Industry analysis:

The industry in which pakistan state oil is doing business is hioghly competative. Being a
national oil company has its advantagesbut the company still has to face pressure from
different sources. The following key factors highlighted this fact.

1. Threat of the new Entrant

The threat of the new entrant in the industry that PSO is associated with is small but it can not
be eliminated. There are already foue players in the market other than PSO itself, namely SHELL
PASKISTAN, Caltex, Total Parco and Attock Petroleum. New companies will not have a large
market segment to capture therefore starting business in this industry will far from lucrative.
This can be portrayed with the help of new entrant like Admore and ZEC which have not been
able to pose a threat to the already present player.

2. Threat of substitute products

As alternative of fuel, Pakistan state oil is developing ethanol which is eventually available in
market at low prices. Other than that, CNG is also avaliable in most of the PSO outlets. It is
evident that world oil resources will eventually run out and alternative sources of fuel will be
required hence PSO has to keep up with technology and be prepared for this eventual
reprecussion to avoid being wiped.

3. Bargaining power of suppliers

It can be assumed that being an oil company, the bargaining power of suppliers would be fairly
high for PSO. However after some research it has been determined that this is not the ccase.
Firstly, Pakistan has to impoort oil, PSO has maintained a 30 year mutually benefical bussiness
relationship with Kuait PETROLEUM corporation(KPC). This protects PSO from frequent price
fluctuations in the international market. The transport fleet consists of 6000 tank lorries which
are equiped with state of the art technology to keep them moinitored.

4. Baragaining power of buyers

PSO has a vide customer base which includes retail customers at national level, various
industrial units, government, power projects, aviation and marine sector of pakistan including
pakistan army, pakistan railway, pakistan Navy, NLC, WAPDA, KESC and many more. All these
buyers combined form a formidable force which can have the power to influence PSO, however
nothing like that has materliazed to date. PSO enjoys the advantage that the government
regulates the prices of its various petroleum products. PSO only allows a small discount tolarge
organizations on its own behalf.
 5. Rivalry among competitors

The petroleum, oil and lubricants industry in pakistan is composed of to major players, PSO and
Shell Pakistan. Caltex and Total Parco were the third and four entrants. Last but not least Attock
petroleum has the smallest share of the market. All these companies in essence are competing
for the same customers. Even though Pso has an 82.1 percent share of the black oil market and
61.2 percent share of the white oil market, it still faces fierce competition from its competitors
which are vigilant in launcing their advertisement campaigns according to the prevelant
condition of the market.