Jan 20 - 26, 2003

It has been recently reported in the press that Pakistan State Oil (PSO) has been honoured as the first Pakistani corporate entity to be studied as a case of exemplary corporate transformation by the Wharton School of Commerce, University of Pennsylvania, USA.

The Vice Dean and the Director of the Wharton School are said to have written a letter to the Managing Director PSO, requesting permission to prepare a case study focused on PSO for the forthcoming class at Wharton. Wharton School is part of the University of Pennsylvania, the highly competitive and most prestigious Ivy League School in Philadelphia, which is America's first university. The case study, if PSO agrees to its preparation, might also be beneficially used for training of the government officials, professionals and the business students in the country. PSO, while agreeing to the preparation of the case study by Wharton School, may obtain the right to its use, free of cost, for training purposes by different business and other institutions in the country.

Business schools in Pakistan are mostly using textbooks printed in foreign countries, in majority of the cases in USA. These books generally contain case studies relating mostly to American or European businesses. However, as the business environment described in the case studies is unfamiliar to our students and possibly some of the faculty members as well, full benefit from discussion on the case studies is not derived. Lahore University of Management Sciences (LUMS) is reportedly relying heavily on case method and therefore is expected to have developed a number of case studies on local enterprises. Some other business schools and professional institutes have also attempted developing a number of case studies based on actual operation and problems of local businesses. However, it is felt that there is further need to continuously develop many such case studies on local enterprises in our local business and regulatory environment. Also, there should be a system of up-dating the existing case studies in the light of comments and lessons learnt during case discussion sessions.

Local businesses are known to have allowed internships to students undergoing business and technical education. Handled properly, the arrangement is mutually beneficial. However, some of the businesses do not fully benefit themselves or allow the internees to fully gain from the opportunity. The businessman might in the first place have agreed to take the internees more to oblige certain friends. Perhaps, they do not wish to disclose more information on company operations to the internees as they apprehend that these details may fall in the hands of tax or other regulatory agencies or their competitors. Preparation of the detailed case studies involves sharing more details about particular aspects being the subject of the case study as well as the general set up of the company and its operations. In case it is a comprehensive case study, much more details shall be required interspersed with group or one-to-one discussions with the senior management. Not all owners or managers are experienced or confident of handling such situations so in most cases they take the safest course of action i.e. refuse to offer facilities for the preparation of the case study at all. Such people, in the long run, also lose as they restrict the opportunities to gain fresh ideas or independent review of their operations. Now that many of our business people have been trained in business schools abroad, they are possibly in a position to write case studies to be used in our business schools. This resource needs to be further explored and promoted.

PSO performance has been good throughout and it is surprising that Wharton School took so long to identify it for study purposes. Wharton School has selected PSO, one of the top 25 companies of Karachi Stock Exchange for the year 2001, for the case study presumably after careful screening of a number of companies in the country. PSO has a number of distinguishing features that might have tilted the balance in its favour for selection. For the benefit of local business students, some of such features are described as under:

a. PSO, a public sector major oil marketing company, is highly profitable and currently is in the process of privatisation. This is a strategic asset of Pakistan and the government might re-consider its earlier decision in the fast changing regional situation.

b. There are three oil-marketing companies in Pakistan. Besides PSO, there are Caltex and Shell, both of which are multinationals.

c. PSO was formed some 25 years ago with the merger of three oil-marketing companies that were nationalized by the government. The merger of three distinct corporate cultures surprisingly emerged into a new vibrant successful company in the public sector. PSO this year had pre-tax profit of Rs 5.1 billion and declared highest ever dividend comprising 130 % cash and 20 % bonus shares.

d. PSO is supplier of furnace oil to HUBCO and some of the other IPPs, and in this regard the government has guaranteed PSO performance.

e. PSO is a company listed on all three stock exchanges in Pakistan. PSO annual reports contain a wealth of information bout the company itself as well as the petroleum products marketing in the country. PSO Annual Report-2001 was selected by ICAP-ICMAP as the best presented report of the year.

f. PSO received KSE Top Companies Award for 18th consecutive year.

g. PSO commissioned 208 New Vision outlets bringing the total to 503 in the short span of three years. Altogether PSO has 3,800-strong retail network.

h. PSO has met more than 70% of the nation's fuel requirements and developed the largest storage network in the country.

In case it has agreed to go ahead with the preparation of the case study by Wharton School, PSO shall be aware of the scope of the case study under consideration and the amount of effort it would require to satisfy the writers of the case study. It is anticipated that for actual writing of the case study, more details shall be required from PSO management as well as the permission for its use in the preparation of the case study. It would be better, if the writers were required to also clear with PSO the final draft of the case study, before it is actually used in the business schools and is included in the textbooks. However, in order to learn more from the exercise and to lay foundation for preparation of future case studies by local Business Schools, an attempt has been made to list the topics of potential case studies based on information already in the public domain, regarding PSO, other oil marketing companies or other well-known enterprises. Annual reports on these companies would help the writers in picking the topics of the case studies and in developing the broad outlines of the same. Some of the likely topics of the case studies are as under:

a. Basis of profitability management efficiency or business monopoly

b. Appropriateness of marketing strategy and products distribution network

c. Rationale for divesture of subsidiary companies or sale of non- core assets

d. Future fuel supply (fuel oil or gas) options to the IPPs

e. Capability and effectiveness as importer and import arrangements

f. Product arrangements with local manufacturers particularly oil refineries

g. Challenges of organisation, management and strategic business units

h. Corporate plan and profitability targets business-wise and product-wise

i. Nature of relations with the controlling ministry i.e. MP&NR

j. Cash management effectiveness and investment planning process

k. Information system on inventory and sales for real time information

l. Storages capacity and inventory management system

m. Corporate monitoring, internal controls and procedures manuals

n. Main factors that contributed to corporate transformation

o. Market leadership earned or gift of being in public sector

p. Comparative performance in product development and marketing

q. Prospects, challenges and opportunities

The list can be easily stretched to include more topics of interest to students of business education. For thorough discussion the case studies on the above topics would demand exposure of the participants to a number of disciplines. The topics listed above could also be used for Project Finance training to the Credit Managers in the banks and the DFIs as well as the government officials handling mega infrastructure projects.

Case studies are a forceful medium for generating discussion among business students on critical issues with limited data availability, for arriving at decisions that have far reaching financial and other consequences. The teacher and the taught, both should be motivated to go through the rigorous exercise. It is felt that the students studying in private universities are less inclined to hard work although they bear larger tuition fees and all are desirous of obtaining higher final grade. The position is relatively better in the public sector institutions. This might be partly due to the fact that these institutions are less dependent for their continued operations on fees from the students and therefore can adopt harsh measures to maintain better educational standards in the best interest of the student community. As such the public sector institutions should be playing more active role in the development of teaching aids including case studies that would improve the education standards.

Writing of case studies requires thorough knowledge of the business environment/operations and high teaching skills that can be further improved through experience and hard work. The government is anxious to raise the quality of education at the university level. This can be possible through concerted efforts over a number of years, using modern teaching methods and aids including properly developed case studies. It is proposed that business schools develop close liaison with the business and industry with a view to afford the students more opportunities to see actual operations and to meet the managers there who are heading different line or staff functions. This liaison would also lead to developing case studies, both on simple issues and the complicated matters of national level. Private sector universities generally economise in every thing including teaching faculty most of which are only visiting or part-timers. As against this, the public sector universalities and institutions have permanent faculty. There is thus continuity and these teachers can develop the case studies and improve them over time, after using these studies few times in the actual class settings. This will also help the teachers in improving their understanding of the real-life business activities and thus their effectives in the classroom shall improve considerably. Gradually, the private sector universities would also join in the effort for developing studies and thus contribute more in the overall improvement of the education standards.