change management 1.2

8/8/2019 Change Management 1.2

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Pakistan state oil (PSO)

Company overview.

Pakistan state oil (PSO) was found in the mid-70s when the Government integrated three OilMarketing Companies : Pakistan National Oil (PNO), Dawood Petroleum and premiere oil companylimited (POCL). The company has 82.3% share in black oil market and 61.8% share in white oilmarket and with overall 71% market share. PSO also enjoys around 36% market participation inlubricants with its own brand name Castrol. The company contribute 80% share in imports of oilproducts in the country. It has one million storage capacity (76% of the total national storage) in 13storage depots all over the country. Major competitors are shell Pakistan, Caltex, total Parco andattock petroleum.

Changes in PSO .

From 2001 to 2004 PSO has gone through radical changes, both internal and external, and hasemerged with a new outlook. PSO s comprehensive and far-reaching corporate reform programmewhich resulting in dramatic corporate transformation has been widely appreciated at variousnational and international forums. This transformation programme covers the following three mainareas.

1. Organisation restructuring.2. Employee empowerment and development.3. Efficiency and transparency in decision-making.

Internal problemsy Out dated system.y Lack of automation.y Lack of quality professionals.y No sound Business vision.y Ineffective organisational structure.y H eave reliance on inventory gain.

Ex ternal problems

y Political intervention.y A ggressive marketing and development by competitorsy H igh regulated environment.y Rapid products substitution in the market.y New players in the market.

Transformation strategy of PSO.


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It was realized some years ago that PSO need some changes at the management level. The first stepwas taken by the PSO to recruit some professional market experts from out side the organisation.This was result in the appointment of new Deputy Managing Director (Marketing). They separatedthe position of CEO and non-executive chairman of the board. The board of management is assistedby three sub-committees; the H uman resource committee, the A udit committee , and the finance

committee. The main purpose of these committees was to review both policy and implementationof new initiative.

V ision.

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

Mission.

Committed to leadership in the energy market through competitive advantage in providing thehighest quality petroleum products and services to our customers based on professionallytrained, high quality, motivated workforce, working as a team, which recognizes and rewardsperformance, innovation and creativity, and provides for personal growth and development.

Implementation of new strategy.

Restructuring.

The implementation of new policy and initiatives was really tough challenge for PSO. Now this is aplace where an organisation can succeed or fail to deliver the real change. They introduced thebusiness unit concept, these units are performing in an independently and responsibly in the form of strategic business units, based on clear and transparent allocation responsibility and accountability.(A ccording to General Manager Interview of PSO)

Employee empowerment and development.

There was no strict control and check on employee, they never fulfil their responsibilities and evenmost of them not stay full time at offices .The training and organisational development departmentstarted training and development of the employees. They adopted a strict policy for change inattitude of employees quite intensively by creating a sense of participation, openness, integrity, andkeeping in focus the company`s vision, values and long-term objectives in all training activities. The

training programme was consist on teambuilding, presentation skill, sale and marketing, leadership,computer based project management, ethic, customer service etc .

Efficiency and transparency in decision-making.

PSO has adopted Mix Matrix strategy (according to GM, PSO interview on website) . They emphasize andwant to see not only quick decision making ability in their management but also transparency in


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them. They gave more attention to teamwork, formation of many cross functional team to helpdecision making and implementation of new policy.

R esults of transformations.

Over all transformation policy was successful. A ccording to PSO official website effective

implementation of corporate reform and consistent application of the best industrial practices andbusiness development strategies, that PSO has been able to maintain its market leadership in ahighly competitive business environment . The summary of the result is following.

Customer serves is improved The organisation became decentralized from centralization. Managers became more autonomous. More check on transparency and accountability. More focus on training and development of employee. Market share increase from 65% to 71%. Profitability increased.

T he system Approach to change in PSO.

By definition system is an organized assembly of various components which are related in such waythat the behaviour of one individual component will effect the overall status of the system. Its meanany process or activity could be a system, so we can take PSO as a system. A system approachprovides clarity, understanding and sense of direction. More importantly it provides a mean of tackling knowledge management related change events and gets things started (McLaughl in et al.,2006). A system must have a predetermined objective that the interrelated components strive toachieve.

The intervention strategy.

A n intervention strategy may be regarded as the procedural methodology for successfullyintervening in the working processes of the original system. The ultimate result should be a stablenew environment, which in incorporates the desired change. A fter the analysis of PSO interventionstrategy, it seems and fit to some extent in intervention system model(ISM).

Implementation phase .

This is the practical phase of our intervention strategy, our objectives are clear and current, optionsselected and review, and the system well defined and understood. Now all that is left is to introducethe change to the system, but for this we need a sound strategy. There are two basicimplementation strategies available which are:

1. Pilot studies: it gives opportunity to review the change. A ssumption and procedurecan be tested. Future acceptance of the fully implemented change will increase, butit also delays full implementation process. PSO was not adopted this strategy.

2. Parallel running: Slow phase out old system, as the new becomes more reliable andunderstood. We can not really see this strategy in PSO.


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Conclusion.

The real change process was started in PSO when the government decided in 2000 to privatize thecompany and started selling its share in stock exchange, as global privatization trend get more and

more popularity. It is believe that Private sector can be delivered more efficient goods and servicethen public sector and we can see clearly in this case study. The market will be more competitivedue to free market instead of monopoly. This strategy can be adopted and can be apply in all othersimilar organisation.

R eferences.

1. A .Paton & J.McCalman (2008) change manage ment A guide to effective i mpl ementationthird edition, London; sage publication Ltd.

2. H ugh Davenport, Jon Stephens and Stephen Swailes (2003) organisationa l Behaviour individua l, Grou p and organisation , second edition, London ;FT Prentince H all.

3. http://www.pafkiet.edu.pk/dnnbeta/LinkClick.asp x? fileticket=%2Fom x hrcZPWo%3D&tabid=150&mid=703 date 06/03/09 (time 21:00)

4. http://www.psopk.com/investors/pdf/ar_2008_overview.pdf . access Date 06-03-09(time: 21:00)

5. http://www.sharespk.com/inde x .php/2007/12/10/psoc-pakistan-state-oil/ access date07-03-09 (time 1400)

6. www.privatisation.gov.pk/oilgas/PSO Teaser06.pdf . access date 25/03/09 7. www.changezone.co.uk/dynamics/topdown.html access date27-03-09 ( time:11:30)


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8. searchcio-midmarket.techtarget.com/sDefinition.html (access date 10-4-09)

change management 1.2

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