Final Internship Report Summer

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PSO SUMMER INTERNSHIP REPORT JUNE-JULY 2012

Internship Report on PSO

Author 1: Sunny Rawlani Contact number: 03337569226Email address: [email protected]

mailto:[email protected]

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EXCUTIVE SUMMARY

This report highlights my internship

of Retail Business

in PSO house Karachi. The internship was

begun from 18th of June and came to end

at 27th of July of August. I did my

internship practice in marketing

department under the primary supervision

of Madam Sarah. I was assigned main

projects regarding in which make a

detailed report on PSO High Speed Diesel

(HSD) market and the other one was to

conduct survey about the HSD awareness.

Moreover it was also assigned in which I

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organized a market activity, named as

Lube Hanagama at different petrol pumps.

PSO is the largest oil company in Pakistan

having the advantage to conduct large

internship activity

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Table of Contents

Introduction............................................................................................................04

Background............................................................................................................05

Continuous Growth At PSO...................................................................................05

Company Overview...............................................................................................06

Mission Statement..................................................................................................07

Organizational Structure........................................................................................08

Functional Department at PSO..............................................................................09

Target Market.........................................................................................................11

Marketing Mix (4p’s).............................................................................................12

SWOT Analysis.....................................................................................................17

Suggestion and Recommendation..........................................................................20

Experience At PSO................................................................................................21

Conclusion.............................................................................................................22

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Introduction:

The PSO (Pakistan State Oil is alienated into two segments one is marketing and

other is supply of automotive products including lubricants. The PSO sector has been

topped, this sector has been topped because of highest sale and exceptionally visible

because of the competition and marketing activities among the oil companies in the

Pakistan. The second one, the industrial sector and this is primitive for consumers and

power plants, construction projects, sugar and cement industries etc.

Marketing objectives could be achieved with the help of marketing strategies.

Different combinations of the element of marketing mix are used for the formulation of

different marketing strategies to meet the marketing objectives. PSO captured more

marketing share as compare to its competitor so it had one of leading Energy Company,

its networks spread all over the Pakistan.

In the oil industry lubricants are the most important product because of high

profitability, so their sale generates high revenue for the company. All cars need

lubricants for their engine. There is an increase in the consumption of lubricants because

of the growing number of vehicles both for light vehicles, heavy trucks and buses.

Furthermore, there is an increase in lubricant demand for old cars and trucks.

Lubricants are very important for smooth and problem free movement of any vehicles

and for this purpose there is a requirement of different variety of lubricating oils. For car

engines some factors are very important such as performance, low fuel consumption,

engine life, and low maintenance requirements.

To meet these requirements, better quality of fuels and lubricants are needed.

There is an increase in development in the automotive industry, increase in power of

engines and more computerized functions have changed the lubricants requirements.

The PSO tag line “PSO Apna Hai” is all about maintaining client satisfaction in

long term brand loyalty towards PSO.

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BACKGROUND

Pakistan State Oil Company Limited, namely PSO was found in 1976, as a result

of amalgamation of the formal three oil marketing companies’ I-e Pakistan National Oils

Limited, Premier Oil Company and Esso Undertakings in Pakistan. There is a chronology

of events leading to the formation of Pakistan State Oil Co. Ltd .On January 1 st, 1974,

Federal Government takes over management of PNO (Pakistan National Oil) and DPO

(Dawood Petroleum Limited) and renamed it into POCL (Premier Oil Company Limited)

under marketing of Petroleum Products (Federal Control) Act, 1974.Then on June 3 rd,

1974 Government incorporated Petroleum Storage Development Corporation, PSDC. On

August 23rd, 1976 name of PSDC was changed to State Oil Company Limited, SOCL. On

September 15.1976 Government purchased ESSO Undertakings, vested the same in

SOCL. And finally on December 30, 1976 Government merged PNO and POCL into

SOCL and named it as PSO.

As the largest oil marketing company of Pakistan, PSO is engaged in the storage,

import, distribution and marketing of Petroleum products, petrochemicals, Aviation and

Bunker fuels, LPG and CNG dominates the country’s fuel and energy needs. Since its

inception in 1976 the company has been meeting more than 70% of the country’s fuel

needs.

CONTINUOUS GROWTH AT PSO

PSO continues to expand its physical, technical and marketing

resources to meet the requirements of the country .To keep pace with

growth, PSO has maintained International Collaborations to import

latest technology. These are:

1. Castrol (UK) Blending and marketing of lubricants in Pakistan

2. Air Total (France) Technical and Commercial agreements in

Aviation Services

3. Exxon Chemicals (Singapore) Petrochemical Business and Technology.

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COMPANY OVERVIEWPakistan state oil is the market leader in Pakistan’s energy sector. The

company has the largest network of retail outlets to serve the automotive. PSO takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow. Pak i s t an S t a t e O i l , t he l a rge s t o i l ma rke t i ng company i n t he coun t ry , i s cu r r en t l y engaged i n s t o r age , distribution and marketing of various POL products.Major stakeholder:Government of Pakistan: 51% sharesCURRENT VALUERs. 75 billion,MARKET SHARE:In Black oil: 82.1%In white oil: 61.2%

Distribution outlets:About 3700Out of which1,610Outlets have been upgraded as per as new visionSTORAGE DEPOT:29TOTAL STORAGE:81% of National storageTANK LORRIES6000PER DAY CUSTOMERS:PSO serves 2.8 million retail customers on daily basis Serve 2000 industrial unitsPROVISIOON OF FEUL AT PORTAir ports: 9Ship fuel: 3 portsNew Vision Retail ProgramWith most modern facilities likeElectronic dispensing unitsConvenience storesBusiness centersEasy Payment CentersHONOUR:

First Pakistani Public Sector Company to become a member of the World Economic Forum (WEF) and including in Fortune 500 companiesWinning the “Karachi Stock Exchange (KSE) Top Companies Award” has made PSO a notable company world over. Received AAA rating by Pakistan Credit Rating Agency (PACRA)

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MISSION STATEMENT

To ensure availability and security of sustainable supply of oil and gas for

economic development and strategic requirements of Pakistan

To coordinate development of natural resources of energy and minerals

STRATEGY TO ACHIEVE MISSION

To adopt an integrated approach for promoting exploration and fast track

development of oil, gas and mineral resources

To deregulate and liberalize and privatize oil, gas and mineral sector through

structured reforms

To attract private investment and to establish credible institutions for facilitating

the development of petroleum and mineral sector and develop technical

professional human resources

To optimize existing energy delivery infrastructure oil and gas pipelines to reduce

imported fuel oil consumption with indigenous gas by optimally balancing the gas

availability and supplies from local and imported resources

MARKETING STRATEGY IMPLEMENTED BY PSO

The strategy of PSO is to promote the exploration in oil, gas and mineral

resources. They reform the structure of natural resources. Not only reformed the mineral

resources, but also the petroleum resources. The main object of this strategy is to focus

on enhance of resources, attract the private investment and establish credible institution

of petroleum.

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ORGANIZATIONAL STRUCTURE

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FUNCTIONAL DEPARTMENTS OF PSO

1. Marketing Department.

2. Finance Department

3. Supply & Distribution Department

4. Operations Department

5. Information System Department

6. Human Resources Department

7. Training & Organizational Development Department

MARKETING DEPARTMENT WITHIN ORGANIZATION

An advanced organization like “Pakistan State Oil “needs some sort of marketing

system to satisfy the efforts of all the people working in the organization which are

required to satisfy the varied needs of all its consumers. Divisional Manager of ‘PSO’

said that:” the marketing department within our organization serves as front line fighter to

their competitors. Without it they can not project and introduce new products. They are

committed to providing the best products and services to all their kind patrons. The main

objective and of “PSO” marketing department is to continuously upgrade their products

their presentation to keep the customers fully satisfied.

MARKETING DEPARTMENT SUBSECTIONS

PSO has the following marketing departments:

1. Retail. (Further Defined)

2. Industrial consumers.

3. Aviation.

4. Compressed Natural Gas.

5. Liquefied Petroleum Gas.

6. Chemicals.

7. Marine.

8. Lube sales and Agency trade.

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Retail

The basic concern of this department is with petrol pumps. To enhance the sales

of petroleum products in already existing petrol pumps and to install new one are its

major objectives .It gives certain targets to outlets dealers (owners) which they have to

achieve in a certain time period. The 3805 outlets all across the country are supported by

storage depots which are being facilitated by the product movement through tank Lorries,

railway tank wagons and pipelines. The major policy of these departments these days is

the new vision program of outlets .It makes the decision of new vision on the basis of

some factors like location of outlets, potential of sales area, existing sales, competitor’s

strong hold etc. There are three ways to bring the outlets in new vision. These are:

100% contribution by company

50% contribution by company

100% contribution by dealer

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TARGET MARKET

Target market for selected three products is as follows:

HI-SPEED DIESEL

1. AGRICULTURE SECTOR

Agriculture sector includes. The landlords, who have their own irrigation units

and they use diesel in their operations. Diesel is also used in tractors, cultivating

machines and in harvesters.

2. GOVT. SECTOR

PSO also has a very good market in Govt. sector, which include WAPDA and

3. PAK FORCES

Pakistan Army, Air Force, Navy, all these are the target market of PSO-

particularly for hi-speed diesel. Moreover, transports that are involved in loading, cargo

activities i.e. public transport, private transport Co. trucking (Goods transport stations).

Hi-speed diesel is also consumed by the diesel general motors, which include vehicles

that are above 1300cc. (1C – 2C engines to heavy power engines).

PETROL

Target market for the petrol car below 1300 cc. Light user like people who have:

1. Motorcycle

2. Taxi

3. Rickshaw

4. Generator

MOBIL OIL LUBRICANT

Target market for Mobil oil is Diesel engine and Petrol engine; large vehicle, in

Govt. sector, highway authority. Who used their machinery to develop the infrastructure;

FWO (Army) services stations and workshops.

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MARKETING MIX

PRODUCTS

Single Grade Petrol (Premier Plus)

High Speed Diesel (HSD)

Castrol GTX

SINGLE GRADE PETROL:

Compatible with mineral, synthetic and most hydraulic oil, blends with most

greases, pastes, 2-stroke fuel oil, cutting oil, chain oil, compressor oil, axle oil, drilling

lubrication, tapping fluids, hydraulic oil, mining fluids, petrol, diesel, marine fuel oil,

scour able oils, coolants, anti freeze, soluble cutting fluids, penetrating oils, flushing oils,

general purpose lube oils.

SGP does not:

Flake, Melt, Crack, Expand, Creep, Scuff, Drag out, Contract, Migrate, Wash off

SGP helps to prevent:

Seizure, Galling, Vibration, Noise, Frictional heat, Weight Loss

SGP improves:

Loading on bearings, cutting tool versatility, product finishing

Single Grade Petrol products benefits..

Saves petrol/diesel fuel up to 20%

Improves engine power (BHP) 8%

Reduces exhaust emissions 46%

Reduces all round friction 90%

Reduces oil consumption 20%

Improves compression 16%

Saves electrical power 14%

Improves Nm rating on gears 12%

Improves cutting life 200%

Reduces operating noise 10%

Reduces vibration 50%

Reduces operating temperature 20%

Improve torque values 12%

Improves frictional flow rates 15%

Extends the life of filters 20%

Improves production output 20%

Extends the battery life on tools 12%

Increases operating speeds 10%

Reduces weight loss on bearings

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50%

2. CASTROL GTX…

Multi grade super high performance oil for use viscosity range of SAE 20W-

50W, gives the rapid circulation and adds protection during start up from cold, where

80% engine wear may occur, with extra protection for engines operating in hot and dusty

climates.

BENEFITS

Longer engine life and power retention.

Improves oil pressure and consumption.

Protects against soot, varnish, black sludge formation, acid and corrosion

PERFORMANCE

SAE 20W-50w

MIL-L-46152D

API SG/CD

MIL-L-2104E

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Because of all these description it is also considered as one of the fast moving

product. Independent power plants, WAPDA and etc mostly demand it. It is used as

lubricant in the petrol consumption cars.

3. HIGH SPEED DIESEL

High speed diesel is one of the fastest moving product among other products of PSO. It is

most commonly used by heavy engine vehicles and automobiles. It is used in these areas:

Agriculture

Industry

General Public

It is used in large, slow speed marine engines and automotive engines

as well.

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Pricing Strategy of Petrol & Diesel

Both petrol and diesel are placed under the head of fuel oil, so that the pricing

strategy of both of these products is same. And well discuss it in the context of pricing

strategy of full oil.

Fuel oil prices are set by a committee for all oil marketing companies. And to this

fact all oil-marketing companies are having same. Petrol and diesel prices. There is

almost no difference between the fuel oil prices of PSO and Shell, or any other

competitor.

Fuel oil pricing strategy its standard, set by OCAC (Oil Companies advisory

committee). Up to every fortnight the fuel oil prices are revised.

PRICING STRATEGY OF CASTROL GTX

There is no hard and fast rule for the pricing strategy of castor GTX. But still

there is a defined strategy of prices. In case of Castrol GTX, that is a lubricant, all oil

companies set their own prices which means prices of lubes vary from PSO, Shell and

Caltex. These prices are based upon.

Cost

Handling charges

Storage charges

Because some companies have to bear less cost handling charges as well as

storage charges that’s why; this product of PSO has greater demand in the market. Being

a government company PSO has to bear less cost and handling and storage charges.

Lubricant prices are revised after ever 4-6 months. They have defined their pricing

strategy as competitive prices. They have said that we have competitive prices. Two

factors are considered while setting the prices

i Profit

ii Services

In case of lubricants, they set their prices lower than their competitors.

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PLACEMENT AND DISTRIBUTION CHANNEL

A channel of distribution comprises a set of institutions, which perform all of the

activities utilized to move a product and its title from production to consumption.

Place is also a channel of distribution or intermediary. It is the mechanism through which

goods and/or services are moved from the manufacturer/ service provider to the user or

consumer. There are many types of intermediaries such as wholesalers, agents, retailers,

the Internet, overseas distributors, direct marketing (from manufacturer to user without an

intermediary), and many others.

For Single Grade Petrol (SGP) and High Speed Diesel (HSD), the most viable

placement channel is the products movement from wholesalers to retailer’s .For general

retail outlets; this facility is available in the form of tank Lorries. For industrial needs,

railway tank wagons are the most appropriate source. Previously Government of Pakistan

had been paying the freight charges of their placement but now for the product

movement, retailers have to pay themselves the freight charges. As far as the placement

of Castrol GTX is concerned, different lube vans are available which take the lubes from

manufacturers to dealers of petrol pumps to be available on lube shops. Also there are

different agencies for lubricants, which take them from dealers on their own expenses and

sell to general public.

These days the enhancement of existing facilities and development of new

infrastructure - especially pipelines, which are the safest, efficient & most environment

friendly mode of transportation, is being looked up carefully. Pakistan Railway is also

gearing for moving more products upcountry. This is very important to reduce the

pressure on road movement

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SWOT ANALYSIS

STRENGTHS:

PSO is having product innovation as it frequently introduces new products

according to the requirements of its consumer.

A distinctive competitive advantage, with an acknowledged market leader as it is

having largest market shares of 67%

Being a government company it has big contracts with other governmental

organizations like Pakistan Railways, PIA etc.

PSO utilizes sophisticated equipment and sound industry standards to prevent any

form of pollution and preserve natural habitat.

Large Number of outlets in Pakistan.

PSO was the first oil marketing company (OMC) to introduce Premier Plus

in Pakistan. It is a low lead gasoline with a special additive to reduce Carbon

Monoxide levels in vehicle emissions. CNG, a much cleaner fuel in place of

gasoline, is also being introduced in Pakistan by PSO.

PSO is the only company in Pakistan which is listed in top 1000 companies of

Asia and has received TOP 25 Companies Award every year, for the last 13

consecutive years.

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WEAKNESS:

The managing Director (MD) of company is changed every time when the

government is changed which creates in stability in the company.

Old retail outlets are major weakness for PSO as they are not enough capable to

compete the Shell, Caltex or Total outlets.

Untrained staff at outlets is causing inefficient services.

Word of Mouth is not much effective

Lack in Advertisements or promotional strategy in lubricants and petroleum

products

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

Falling down retail network with low throughput per outlet; lack of assured

supply sources; obsolescence, improper controls and lack of professionals

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OPPORTUNITY:

Diversity into the related products i.e. creating some unique features in the

products to attract their consumer

Privatization may be subjected to positive outcomes

Afghanistan's Market is the biggest opportunity for OMC’s in Pakistan

Industrial & Trade growth in Pakistan is also the opportunity for PSO as they are

adding revenues in Power sector that is the major customer of PSO.

Deregulation, globalization, upstream/downstream integration and diversification

THREATS

Due to more inclination towards CNG, the demand for petrol and HSD is in

danger .As is the law of Canadian government for built in CNG kits in cars, it will

be a threat for fuel oils if imposed in Pakistan

Availability of Alternative

Availability of alternative at low price is a threat for the organization. It

may be possible that the competitors facilitating the customers with low price and

better quality then it will decline the sales example .TOTAL is offering low prices

of lubricants as compared to PSO and SHELL. It may be possible that it will shift

the demand of price conscious customers towards itself

If the staff servers are untrained, unethical and don’t know about the products

they are selling then they are unable to satisfy the customers, unable to providing

proper customer feedback to company and cant explain to the company that what is

the demand of customers so it will be a threat for the PSO of low sales

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SUGGESTIONS AND RECOMMENDATION

This is needed for the organization to improve the services.

PSO is lagging behind in the field of marketing research. So they should pay

attention to make the research and development department efficient and active.

Management should work in depth to know that which petrol pumps are more

profitable and which are generating low sales so they can adopt new policies in

order to increase sales.

They should improve their services at their retail outlets.

They should focus more on their marketing activities.

They should promote themselves during national events like cricket tournaments.

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My experience at PSOWe have to agree in that; internship plays practical role in building the personal skills and support to give knowledge of environment and enables internee to think and analyze; what are different between book and practicality, and what are the similarities. Being an internee I have found my internship very much knowledgeable.I began my internship program on 18th June, 2012 with PSO. The internship was to last for 6 weeks and as a result my internship came to an end on 27 th July .In somewhat more concrete terms, PSO provides the responsibilities with timely ,scientifically credible, policy-relevant environmental data and information for decision-making and action planning for sustainable internee personal development.

My Duties at PSO House

Visits on HSD survey

Conduct In-house survey to know about employee’s awareness about HSD

Find out the problems and loops of PSO HSD by its competitors

Make a short report of pie chart on in-house survey

Make a long report on PSO HSD Sales and sales incline strategies.

Organize marketing activity, LUBE HANAGAMA on different PSO COCO sites

I had to visit different PSO terminals for getting information for my HSD report. This

information helped me a lot to make my short and long reports. I had to conduct in-house

survey for checking employs awareness about HSD and presented it to my supervisor. I

also contact staff, find out the problem or loops, and evaluate the finding.

Accomplishments

I tried my best to accomplish all the responsibilities or targets which assigned to me

during my internship. The supervisor assigned me duties and I fulfill the requirements on

time and they admire my capabilities of work. I accomplished following the tasks during

my internship.

Daily report to supervisor in detail of last day work

Completion of pie charts of survey

Completion of detailed report on HSD

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CONCLUSION

Pakistan State Oil is playing an important role in the economic development of

the country. PSO is not only a national marketing company but also serves as vehicle of

government energy policy.

PSO not only shoulders the responsibility of meeting the petroleum needs in all

sectors of economy and defense but also undertakes all measures for the conservation of

energy by reducing stocks, trans-shipment in handling losses. PSO is supplying oil in

even those areas where other companies have refused due to security reasons.

My perception about the company have totally changed during my six weeks

internship, I met to the point that this is a professionally focused and full organized and

developed company. Even it is totally a government sector but it has successfully

managed its corporate culture.

PSO has an edge all over the government sectors. I observed the positive points in

PSO that was its strengths and near to be its opportunities in future but as I observed

weakness it will be a harmful threat for this organization. After the SWOT analysis I have

come with these recommendations that I would like to explain. PSO should redesign its

old retail outlets. The old outlets are the reason of sales decline up to some extend. New

and fresh presenting of products always attracts the customers.

It is very important for PSO because it is already facing its competitors in the same

market. PSO should also hire trained staff or give training to existing staff. Through this

way PSO can win customers satisfaction. Every organization in the market want to get

customers satisfaction but there is no need for PSO to adopt different way to do so

because PSO already satisfy its customers but to increase the loyalty and make strong

customer relationship it is compulsory for PSO to give incompatible service to its

customers.

Documents

Final Internship Report Summer