Running Head: Practical concepts of Management

Report on management of Pakistan State Oil

Name

Registration ID

Ashar Masood
Ziaullah
Dil Muraad
Ashraf Asghar
Ch. Hassan Azmat
Dharmendar Kumar

22369
20820
17862
17579
20995
22670
20112

Babar Nawaz

Program: BBA (H)

Course: Principles of Management
(Tue)
Faculty: Miss Kalpina Dawani

_______________________________________
Report Topic: Practical concepts of
Management
Due Date: 06-04-2014
___________________________________________
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Practical concepts of Management

LETTER OF ACKNOWLEDGMENT
It has been a pleasure to be Miss Kalpina Dawani students. We would like to
thank her for giving us the chance to apply the theories & principles of
Management in the real world.
Her lectures have been very interesting. We are extremely grateful to her
and appreciate her efforts for providing full support, encouragement and
valuable guidance.

Sincere regards

Practical concepts of Management

Contents
Abstract...................................................................................................................... 5
Introduction................................................................................................................ 6
History and Background............................................................................................. 6
Vision Mission Goal objectives.................................................................................... 7
Vision:..................................................................................................................... 7
Mission:................................................................................................................... 7
Goals:...................................................................................................................... 7
Long term goals....................................................................................................... 8
Plans:....................................................................................................................... 8
Strategies:.................................................................................................................. 9
OBJECTIVES OF PSO:................................................................................................. 10
Pyramid (Three level of Manager)..........................................................................11
Function.................................................................................................................... 12
Planning:............................................................................................................... 12
Organizing:............................................................................................................ 12
Leading:................................................................................................................ 12
Controlling:............................................................................................................ 12
Roles......................................................................................................................... 12
Skills......................................................................................................................... 13
Technical Skills:..................................................................................................... 13
Human Skills:........................................................................................................ 13
Conceptual Skills:.................................................................................................. 13
Organizational culture with 7 elements....................................................................13
Attention to detail................................................................................................. 13
Innovation and Risk Taking.................................................................................... 13
Stability................................................................................................................. 13
Aggressiveness..................................................................................................... 14
Team Orientation:.................................................................................................. 14
Outcome Orientation:............................................................................................ 14
People Orientation................................................................................................. 14

Practical concepts of Management

Trust on omnipotent or symbolic view......................................................................14
General environment how it affects the decision of managers.................................14
Decision making process (example).........................................................................15
Step1..................................................................................................................... 15
Step 2.................................................................................................................... 15
STEP 3................................................................................................................... 15
STEP 4................................................................................................................... 15
STEP 5................................................................................................................... 16
STEP 6................................................................................................................... 16
STEP 7................................................................................................................... 16
STEP 8................................................................................................................... 16
Intuition or practical based decision importance:.....................................................16
Importance of motivation which theory their implementing in the organizational. . .17
Organization structure vs. mechanic structure.........................................................18

Practical concepts of Management

Abstract
Open-book & direct approach environment. An assortment of forums/meetings at hand
(Executive Committee, Management Committee, Compensation, and Organization & Employee
Development Committee) inspire discipline and accelerate establishment of processes &
systems. Encourage team work & group dynamics while inculcating a sense of ownership
through empowered Cross Functional Teams (CFTs). Employee Business Process Reengineering
(BPR) to maintain an international working environment by streamlining processes and
removing unnecessary layers. Interactive sessions are regularly held by the Managing Director at
all levels because clear, coherent and consistent messages ensure that employees are able to
integrate the inputs into their thinking. All organizational changes are announced

Practical concepts of Management

Introduction
For the past 35 years, Pakistan State Oil has been fuelling the needs of the nation.
Acknowledged as the leading Public Sector Company of Pakistan, PSO has been driving the
wheels of the national economy and is the first public company to pass the 1 Trillion rupee
revenue mark.
Currently the Company is 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. PSO has the most wide-spread retail
network in the country with over 3,500 retail outlets and is also the major fuel supplier to
aviation, railways, power projects, armed forces, marine and agriculture sectors. The
Company also possesses the countrys largest storage capacity representing nearly 74% of
the nation's total storage capacity.
PSO is now on the road to becoming a fully integrated firm encompassing facets of
exploration, refining, transportation and shipping. Through this plan, PSO will not only reduce
operational costs, it will also be able to reduce dependence on external supply sources and
develop self-sufficiency in the energy sector. The Companys future plans also include
exploring new product markets, expanding the lubricants product range, further expansion of
the company retail network, and reducing product movement costs.

History and Background

The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January 1st; the
government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum Limited (DPL) as
Premiere Oil Company Limited (POCL).
Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came into
existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd 1976.
Following that, the ESSO undertakings were purchased on 15th September 1976 and control was vested in
SOCL. The end of that year (30th December 1976) saw the merger of the Premier Oil Company Limited
and State Oil Company Limited, giving way to Pakistan state Oil (PSO).
After PSOs inception, the corporate culture underwent a comprehensive renewal program which was fully
implemented in 2004. This program over the years included the revamping of the organizational
architecture, rationalization of staff, employee empowerment and transparency in decision making through
cross functional teams. This new corporate renewal program has divided the companys major operations
into independent activities supported by legal, financial, informative and other services. Inorder to
reinforce and monitor this structural change, related check and balances have been established by
incorporating monitoring and control systems.
Human Resource Development became one of the main priorities on the companys agenda under this

Practical concepts of Management

corporate reform.

It is due to this effective implementation of corporate reform and consistent application of the best
industrial practices and business development strategies, that PSO has been able to maintain its market
leadership in a highly competitive business environment.

Vision Mission Goal objectives

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

Mission:
We try to provide our customer the best quality of petroleum, goods and services based on:
1. A professionally trained, high-quality, motivated workforce that works as a team in an
environment which recognizes and rewards performance, innovation and creativity, and provides
for personal growth and development.
2. The lowest-cost operations and assured access to long-term and cost-effective supply sources.
3. Sustained growth in earnings in real terms.
4. Highly ethical, safe, environment-friendly and socially responsible business practices.

Goals:
The most important goal of PSO organization is first to create goodwill of PSO and try to
provide welfare services to poor people who are unable to avail for instance. Education, school,
health sector etc.
PSO shall undertake social, philanthropic or community development programs which
are in alliance with its business strategies or that which will benefit the broader interests of
the community.

Practical concepts of Management

1.

Associating to a cause which is in-line with the identified sectors that include:

o
o
o
o
o
o
o
o

Relief Activities Education

Health Sector
Community Building
Children Welfare
Women Empowerment
Sports Development
Heritage Preservation
Reduce child morality

2. Credibility and repute of the charity organization seeking assistance.

Long term goals

PSO organization wants to enter in coal.

Company want to fix their own refinery system with in the country to reduce the cost
and which is profitable for company.

The most specific long term plan of firm is to decreases the cost of productivity.
Through escape the extra labor from company, more make technological process
which can reduces the cost etc.

Plans:

PSO is motivated 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.

Outstanding performance of company was recorded by the board of management. It was

because employees worked hard delivered efforts and produced results.

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.
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

Practical concepts of Management

has a broader meaning. Improving the strength favor ability and uniqueness of brand associations
making up the
Brand image.
The above goals are achieved primarily through:
I.

Corporate Advertising

II.

Sales Promotion Campaign

III.

Sponsorships

PSO has recently set up a dedicated service department that is major step towards
companys overall objective of becoming a customer-oriented company.

The major function of the PRD (public relations department) is to make sure the
projection of the companys image as the countrys premier public sector organization and
conscientious citizens. This is achieved by highlighting positive stories about the company in the
media.

Strategies:

PSO operates with a lowest cost operations policy.

It is closing the gap in market share with leader Shell.

It offers the highest quality lubricants in the market.

It has a significantly high turnover.

Lubricants have very high profit margins; an average of Rs. 20 profit per liter sold.

Castrol CR is PSOs best performing lubricant.

Castrol CR is a diesel lubricant, and the largest market is in the diesel engine vehicles
category.

PSOs in-house brands, Carient, DEO and Blaze 7 all show signs of continuous progress
over the next four years.

Unbranded lubricants account a high contribution toward sales, yet is showing a steady
decline in the years to come.

Practical concepts of Management

OBJECTIVES OF PSO:
1. Maximize profitability in the Lubricants business through segmented marketing and
brand promotion.
2. Explore potential markets for the export of fuels and lubricants.
3. Expand the PSO Cards Business by enhancing the customer base, efficient distribution and
brand partnership.
4. Enhance our reach and add to our network of New Vision Retail Outlets (NVROs).
5. Develop bio-fuels and expand the gaseous fuels business.
6. Revamp the C-store network, introduce Quick Service Restaurants and develop strategic
alliances with local and international franchises.
7. Revamp organizational structure and various functions in line with the best corporate
practices.
8. Streamline systems and procedures in accordance with the changing business environment.
9. Ensure full HSE compliance in all our operations and try to meet a zero accident objective
through effective system development, training, inspections and audit.
10. Reinforce quality assurance by acquiring the ISO 9000 quality management certification of
various departments, and expansion of MQTU network.

Practical concepts of Management

Pyramid (Three level of Manager)

Practical concepts of Management

Function
Planning:
Both PSO and Engro are in agreement that coal is the best possible indigenous fossil fuel
resource for Pakistan and has the potential to address the country's severe power shortage and
bring energy security to the country. Through this project, not only will the energy chain be
strengthened it will also generate extensive economic activity nationwide while developing
Pakistan's human capital through the execution and operation of state-of-the-art coal mining and
coal-based power generation projects. Additionally by playing a lead role in developing this
national resource, both companies will be able to strengthen their financial bottom line and
expand further through downstream commercial projects based on Thar coal.

Organizing:
As PSO has a strong back up of petroleum & power engineering so the PSO will be established
the power plants and Engro is providing the human resource. This contribution was set because
of the specialties of the firms in their respective Industries.

Leading:
Different Deputy General Managers is responsible to attain their respective tasks on scheduled
time.

Controlling:
Different General Managers is and would be tracking the performance evaluation on different
scales of time. Rather than that Managing Directors would be keeping an eye over the progress
on different intervals of Time.

Roles
According to organizational Hierarchy roles of the employees are distributed.
Interpersonal Roles:
The first level Managers are usually got in touch with Non-Managerial employees who are
usually on production side and use to supervise them Rather than that different interactions with
external elements also take place like Management training programs for upcoming talent.
Informational Roles:
Different projects or consumers have different demands all information to satisfy the consumer
needs is collected by Deputy General Managers and processed forward with the help of General
Managers.

Practical concepts of Management

E.g: if any of Investor wanted to have a brief information on the financial accounts of PSO so
DGM and GM would provide him sufficient knowledge to work with.
Decisional Roles:
These roles are occupied by Managing Director and Board of Director (BoD). If PSO found any
opportunity to work on any project, MD and (BoD) would be taking decision whether to conduct
the project or not.

Skills
Technical Skills:
Training and development Manager would be training the internees twice a year. He has that
much skills that he is able to conduct his job properly.

Human Skills:
Deputy General Managers usually provide motivational speeches or organization success stories
in their respective department during working days to motivate employees towards their work
tasks.

Conceptual Skills:
Usually Managing Director and Board of Director does not upholds the project, which was
offered by many different corporates
e.g: PSO Managing Director has ended up the agreement with PIA because of their increased
credit amount.

Organizational culture with 7 elements

Attention to detail
Employee Engagement Programs occurs at different intervals of time to check whether the
employees are putting their full efforts in their work or not.

Innovation and Risk Taking

Highly supportive environment in regard of completing of work task make employee to bring up
innovative ideas and risk management.

Stability
The decisions & performances stability may vary from time to time.

Practical concepts of Management

Aggressiveness
Due to same sales promotions and tasks to all sales employees made a healthy
competition between the employees with a great out comes.

Team Orientation:
Usually almost every project or sales promotion is taking place in team.

Outcome Orientation:
PSO have high ethical standards and a Business 'Principles and Ethics Policy' in place. We value,
encourage and inculcate corporate reforms, good governance, best business practices and an
environment of continued adherence to 'Zero Tolerance', resulting in the development of our
human capital and meeting all business challenges.

People Orientation
Interactive sessions are regularly held by the Managing Director at all levels because clear,
coherent and consistent messages ensure that employees are able to integrate the inputs into their
thinking

Trust on omnipotent or symbolic view

PSO believe on omnipotent view:
System of authentic performance evaluation and feedback is implemented at PSO
and is an integral part of our appraisal management.
Individual performance is aligned with the business goals and company objectives.
Performancebased rewards are offered to all employees on a yearly basis.
Bell curve covers all management employees annual appraisal through a population
spread

General environment how it affects the decision of

managers.
PSOs general environment is uncertain and somewhat complex because of the following factors
Social
The educated population is becoming conscious about the threats that oil companies pose to the
environment therefore PSO being the largest oil company in Pakistan has a social responsibility
of educating its customers about efficient usage of fuel as heavy usage has an adverse effect on

Practical concepts of Management

the environment and economy of the country. PSO would be one of the major companies to feel
the brunt of a social movement against organizations that harm the environment.
Technological
In the technological environment new methods of refining and distributing oil and oil related
products are continuously changing for the better.

Decision making process (example)

Step1
According to PSO (Pakistan State Oil) the problem is for a new project a strong marketing and
sales promotion is required.

Step 2
PSO wants to promote their new project through different kinds of advertisements include print
advertising, outdoor advertising, broadcast advertising, billboards advertising, and public service
advertising.

STEP 3
According to our project we promote our products.
Print media
Social media
Commercial advertisements
Outdoor activities
Public services

10
8
6
4
2

STEP 4
For a new project like fuel pumps or to promote new products for instance lubricants (engine oil)
PSO promoted through commercial advertisements, print media and social media.
Print media
Social media
Commercial
advertisements
Public services

Newspaper
Magazines
Face book
Twitter
30 sec ad on T.V Websites

books
YouTube
radio

Free education

Bill

Aid services

Practical concepts of Management

boards

STEP 5
Here we analysis that which alternative is more profitable for a company through these
advertisement ways.

Print media
Social media
Commercial
advertisements
Public services

Investments In
Millions
Newspaper 20
Face book 10
30 sec ad on T.V
50
Free education 40

Total cost
Magazines 10
Twitter
7
Websites 20

Books 10
YouTube 12
Radio 15

40
27
85

Aid services 13

Bill boards
25

78

STEP 6
The revenue PSO generated from promotion of new project and which is reasonable cost for
investment that is print media and social media is obviously less expensive rather than print
media but according to company they target business people, whether middle or lower class
every business person read newspapers, magazines or books every day etc.

STEP 7
We have implemented print media because it is more profitable for company in less cost to
promote their project through newspaper, books or magazines etc.

STEP 8
After meeting a marketing campaign and after certain time period an analysis test can be done to
check out that our decision making process is successful or not.

Intuition or practical based decision importance:

Basically it is depend on situation in organization to take a decision practically or intuition based.
According to PSO they took decision on intuition based when they advertise through print

Practical concepts of Management

media, electronic media, or CSR of company actually they are not confirmed that they get 100%
generate revenue but they do it for awareness of their company products. They lounge SAP
software in 2005 which is more useful now in firm they also took this decision on intuition base.
Practical decision they made when they promote the new name of petrol that is GREEN PLUS...
It is a chemical which is include in oil, firstly they research on it and when they 100% confirmed
that it is not dangerous for vehicles then they announce in market. The benefits are low fuel
consumption, sulphur which maintain the inner engine parts etc. This name also make
differentiate from other fuel organizations for instance shell, Caltex, Byco etc.

Importance of motivation which theory their

implementing in the organizational
To boost the morale of employees a reward and recognition scheme is in place for the last few
years and has been a great source of creating a spirit of healthy competition amongst employees.
Each year employees are nominated for two company-wide ceremonies viz
- Shaukat Raza Mirza Management Excellence Award and
- PSO Managing Director's Performance Award
It acknowledges exceptional, smart and beyond the call of duty performance.
Special efforts for continuously enriching our business systems and implementing relative
strategies have always been fruitful which are aimed at augmenting a work culture that enhances
employee motivation as well as gaining a better understanding of forces that shapes motivation,
attitude, behavior patterns and expectations.
Employee Motivation surveys are conducted that recognize the needs, opinions, concerns and
perceptions of our human capital about the organization and what they value in terms of
professional and personal interests and incentives. Keeping a human element is mind these
surveys help identify a meaningful employee relationship with the organizational objectives and
understand their job responsibilities and work expectations.
PSO have high ethical standards and a Business 'Principles and Ethics Policy' in place. We value,
encourage and inculcate corporate reforms, good governance, best business practices and an
environment of continued adherence to 'Zero Tolerance', resulting in the development of our
human capital and meeting all business challenges.
PSO encourages recreational activities of workforce at all levels. Formation and functioning of
'PSO Club' provides assistance to employees for their mental and physical health as well as for
their social activities. Sports and recreational activities are organized through this forum, where

Practical concepts of Management

employees and their families are encouraged to participate.
It is our top priority to ensure the employees are in good shape and health. To physically show
that we care, we have in-house food service with subsidized meals in a cafeteria that can cater
all the employees stationed at PSO House.
Employees can enjoy gymnasium facility right in PSO's corporate vicinity, a convenience of
walking from your workstation to a private gym for a revitalizing workout.

Organization structure vs. mechanic structure

PSO organization structure is organic. Every level of managers have their limit of authority
to take decisions. Wide span of control but depend on the department of managers whether
Finance, Marketing, HR department etc. Cross functional teams take decisions. Low
formalization and decentralization.