Executive Summary Shell is a superior brand name with more than 100 years history in this region, infact the company is still in possession of a fuel storage tank from 1899. However, the documented history of the Royal Dutch/shell group the Indo-Pak subcontinent dates back to 1903 when a partnership was struck between
the
shell
transporter
and
trading
company and the Royal Dutch petroleum company to supply petroleum products in Asia. With their key indicators of progress already soaring to new heights, Shell is committed to dedicate all its energies, resources and the time to bring
higher
value
and
satisfaction
to
their
customers, employees and shareholders. The graph of Shell is going up every year. The ratio of profit is increasing at good percentage. Shell is serving the people at high level of standard by going according to the wishes of the customers. Assessment of the needs and wants of the
Shell History in Pakistan
customers is an ongoing process at Shell, which helps to continually develop new products and services.
To
continuously
offer
courteous,
professional and advanced business, the team of shell has recently been rejuvenated by going though
History of Shell programs with a focus
training
on
technology. Shell hasinformation an over 100 year’s presence in the Subcontinent
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The Shell brand name enjoys a 100-year history in this part of the world, dating back to 1899 when Asiatic Petroleum, the far eastern marketing arm of two companies: Shell Transport Company and Royal Dutc Du tch h Pe Petr trol oleu eum m Co Comp mpan any y be bega gan n im impo port rtin ing g ke kero rose sene ne oil fr from om Azerbaijan into the subcontinent. Even today, the legacy of the past is visible in a storage tank carrying the date - 1898. Roya yall Du Dutc tch h Sh Shel elll pl plc c in Indo The The do docum cument ented ed hi histo story ry of Ro Indo_Pa _Pakist kistan an subcontinent dates back to 1903 when partnership was struck between The The Sh Shel elll Tr Tran ansp spor ortt & Tr Trad adin ing g Co Comp mpan any y an and d th the e Ro Roya yall Dut utch ch Petroleum Company to supply petroleum to Asia. In 19 1928 28,, to enh enhan ance ce the their ir di distr stribu ibutio tion n ca capab pabil iliti ities, es, th the e mar marke ketin ting g interest of Royal Dutch Shell plc and the Burmah Oil Company Limited in Ind India ia wer were e mer merged ged and Bur Burmah mah Sh Shell ell Oil Sto Stora rage ge & Dis Distri tribu butio tion n Compan Com pany y of Ind India ia wa was s bo born rn.. Aft After er the in indep depend endenc ence e of Pa Pakis kistan tan in 1947 19 47,, the nam name e wa was s cha chang nged ed to the Bu Burm rmah ah Sh Shell ell Oil Di Distr stribu ibutio tion n Company of Pakistan. In 1970, when 51% of the shareholding was transferred to Pakistani investors, the name of changed to Pakistan Burmah Shell (PBS) Limited. The Shell and the Burmah Groups retained the rem remain ainin ing g 49 49% % in equ equal al pr prop opos ositi ition ons. s. In Feb Febru ruary ary of 19 1993 93,, as economic liberalization began to take root and the Burmah divested from PBS, Shell Petroleum stepped into raise its stake to 51%. The years year s 200 2001-2 1-2 hav have e seen the Shel Shelll Petr Petroleu oleum m Comp Company any succ successi essively vely increasing its share, with the Group now having a 76% stake in Shell Pakistan Ltd (SPL)- an expression of confidence.
Company’s Slogan “ You can be sure of Shell ”
Company Objective
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Statement of General Business Principles: Shell Pakistan Limited General Business Principles govern how Shell Pakistan Ltd. conducts its affairs. The The ob obje ject ctiv ives es of Sh Shel elll Pa Paki kist stan an Lt Ltd. d. ar are e to en enga gage ge ef effi fici cien entl tly, y, respons resp onsibl ibly y and profitably profitably in oil, gas gas,, chem chemical icals s and other sele selected cted businesses and to participate in the search for and development of other sources of energy to meet evolving customer needs and the world’s growing demand for energy. We believe that oil and gas will be integral to the global energy needs for economic economic development development for many decades to come. come. Our role is to ensure that we extract and deliver them profitably and in environmentally and socially responsible ways. We seek a high standard of performance, maintaining a strong longterm and growing position in the competitive environments in which we choose to operate. We aim aim to work work closel closely y with with our our custo customer mers, s, part partner ners s and and polic policyymakers to advance more efficient and sustainable use of energy and natural resources.
Goal of Shell The The goal goal of the the comp compan any y is to posi positi tion on itse itself lf as the the pref prefer erre red d oil oil company in Pakistan, leading the field in its commitment to safety, customer service, quality and environmental protection.
Product and Services Product: Anything that can be offered to market for attention, acquisition, use or consumption that might satisfy a want or need. The oil products of shell are given below.
Services: Services are the form of product that consist of activities, benefits, or satisfaction offered for sale that is essentially intangible and do not result in the ownership of anything. The services that provide shell Pakistan limited are given below.
There is credit card that given to the customer, in presence of these these credit credit card card shell shell prov provid ide e all all types types of servic services es witho without ut getting charges. When customer of shell going for pouring oil then also clean the transportation that is coming for being filled the oil.
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Product Mix “Product mix is the set of all the products offered for sale by a company.” The structure of product mix has both breadth and depth. Its breadth is measured by the number of product line carried and its depth by the variety of sizes, colors and models offered within each product line. Thus the two main products which Shell Pak. offers are fuel and lubricants. These have further classifications in various constituents which form the product line.
Product line: Shell has two product lines namely, fuel and lubricants.
Fuel: Shell offers a wide range of fuel. These are: Hi-Octane Super Unleaded Super Hi-speed Diesel CNG
Lubricants: The various lubricants offered by Shell are; Rimula C Rimula D Rimula X Helix Plus Helix Super Helix Standard Shell Helix(CNG)
Product Life Cycle Product Life Cycle Stages: Produ Product ct Life Life Cycle Cycle means means the chan changes ges in the the sale sales s volum volume e of the the product over the life the product. In market there is always ups and downs are present because this is a dynamic world. Every thing will have to finish after certain time period, by finishing their life, so the life cycle of Shell is. We define a product as anything that is capable of satisfying customer needs. This definition includes both physical products e.g. Carrs, Wa Ca Wash shin ing g mach machin ines es,, DVD DVD play player ers s as we well ll as serv servic ices es e.g. e.g.
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insurance, banking, private health care. Business should manage their products carefully over time to ensure that they deliver products that continue to meet customer wants. The process of managing groups of brand brands s and prod product uct lines lines is calle called d portf portfoli olio o plann plannin ing. g. The The stage stages s through which individual products develop over time are called Product Life Cycle. The classic product life cycle has four stages.
Introduction Stage: At the introduction stage market size and growth is slight. It is possible that substantial research and development cost have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. It is highly unlikely that companies will make profits on products at the introduction stage. Products at this stage have have to be caref careful ully ly moni monitor tored ed to ensur ensure e that that they they start start to grow grow.. Otherwise the best option may be to withdraw or end the product.
Growth Stage: The growth stage is characterized by rapid growth in sales and profits. Profits arise due to an increase in output [economies of sales] and possibly better prices. At this stage, it’s cheaper for business to inset in increasing their market share as well as enjoying the overall growth of the the mark market et.. Acco Accord rdin ingl gly, y, sign signif ific ican antt prom promot otio iona nall reso resour urce ces s are are traditionally invested in products that are firmly in the growth stage. Shell Pakistan introduction stage is successfully done because it comes from from the inter internat natio iona nall market market and enter enters s in Pakis Pakistan tan marke market. t. Now Now company has about 40-45.5% of market share and still growing
Maturity Stage: The maturity stage is perhaps the most common stage; it is in this stage that competition is most intense as companies fight to maintain their market share. Here both marketing and finance becomes key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The maturity stage is the time when most profit is earned by the market as a whole. Shell Pakistan not yet enters in maturity stage.
Decline Stage: In the decli decline ne stage stage the marke markett is shrin shrinkin king, g, redu reducin cing g the overa overall ll amo amount of profit that can can be shared ared amo amongst the the remai maining ing competitors. At thus stage great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to cheaper facility, sell the product into other cheaper market. Care should be taken to control the amount of stocks
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of the product. Shell Pakistan is a brand name and company is not in decline stage because their sale increases day by day.
Pricing Price is the amount of money for which a product is offered in the market. The amount of money charged for the product of services of sum of the value that consumer exchange for the consumers exchange for the benefits for having or using the product product of services price is only which brings revenue in the market, so it plays a tremendous role in the market.
Strategies of Pricing: There is to types of strategies present in marketing. Market skimming price Market penetration price • •
Market skimming price: This is high price settings for a new product to skim maximum revenue layer by layer from the segments willing to pa the high price the company makes favor but more profitable sales marketer prefer to this type of price strategies because there is every product that comes in the market will have to go out from the market every product that comes in the market will have to go out from the market every product have its limited life and after spending certain period of time product leave from the market like the computer software program that comes in the market has the time period of 6 or 3 months in the past but now there is soft ware programs that have limited life period of eighteen days, and after eighteen days there strategy because there point of view is that product have to go out from the market then they comes up with high prices to earn profit that minimizes the cost that spends when it was made and finally out of the market.
Market penetration price: Sett Settin ings gs a low low pric price e for for a new new prod produc uctt in orde orderr to attr attrac actt a larg large e number of buyers and large market shares. Companies also adopt this strategy when they enter in the market. Shell Pakistan limited also comes up with the penetration strategy because it is an international market and they just want to enter this market now this company enjoying the high profit and continuums in the product life cycle.
Basic Objectives of Pricing: Survival:
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Now days days compa companie nies s purs pursue ue surv surviva ivall as there there major major objec objectiv tive e of pricing especially when they are plagued by intense competition and changing consumer wants. Shell Pakistan ltd also tends to its lubricants in order order to surv survive ive the tough tough compet competiti ition on lubr lubrica icant nts s indus industry try.. The The pricing of fuels is not in the bands of Shell Pakistan limited or any other such company. The price of fuels is in the hands of the government.
Maintenance of current profit: The next objective of pricing is the maintenance of current profits. At the momen momentt shell shell Pakis Pakistan tan ltd is the the leade leaderr in fuel fuel and and lubr lubrica icant nts s industry and there for tends to maintain its profits through through appropriate pricing.
Product quality Leadership: Shell lubricants and fuels have been especially formulated to meet the demanding demanding requirements of a wide range of customers customers in most sectors of the company.
Selection of Pricing Method: Companies usually select the price of their products in accordance to the following three: customer demand schedule, the cost function and competit competitors ors price. price. However However companie companies s adopt adopt various various strategi strategies es in order to price their products. The strategies adopted by the shell Pakistan ltd are: 1: 2: 3: 4: 5:
Price of competitor’s product Price premium for high quality Price premium for high purity Price premium for better services Is the appropriate price for shell.
Going price rate: “Going price rate means that a company bases the price of its product in accordance to the price offered by its competitors.” In fact shell Pakistan’s competitors are like;
PSO TOTAL ATTOCK CALTEX ADMORE
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Target Market A target market is the market segment which a particular product is mark market eted ed to. to. It is ofte often n defi define ned d by age, age, gend gender er soci socioo-ec econ onom omic ic grouping. Targeting strategies is the selection of the customers u wish to service. Including; How many segments to targets Which segment to target How many product to offer Which product to offer in which segments There are three steps to targeting:
Market quality Target choice Product positioning
Targeting strategy decision is influenced by:
Market maturity Diversity of buyers need The companies size Strength of the competition The volume of sales requires for profitability
Market Targeting It is the process of evaluating each market segment’s attractiveness and and sele select ctin ing g one one or more more segm segmen ents ts to ente enter. r. Ma Mark rket et targ target etin ing g depend depends s upon upon the financ financial ial posit positio ioni ning ng of compa company. ny. If compa company ny is stro strong ng fina financ ncia iall lly y then then he must must go for for mark market et targ target etin ing. g. Shel Shelll in Pakistan produces verities of products. All these products are available urban as well as rural area.
Market Segmentation Market is the processing which dividing dividing a market in to distinct group of buyer buyers s on the basi basis s of needs needs chara characte cteri risti stics cs or behave behave who who might might requires separate products or marketing mixing.
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Market consist of buyers and buyers differs in one or more ways they may differin differing g their their wants, wants, resourc resources, es, locatio locations, ns, buying buying attitude attitude and buying practice. Shell Pakistan ltd. Divide his market in to following segments:
Demographic segmentation Geographic segmentation Psychographic segmentation
Demographic Segmentation: Demographic segmentation is dividing the market in to groups based on demographic variables such as:
Age Gender Education Income Family size Occupation Social class Shell introduces their product for upper class, upper middle class and middle class. In other words shell produces its products for everyone who have automobile.
Geographic segmentation: Geog Geogra raph phic ic segm segmen enta tati tion on is divi dividi ding ng the the mark market et in to diff differ eren entt geographical units such as. Region Density Cities This is all about the segmentation of shell. Shell provides facilities of petro petrole leum um to urba urban n as well well as rural rural area areas. s. Segm Segment entati ation on basic basicall ally y depends upon Population of that area Living standards of people
Levels of Market Segmentation There are three levels of market segmentations Mass marketing Segment marketing Niche marketing
Mass Marketing:
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Shel Shelll Paki Pakist stan an limi limite ted d go for for the the mass mass mar marke keti ting ng bec because ause its its distribution is very extensive. Internationally its products are goes into international market.
Positioning: The The proce process ss of arr arran angi ging ng of prod product uct to occup occupy y clear clear disti distinc nctt and and desirable place related to competing products in the minds of target consumer. Shell Pakistan companies lies its growth stage in the market and enjoys 65% shares. Now gradually with the increase of growth rate is expands its products line and also its distributions.
Marketing Channel “Marketing channels are set of interdependent organizations involved in the process of making a product or service available for use or consumption” The entities involved in the distribution of Shell products in Pakistan are:
Supply Chain Department Shell Depots Distributors Fuel Stations Consumer
The Market Share of Shell At the moment Shell Pak. has a market share of about 40% to 45% in Pakistan. It is trying hard to become the market leader in Pakistan. For this purpose it is taking the following steps.
Qualities of a good Market Leader Customer Knowledge: Shell Pakistan is fully committed to achieve excellence in customer serv servic ices es and and prod produc uctt qual qualit ity. y. This This can can only only be done done by havi having ng complete knowledge of the needs and wants of their customers. It is due due to this this reas reason on that that Shel Shelll Paki Pakist stan an has has esta establ blis ishe hed d a spec specia iall customer service centre by the name of “Shell Edge.”
Long Term Planning: Shell enjoys a 100-years history in the sub-continent. Shell’s long term commitment towards developing the petroleum industry in Pakistan is reflected by a capital investment of Rs.703 million in 2006.
Line Extension:
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“Line extension means including new products in the product line.” Shel Shelll has has rece recent ntly ly exte extend nded ed the the prod produc uctt line line of its its lubr lubric ican ants ts by producing CNG lubricants by the name of “Shell CNG Engine Oil.”
Heavy Advertising: Another feature of a good market leader is to heavily advertise in order to comp compet ete e with with the the comp compet etit itor ors s and and to crea create te more more awar awaren enes ess s amongst already existing and new customers. Shell also adopts the same strategy. It advertises both on electronic and print media to keep its customers well informed. The company has also started a magazine named “Spirit” to promote its products.
Effective Placement of Products: Shell Shell has has estab establis lished hed a speci special al coun council cil calle called d “Prod “Product uct Place Placemen mentt Council.” Its sole function is to keep an eye on proper placement placement of the various products offered by the company. company. The council makes contracts with dealers and retailers regarding the placement of the products and also keeps checks in order to see that there is no violation of the contracts.
Price discounts and Allowances: Shell Pakistan Ltd. offers different kinds of discounts to its customers. Cash Discount: “A cash discount is a price reduction reduction offered to buyers to pay their bills promptly.” Shell offers such discounts to its distributors. The distributors take the products from the depots and have to pay in a certain time period.
Schedule of Cash Discounts Offered by Shell
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Discount
2/10 net 30
4/10 net 40 6/15 net 50 8/20 net 60 10/25 net 70
Description It means that the distributor can get 2% discount, if he makes the payment within 10 days which is due in 30 days. Distributor can get 4% discount, if he makes the payment within 10 days which is due in 40 days. Distributor can get 6% discount, if he makes the payment within 15 days which is due in 50 days. Distributor can get 8% discount, if he makes the payment within 20 days which is due in 60 days. Distributor ca can get 10 10% discount, if he makes the payment within 25 days which is due in 70 days.
Quantity Discounts: “A quantity discount is a reduction in price on the basis of quantity purchased or consumed.” T The here re is no set set patt patter ern n acco accord rdin ing g to whic which h Shel Shelll offe offers rs quan quanti tity ty discounts, discounts, however it keeps on introducing certain schemes in order to keep its customers and consumers satisfied and intact. Examples of Quantity Discounts:
Offering 1 or 2 liter of fuel free for the purchase of 10 or 20 liters of fuel from a Shell Fuel Station. Shell distributors offering a free bottle of Shell Advance S4 (0.7 ltr) for every purchase of Shell Oil carton.
Promotion Advertising: “Adv “Adver erti tisi sing ng is any any paid paid form form of nonnon-pe pers rson onal al pres presen enta tati tion on and and promotion of ideas, goods or services by an identified sponsor.” Kinds of Advertisement: Advertisement: There There are different different kinds of advertisements which a company may adopt during the PLC. Shel Shelll also also requ requir ires es adve advert rtis isin ing g its its produ roduct cts s in orde orderr to crea create te awareness about the new or already existing products. 12
The types of advertisements advertisements which Shell Pakistan Ltd. Has adopted are as follows: Informative Advertisement: Advertisement: “The type of advertising advertising which is done during the introduction stage of a product is known as informative advertising.” Shell adopted this strategy when it launched its Shell Helix CNG Oil. It adopted all kinds of media to inform the public about the new product. Shell Shell advertis advertised ed through through Televis Television ion,, News News Papers, Papers, billboar billboards, ds, etc.to etc.to build a good product image in the minds of the customers. Persuasive Advertising: Advertising: “The advertising done to compete with the competitors and to create more more dema demand nd of the the prod produc uctt in comp compar aris ison on to the the comp compet etit itor or’s ’s products, is known as persuasive advertisement.” Shell ell Pak Ltd. td. also ado adopts such strat trateg egy y to compete ete with its compet competito itors. rs. You must have seen seen vario various us adds of Shell Shell featur featurin ing g celebrities like Michael Schumacher in order to make them attractive and and also also adds adds in whic which h comp compar aris ison on is made ade amon among g Shel Shelll and and competitor’s products. Comparison features include purity, viscosity, efficiency and performance.
Kinds of Media to be Used for Advertising “Media is basically a carrier which carries a message or any kind of information from the sender to the receiver.” The different kinds of media used by Shell Pak .Ltd. are: Television Radio(Especially FM stations) • •
• •
• • •
Internet Telep Telepho hone ne Servi Service ce (This (This functi function on is perfor performe med d by “Shell “Shell Edge” Edge” customer services centers. Their toll free number is 0800-22737) Newspapers Magazines (Shell has its own magazine “Spirit” ) Billboards
The BCG Matrix The business portfolio is the collection of business and products that make make up a comp compan any. y. The The best best port portfo foli lio o is the the one one that that fits fits the the comp compan any’ y’s s stre streng ngth ths s and and help helps s to expl exploi oitt the the most most attr attrac acti tive ve opportunities. The company must:
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•
•
Analyze Analyze its current current busines business s portfol portfolios ios and decide decide which which should should need more or less investment. Develop growth strategies for adding new products and businesses to the the portfolio while, at the the same same time, time, deciding deciding which products and businesses should no longer be retained. An SBU SBU is a unit unit of the the comp compan any y that that has has a sepa separa rate te miss missio ion n statement and objectives and that can be planned independently from the other businesses. An SBU can be a company division, a product line or individual brands.
Stars: Stars are high growth businesses competing in the market. Often they need heavy investment to sustain their growth.
Cash Cows: Cash Cash cows cows are are low low grow growth th busin busines esses ses with with relati relativel vely y high high mark market et share. share. These These are mature mature successf successful ul busines businesses ses with relative relatively ly little little need for investment.
Question Marks: These are the SBUs with low market share but which operate in higher growth market.
Dogs: Dogs refer to businesses that have relatively low share in unattractive low growth markets. Organizations prefer to divest from dogs.
Shell in BCG Matrix We put Shell in Stars in the BCG Matrix because shell has a good market share and it has the opportunities to grow more.
The SWOT Analysis SWOT stands for Strengths, Weaknesses, Opportunities &Threats. In whi which, ch, Streng engths ths and we wea akness esses are relat elate ed with with inter ternal environ environmen mentt of the organiz organizatio ation n and opportu opportuniti nities es and threats threats are related with external environment of the organization.
Strengths: Shell strengths mean what are the positive points of the organization. The strengths of shell Pakistan Ltd are:
The managers regard their sub ordinates. Main focus of the organization to increase their customers. 14
Managers use participative approach. Their employees are highly motivated. They hire local employees. No clash with GOVT. or any agency. They care about the hygienic factor. Shell is using effective means for the promotion of its products. Shell provides in time deliver to their petrol pumps. Incentive based policies for motivating employees. Shell has international Standard petrol pumps. Mobile training units keep the staff up-to-date.
Weaknesses:
They are not offering any package to their regular customers. They are not offering any bonus package scheme. Shell has eight regional retail managers. They are insufficient to handle the problems. They They have have no proper proper shade shades s and sitti sitting ng arr arrang angeme ement nt at the filling stations. There is no proper drainage system at filling station.
Opportunities:
Shel Shelll is an inte intern rnat atio iona nall comp compan any y so it sho should uld intr introd oduc uce e packages. Compa Co mpany ny has has an oppo opportu rtuni nity ty to give give speci special al packag packages es to its employees. Company has opportunity to install more CNG as well as petrol pumps in rural areas of Pakistan.
Threats: Threats are actually competitors. PSO and CALTEX improvement. Installation of stations by TOTAL. The smuggling of petrol in Balouchistan from Iran. Entry of new companies in the refinery sector.
Environmental Analysis External Environment: For the the analy analysis sis of extern external al envir environ onme ment nt follow followin ing g are are impo importa rtant nt factors (PEST).
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Political forces Economic forces Socio cultural forces Technological forces
Political forces: In Pakistan there are rapid changes of Government since poison. Each government that came in power condemned the planning work done by the precious government. The slow development due to political instab instabili ility ty but but now now the prese presett gover governm nmen entt is very very stab stable le to grow grow because govt. is providing incentives to different industries.
Economic forces: In Pakistan GNP is 5.41 and inflation rate is very high which is 12.7. The balance of payment position position in Pakistan is -3.5%. The employment employment rate is 34.94 million.
Socio-cultural forces: In Pakistan population is increasing and social values are also changing so the dema demand nd of fuel fuel consu consump mptio tion n is also also incre increasi asing ng.. Peopl People e are are coming from rural areas to cities and their motor cycle for traveling. Pakis Pakistan tan’s ’s attemp attemptt to raise raise the the livin living g stand standard ards s of its its citiz citizens ens has has meant that economic development has largely taken precedence over environmental issues.
Technological forces: Pakistan environment regarding the technology is not very advance due to the lack of resources. Natural gas, because of its environmental environmental qualities, efficiency, and technological advances are going to play an increasingly important role in meeting demand for clean energy.
Internal Environment :
Customer Supplier Labor component Competitors
Customer: Our customer is high class, low class and also middle class, because every class is used petrol for consumption.
Supplier:
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Our supp supplie liers rs are are Pakis Pakistan tan refin refinery ery,, Nation National al refin refinery ery and and Attoc Attock k refinery and Dhodak refinery.
Labor component: Labor is frequently available in Pakistan because of high unemplo unemploymen ymentt rate. rate. Skilled Skilled and unskill unskilled ed persons persons are availabl available e at lower wages.
Competitors: Major competitors of Shell are PSO with petrol pumps and Caltex with petrol petrol pumps. pumps. But shell Pakista Pakistan n limited limited operate operates s in the petroleu petroleum m refinery sector. Shell Pakistan limited also competes with three other petroleum refiners in Asia
Organizational Resources Shell has established 1404 petrol filing station in different areas of Pakis Pakistan tan.. But But now now the the comp company any is tryin trying g to redu reduce ce the number number of petrol filing station because they do not need that filing station, whose monthly sales are less then 500000 liters. Up till now about 50 pumps are renovated in different cities of Pakistan. Number of Depots in Pakistan: Shell has got 14 depots in different areas of Pakistan.
Types of Resources: 1) 2) 3) 4) 5) 6)
Marke Mar keti ting ng Fina Financ ncia iall Research Research and Develop Developmen mentt Human Human Resou Resource rce Oper Operat atio ion n Infor Informat mation ion Syst System em
Marketing: Shell has strong distribution channels. Their market size is very large. Therefore, marketing staff is very efficient and their main objective is satisfying the customer and people have the brand loyalty. Market leadership due to innovation: Shell is considered to be the market leader in innovation. It was the first company to get legal approval to operate mini-market. It was the firs firstt amon among g its its comp compet etit itor ors s to intr introd oduc uce e (rai (rainb nbow ow)) jet jet wash wash and and
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(prosper) branded oil change facility. It provides suggestive literatures to its customers while launching a new product such as Helix super and Helix Lubricant etc. It was was also also the the firs firstt comp compan any y to intr introd oduc uce e the the conc concep eptt of Mo Mobi bile le Training Unit (MTU) for the purpose of training the workers and workers and introducing quality and quantity control units, which check the quality and quantity of major gasoline at various filing stations. Innovation the key to opportunity: opportunity: Innovation use of technology is the key to other possible opportunities rela relate ted d to remo remote te gas gas rese reserv rves es that that rema remain in stra strand nded ed due due to the the prohibitive cost of development.
Research and Development: Research and development strategy deals with product and process inn innovatio tion and imp improveme ement. Shell ell spends on res research arch and development more than most in the other companies to differentiate the performance of its products to its competitors.
Human Resources: Shell provides the training facilities to their labor and management to create create the the good good relat relatio ion n to their their emplo employee yees. s. Shell Shell Compan Company y also also motives its employees and provides different incentive on their good performance.
Operation: Operation of the company is based on continues improvement is the acknowledgement that workers experience and knowledge can help to shoe production problem and contribute towards tightening variances and reducing error.
Information System: Shell design and manage high-class high-class information information system that improves the productivity and decision-making. In organization information may be colle collecte cted, d, stor stored ed and synthe synthesiz sized ed in such such manne mannerr that that answe answers rs important operational and strategic questions. Info Inform rmat atio ion n syst system em is one one of the the stre streng ngth th of the the orga organi niza zati tion on.. It provide aid in environmental scanning and in controlling activities, it can also used as a weapon in gaining competitive competitive advantage.
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Financial Performance: Performance: Sales Analysis: Shell Pakistan Limited reported sales of 63.63 billion Pakistan rupees for the fiscal year ending June of 2001. This represents an increase of 76.2% 76.2%,, versus versus 2000 2000.Wh .When en the the compa company ny’s ’s sales sales were were 36.12 36.12 bill billion ion Pakistan rupees. During 2001, the company’s sales increased at a faster rate than all three comparable companies. While shell Pakistan limited enjoyed a sales increase of 76.2% the other companies saw smaller increases; Chennai Petroleum Corporation Limited sales were up 29.1%, National Refi Re fine nery ry Limi Limite ted d incr increa ease sed d 15.9 15.9%, %, and and Ma Mang ngal alo ore Re Refi fine nery ry & Petro Petroch chemi emical cal Limite Limited d experi experienc enced ed a sales sales decli decline ne of 6.3%. 6.3%. Shell Shell Pakis Pakistan tan Limite Limited d curre currentl ntly y has has 608 608 emplo employee yees s with with sales sales of 63.63 63.63 billion Pakistan Rupees.
Stock Performance: In recent years, this stock has performed terribly. In fiscal year 2000 the stock traded as high as 367.50 Pakistan rupees. During the past 13 weeks the stock has fallen 803%. During During the 12 months months ending ending 30/06/0 30/06/01, 1, earning earnings s per share totaled totaled 30.12 Pakistan rupees per share. Thus, the price/Earning ratio is 5.48. Earning per share fell 18.7% in 2001 from 2000.The Company’s price to book ratio is higher than that of all three comparable companies, which are trading between 0.25 and 0.97 times book value.
Profitability Analysis: On the 63.63 billion Pakistan rupees in sales reported by the company in 2001, the cost of goods sold totaled 44.75 billion Pakistan rupees, or 70.3% of sales. This gross profit margin is significantly better then the company achieved in 2005, when cost of goods sold totaled 91.1% of sales. Shell Pakistan Ltd’s 2001 gross profit margin of 29.7% was better than all three companies.
Competitor Analysis 19
Shell Pakistan Limited Operates in the Petroleum refining sector. This Analysis compares shell Pakistan Limited with three other petroleum refiners in Asia.
Pakistan State Oil: The The past past of PSO PSO date dates s back back to midmid-70 70s s when when the the Governm Government ent of Pakistan amalgamated three “Oil Marketing Companies”: Esso Eastern, Eastern, Pakistan Pakistan National National Oil (PNO) PNO) and Dawood Petroleum Petroleum as part part of its its “Nationalization Plan”. The company is the only public sector entity in Pakistan that has been compet competing ing effect effectiv ively ely with with three three multi multinat natio ional nals s ( Shell, Shell, Caltex and Total). Total ). PSO is currently enjoying over 73% share of Black Oil market and 59% share of White of White Oil market. It is engaged in import, storage, distribution and marketing of various petroleum products including mogas, mogas, high speed diesel (HSD), fuel oil, oil, jet fuel, fuel, kerosene, kerosene , liquified petroleum gas (LPG), compressed natural gas (CNG) and petrochemicals. petrochemicals . PSO also enjoys around 35% market participation in lubricants and is blending/marketing Castrol brands, in addition to a wide array of its own. It is considered as one of the most successful mergers in the history of Pakistan. The company has retail coverage of over 3,800 outlets, representing 80% participation in total industry network. The company has been the winner of Karachi Stock Exchange Top Companies Award for many years and is a member of World of World Economic Forum. Forum. PSO serves a wide range of customers throughout Pakistan including retail, retail, industr industrial, ial, aviatio aviation, n, marine marine and governm government/ ent/defen defence ce sectors sectors.. PSO has been meeting the country’s fuel needs by merging sound business sense with national obligation. The Government of Pakistan(GOP) holds approximately 54% stake in Pakis Pakistan tan State State Oil Oil Compan Company y Limit Limited ed (“PSO (“PSO”), ”), inclu includin ding g both both dire direct ct holdings holdings of the Federal Government and indirect holdings through GOP owned institutions. The GOP is in the advanced stages of divesting 51% of the in PSO to a strategic investor.
Current Marketing Strategy of Shell Pakistan Ltd T The he curr curren entt stra strate tegy gy of shel shelll is conc concen entr trat ate e on its its busi busine ness ss and and selected market areas. By using this strategy company expands its business by upgrading petrol pumps in the country. Especially they are concentrating in the following three areas:
Customer Services 20
Brand Image Quality and quantity
Customer Services: Shel Shelll Paki Pakist stan an Ltd Ltd is work workin ing g for for cust custom omer er sati satisf sfac acti tion on beca becaus use e cust custom omer ers s play play a very very vita vitall role role in the the pros prospe peri rity ty or fail failur ure e of a particular company. That is the reason that shell is operating with the basic aim to satisfy its customers and provide better and better service to its its cust custom omer er.. In brie brieff it can can be said said that that shel shelll give gives s a stro strong ng emphasis on customer services.
Seven Steps for better Customer Services: Every shell operation site follows the seven-point formula for providing customer service to its customer is stated below: 1. As customer customer drive in, in, guide him to a vacant vacant filing unit unit by a neatly neatly uniformed attendant of the petrol pump. 2. Then Then the attendan attendantt well comes comes to that customer customer from from the driver driver side. 3. Atte Attend ndan antt take takes s the the ke keys ys from from the the cust custom omer er.. Afte Afterr that that the the attendant asks to the customer about the quantities of fuel. 4. The attenda attendant nt shows shows meter reading reading before before filing filing the fuel to the customer. 5. Afte Afterr fill fillin ing g the the tank tank atte attend ndan antt tell tells s the the cust custom omer er to see see the the meter reading and amount of liters, hands over the keys and takes amount from customer. 6. Attendant asks to the customer customer that he he would like like to purchase purchase an international high quality of Rimula X. 7. Then Then the atten attendan dantt cleans cleans windsc windscree reen n of the vehi vehicle cle and say good-bye with smile. By this this proc proced edur ure e cust custom omer er feel feels s that that he is bein being g give given n prop proper er attention and he will come again to the filling station to fill the tank of his vehicle.
Brand Image: The Second strategy of shell is creating a strong Brand image of the company in the customer mind. In Visual terms, the installation of Shell Shell’s ’s Retail Retail Visu Visual al Identi Identity ty (RVI) (RVI) makes makes a strik striking ing and and immedi immediate ate diffe ifferrenc ence betw etween shell’s ll’s gaso asoline ine stati tatio ons and and tho those of its competitors, Pakistan state Oil (PSO) and Caltex. The RVI programmed is massive, for the 1200 or so sites which shell inherited through the take over, around two thirds are scheduled to be developed as RVI site sites, s, man many of them bein eing com completel etely y rede edesign igned fro from the unde underg rgro roun und d stor storag age e tank tanks s up. up. In addi additi tion on,, new new site sites s are are bein being g acquired in strategic locations.
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Quality and Quantity: The third strategy of the company is to set standards for reliability and honest dealing because it is fundamental fundamental to the company’s reputation. reputation. For the the impro improvem vemen entt of quali quality ty and quant quantity ity follow following ing poin points ts are are important.
Mobile Training units Quality and Quantity Control Units
Mobile Training units: Mobile Training Units Visit sites keeping staff up to date on a whole range of topics including most importantly, issues of health, safety and environment. Mobile training units train the workers in different filling stations.
Quality and Quantity Control Units: Anoth Another er mobi mobile le innov innovati ation on cover cover fuels fuels quali quality ty assu assura rance nce,, an area area wher where e cyni cynica call disr disreg egar ard d of stan standa dard rds, s, mani manife fest sted ed by dilu diluti tion on of premium grades with low-cost gasoline has become so common that cust custom omer ers s have have give given n up comp compla lain inin ing g abou aboutt it. it. Re Reco cogn gniz izin ing g the the importance importance to the company’s reputation reputation for delivering delivering the right quality of fuel fuel,, shel shelll has has intr introd oduc uced ed rand random om gaso gasoli line ne test testin ing g fore foreca cast st.. Technic Technicians ians operate operate what are, effective effectively, ly, mobile mobile field field laborato laboratories ries,, testing fuels quality using an octane meter. According to shell, “ Fuel Quality is fundamental to our reputation for honest dealing” Quantity contro controll units units check check that that wheth whether er the retail retailers ers are givin giving g the righ rightt quant quantity ity or less less quan quantit tity y of fuel fuel to the the custo customer mers. s. The The quan quantit tity y is checked through various instruments. The quantity control units also check the digital pump.
Recommendations
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There should be proper shades and proper sitting arrangements at the filling stations. Lubricants should be disposed in a proper way to protect the environment from being polluted. Shell should provide small incentive to its customers. Schemes like “buy 50 liters of super and get a cola drink free”, should be kept introducing time to time. Shel Shelll shou should ld make make comp compan any y oper operat atio ion n site site in ever every y city city to capture the new market. There is only one thing that is constant that is change; shell should invest on research& development to cope with dynamic environment. Compa Co mpany ny should should estab establi lish sh new new regio regional nal offic office e to contro controll the the activities of company operations. The company should provide the facility of free oil change on all its outlets. Shell should develop modern retail outlets. These outlets should have have all all possi possible ble facil faciliti ities es for custo customer mers s becau because se one one of the the reaso reasons ns behin behind d decrea decrease se market market shar share e is mode modern rniza izatio tion n of competitors. Shell should develop effective marketing programs that help the company to increase sales that will lead to increase the market share. In these market programs emphasis should be given to adver advertis tisin ing, g, which which is the the most most effect effective ive and and effici efficient ent tool tools s of promotion for such type of business.
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