 13. 14. Total:
Performance management system is not strategically aligned Obsolete & old retail outlets are not capable of competing Poor R&D compared to rival Shell plc Untrained staff at outlets is causing inefficient services Hiring and firing virtually on the mercy of government

0.08 0.07 0.05 0.05 0.03 0.01 1.00

2 3 2 3 3 2

0.16 0.21 0.10 0.15 0.09 0.02 3.07

Discussion and Interpretation of IFE Matrix

A glimpse at the above matrix reveals that PSO is well availing its internal strengths and improving on its internal weaknesses. This is evident from the total score of 3.07 which is virtually far greater than the average of 2.50. This is basically the result of rating in rating column. There is no any rating of 1 and hardly there is rating of 2. The more numbers that are apparent are 3s and 4s which imply that the company is capitalizing on strengths and avoiding weaknesses. This all adds to the better figure for total score. In particular, the
Weights show the relative importance of the factors. In above matrix, for example, storage capacity & retail network factors are more important for PSO
2

company is capitalizing on its retail and distribution network and its status being a government organization more than all other factors in strengths. A revamp effort for PSOs Performance Management System is under way, thus its been assigned a rating of 3, but not 4 because the effort is under way and the system has not been completely revamped. This point was revealed unguardedly by Executive HR, Ayesha Mansoor at PSO. And from HR perspective, the functions of performance management, training and development and compensation are all interlinked, thus a rating of 3 has also been assigned to the factor of untrained staff. To recap, PSO is doing well in terms of making most of its strengths and doing well in terms of improving on its weaknesses. There are chances that the company will have competitive edge internally over competitors given that the rivals score for IFE is less than this. PSOs weighted score for IFE totals 3.07 out of 4.00, a gap of only 0.93. But we recommend that a minor gap must persist because otherwise an organization will show complacency in that they are doing 100% well.

External Assessment
The information in this section directly comes from PESTEL analysis. Because the purpose of such analysis is to gather information on opportunities and threats that are made available and posed respectively by the political, economic, social & environmental, technological and legal factors in the companys task and mega environment, so we have, after careful analysis of all such factors, prepared and designed logically the EFE matrix for PSO. For example, in the following matrix, opportunities labeled 1 and 3 relate to the economic environment of PSO; threats labeled 8, 9, and 10 relate to the political environment of PSO. External assessment is carried out in an exactly similar manner as internal assessment is done with one difference that in internal assessment we collect information on a companys strengths and weaknesses (internal), whereas in external assessment we gather information about a companys opportunities and threats (external). All other things viz. weights, ratings, etc. work in a quite similar fashion. Here is the EFE matrix for PSO:

External Factors Evaluation (EFE) Matrix for PSO

Key External Factors Opportunities:

1. The heightened ever demand for energy and fuel 2. Non-retail market is untapped by other oil and energy competitors 3. Exporting Black Oil Products 4. ATM facility and electronic car wash 5. Facets of exploration, refining, transportation and shipping 6. PSO being on good terms with PARCO

Weight

Rating

1 0.20 0.05 0.05 0.07 0.20 0.05

2 3 2 1 2 3 2

Weighted Score (12)

0.60 0.10 0.05 0.14 0.60 0.10

Threats:
7. Existing competitors like Shell, Total, Caltex & Attock Petroleum 8. Chances of energy sector going private 9. Adverse government policies and interference 10. High political instability in the country 11. Availability of substitutes in Black Oil Market 12. Demand for petrol & HSD is in danger in the face of increased use of CNG as fuel for vehicles

0.05 0.01 0.10 0.07 0.05 0.10

2 2 2 2 1 3

0.10 0.02 0.20 0.14 0.05 0.30

Total:

1.00

2.40

Discussion and Interpretation of EFE Matrix

The interpretation of EFE matrix can be done in the same way as for IFE matrix. A look at the total weighted score of 2.40 shows that it is less than average of 2.50 even. This implies that PSO is not doing well in terms of astutely cashing in on the opportunities and neutralizing the threats. This is well be supported by the fact that there is not a single 4 in the column of rating meaning that the company is not capitalizing on the opportunities and avoiding threats to the fullest. Based on results revealed by both matrices i.e. IFE and EFE, it is interesting to note that PSO is doing quite well internally, but quite poor externally. If we interpret these results from perspectives of two mainstream approaches to gaining competitive advantage i.e. Industrial Organization (I/O) view and Resource-Based View (RBV), we can tentatively conclude that PSO might well be following RBV approach to gaining competitive advantage. This view

says that the internal audit is more important to gain edge than external audit, whereas I/O view says quite the opposite. But the strategic management researchers and scholars postulate that both approaches are equally important in gaining and maintaining competitive advantage. If the goal is to maintain stronger external position (say, market leader) then it must be supported by stronger internal position (in terms of resources).

Competitive Analysis
Lets now turn to comparing PSO with its rival companies in Pakistan. We presume that in this analysis PSOs performance will be poor against some of the critical success factors especially those that are external. The reason behind this prediction is PSOs poor performance in EFE matrix. Because the critical success factors that we have used in designing CPM most belong to external environment with the exception of a few. The analysis is conducted keeping in mind the national market (Pakistan) only. This is important to mention because Royal Dutch Shell plc and Chevron Corporation3 both are foreign companies. So, well see how the three rival companies are performing in Pakistan. To serve this purpose, we have prepared the following CPM (matrix) with special focus on PSO:

Competitive Profile Matrix (CPM) for PSO

Chevron Shell Weight Rating W.Score Rating W.Score 0.13 0.12 0.12 0.18 0.12 0.05 0.05 0.07 0.06 0.10 1.00 3 4 3 3 4 3 2 3 4 3 0.39 0.48 0.36 0.54 0.48 0.15 0.10 0.21 0.24 0.30 3.25 3 4 3 3 3 3 3 2 4 3 0.39 0.48 0.36 0.54 0.36 0.15 0.15 0.14 0.24 0.30 3.11 PSO W.Score 0.52 0.36 0.24 0.54 0.36 0.20 0.20 0.21 0.12 0.20 2.95

Critical Success Factors 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Total:

3

Rating 4 3 2 3 3 4 4 3 2 2

Market share Management Human Capital Financial Position Product quality Advertising Price competitiveness Customer Loyalty Global expansion Technology adoption

We have selected Chevron and Shell for the purpose of CPM because we believe the two companies are nearer competitors to PSO

Discussion and Interpretation of CPM

A quick look at the total accumulated scores by the three rival companies reveals that Chevron Corporation is doing relatively best; second best Shell plc and Pakistan State Oil Company Limited on third position. However, the scores accumulated by the three companies are more than the average i.e. 2.50. In this sense, all three companies are performing beyond average, but it would be in absolute terms. In relative terms, it is evident that PSO is not performing up to par. But a rushed conclusion cannot be given that PSO is below par on all the factors. Look at the rating column for PSO; it has been assigned 4 on three critical success factors viz. market share, advertising, and price competitiveness. It means PSO is capitalizing on these three critical success factors to the fullest and to the extent possible. However, neither of the rivals has got 4 on these factors. But relatively, PSOs score of 2.95 is less than the scores of 3.25 (Chevron) and 3.11 (Shell). This could well be supported by the ratings of 4 that Chevron and Shell have got on some other critical success factors for which PSO might not have got 4. For example, Chevron and Shell have a mix of 4s on management, product quality and global expansion, whereas PSO does not have any.
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To recapitulate, our presumption in the beginning of this section held true and PSOs performance on select critical success factors relative to its competitors turned out to be poor. Absolutely, three rival firms are performing very well on some critical success factors, but relatively, hierarchy in order of good performance looks like this: 1. Chevron Corporation 2. Shell plc 3. Pakistan State Oil Company Limited

Porters Five-Forces Model

This model of competitive analysis is a widely used approach for developing strategies in many industries. According to Porter, the nature of competitiveness in a given industry can be viewed as a composite of following five forces: 1. Rivalry among competing firms 2. Potential entry of new competitors 3. Potential development of substitute products 4. Bargaining power of suppliers 5. Bargaining power of consumers

Now we try to fit PSO in all above forces and what will be its move as a result of happening of all these forces.
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Rivalry Among Competing Firms

The intensity of rivalry among competing firms tends to increase as the number of competitors increases. This ultimately leads companies to price-cutting. Rivalry also magnifies when consumers find it easy to switch brands. The same holds true in case of PSO. When it was the only company operating in Pakistan in oil and energy sector, switching brands was not on peak and a single strategy could work for longer. But today, when a number of rival firms have entered this sector, PSO is being faced with many strategic and competitive challenges including product quality, talented manpower, price competitiveness, and technology awareness, among other things. Another reason why PSO is faced with increased competitive challenges is that the sector it operates and deals in mainly comprises commodity products i.e. gasoline, kerosene, lubricants, etc. These commodities are not easily differentiated. The only thing that can work here is the differentiation on price, packaging, marketing, etc. the things that are explicitly perceived by consumers as differentiated. Therefore, PSO will lag behind in the face of a number of emerging competitors viz. Chevron, Shell, Attock, Admore, Hascol, Byco, etc. unless it takes measures to improve on all above mentioned factors.

Potential Entry of New Competitors

Well, much of the discussion regarding competitors has already been done in previous section i.e. Rivalry among competing firms, in this section; we just see what the government and PSO together can do in order to reverse the heightened impact of entry of more and more new competitors in the sector of oil, gas and energy. Government can bar or at least allow a manageable number of competing firms from abroad to enter to tap Pakistani market. But, doing so will limit FDI that is necessary for economic growth of any country. So, this leads to a tradeoff situation. Another way for PSO to cope with the heightened competition posed by rival firms is to fortify its position and to take actions to deter new entrants, such as lowering prices, extending warranties, adding features, or opening more outlets having trained staff to provide augmented services.
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Potential Development of Substitute Products

Nothing was notable as the substitute product giving competition to PSO. The only substitute product that we noticed poses threat for PSO is the increased use of CNG as fuel for vehicles as a substitute against petrol. However, PSO itself deals in fuel gas, but again it poses threat for PSO itself since demand for petrol will lower and the profit from selling of petrol will offset in the face of increased demand for CNG. At large, PSO will again be better-off since it is the major supplier of government organizations like PIA, Pakistan Railways, agricultural sector, etc.
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Bargaining Power of Suppliers

PSO is less vulnerable to bargaining power of suppliers since government itself is amongst its main suppliers. But this may be at times problematic in the face of adverse government policies or political instability. PSO being the customer of government in terms of raw materials, may enjoy reduced logistics costs (e.g. through JIT deliveries), quicker availability of quality materials, and nominal rates of materials, among other things.

Bargaining Power of Consumers

As discussed earlier, PSO deals virtually in commodity products that are not easily differentiated relative to competing products. And in such a case bargaining power of consumers tends to be higher and they often negotiate selling price, warranty coverage and accessory packages to greater extent. Plus, bargaining power goes higher and higher even when it is easy for consumers to switch to competing brands or substitutes. Therefore, the same guidelines can be applied and used to cope with this issue that we proposed in first two competitive forces.

Analysis-based Conclusion
Pakistan State Oil Company Limited is the largest company operating in oil and gas sector in Pakistan since 1974 and playing a pivotal role in the economic growth of Pakistan. No matter, the company is doing quite well internally, but it needs to fortify itself externally. In the face of emerging rivals in the industry, PSO might well be performing poorly to cope with competitive challenges posed by the competing brands in the country viz. Chevron, Shell, Total, and Byco, among others. Our analyses performed in the report reveals that PSO needs to improve itself on some external factors in order to capitalize on opportunities and neutralize its threats. An EFE score of 2.40 is the indicator of such poorer performance. PSO is better-off on some factors like market share, status of being government organization, etc. However, other factors are here to affect PSO adversely e.g. price competitiveness, product quality, talented manpower, etc. all in the face of entry of more and more new competitors. To conclude, PSO deals in the products that are commodities not easily differentiated. The only thing that can differentiate the products explicitly as perceived by the consumers is the appearance and accessory features of the product like packaging, color, price, marketing, warranties and some other augmented services. In order to maintain its 39 years old image, reputation and share in the market, PSO needs to take actions on all above factors to be included as the lifelong features of its products. If timely actions are not taken, consumers will switch to competing brands and rivals will overtake and capture the market.

References
Kindly See Prefatory Note (Page 3)

PART 3

(Appendices)
Appendix (A): A Glimpse at PSO History in Brief

January 1, 1974 The federal government took over the management of PNO (Pakistan National Oil) and DPL (Dawood Petroleum Limited), renamed into POCL (Premier Oil Company Limited) under marketing of Petroleum Products (Federal Control Act, 1974)

June 6, 1974 The government incorporates Petroleum Storage Development Corporation PSDC

August 23, 1976 PSCDC renamed to State Oil Company Limited (SOCL)

September 15, 1976 The Government purchases ESSO undertakings, vests their control in SOCL

December 30, 1976 The Government merges PNO and POCL into SOCL (State Oil Company Limited) and renames it Pakistan State Oil Company Limited (PSO)

1999 The new vision program is launched with the new logo of PSO.

Appendix (B): PSO Network

Appendix (C): PSO Growth Rate

Appendix (D): PSO CEO & MD

Mr. Naeem Yahya Mir is the CEO and MD of Pakistan State Oil Company Limited

Appendix (E): Some Commonly Come across Acronyms in Oil and Gas Sector

HSD = High Speed Diesel LPG = Liquefied Petroleum Gas Mogas = Motor gasoline OMC = Oil Marketing Company POL = Pakistan Oil Limited