GEZ petrol station: CVP analysis and spread sheet modelling for planning and decision making Ku Nor Izah Ku Ismail, Wan Nordin Wan Hussin and Mat Supian Salleh Ku Nor Izah Ku Ismail is a Professor and Wan Nordin Wan Hussin is a Professor, both at Universiti Utara Malaysia, Kedah, Malaysia. Mat Supian Salleh is a Senior Manager at Petronas Dagangan Berhad, Kuala Lumpur, Malaysia. Introduction As the Area Manager for GEZ Berhad, a major oil company in Malaysia, in 2011, Aiman was responsible for directing the sales activities of more than 20 petrol stations in the northern region of Malaysia. He was also responsible for providing training to petrol station dealers and staff, initiating sales promotions and implementing key initiatives to improve sales. Despite being a stable business with an increasing number of vehicles, petrol station operators often faced the difficulty of sustaining their businesses, leading to the termination of their dealership licences. The lack of knowledge in cost accounting and lack of awareness about the usefulness of Excel spreadsheet models to aid planning and decision making, amongst other things, contributed to business failures. Realising the importance of understanding management accounting concepts and tools such as cost behaviour, cost allocation, cost-volume-profit (CVP) analysis and acquiring a core set of skills in spreadsheet modelling, Aiman believed that, in today’s data-driven environment, the dealers and their relevant staff should be expected to use Excel in analysing accounting information and solving business problems. They should be able to differentiate between variable and fixed expenses, and build a CVP model for scenario planning and decision making. Aiman sought the assistance of Rizal, a local university accounting lecturer, to build a CVP model that he could use in the dealers’ training to impress upon the dealers the power of Excel functionality in showing how sensitive projected results are to changes in scenarios or changes in critical operational variables. To develop the spreadsheet model, Rizal gathered the relevant data from the operator of the Baron Service Station (BSS), one of the most successful GEZ dealers in the northern region of Malaysia. GEZ petrol stations As of October 2010, there were 3,182 petrol stations and 332 mini-petrol stations in the Malaysia, selling about 25,000 million litres of petrol and diesel. Selangor saw the highest number of petrol stations, followed by Johor and Perak (Exhibits 1 and 2). GEZ petrol stations were set up by GEZ Berhad, one of the main players in the petroleum retailing industry, and GEZ petrol station operators ran the business under three basic concepts: company-owned station (COS), partially company-owned station (PCOS) and dealer-built station (DBS). The operators of PCOS and COS were landowners themselves or were nominated by and agreed on by GEZ. Under the DBS concept, the operators were not the landowners. Normally, a GEZ petrol station conducted two main businesses – the fuel business and the convenience store business, known as SelesaMart. Under the fuel business, the petrol stations sold petrol research octane number (RON) 95 (R95), petrol RON 97 (R97) and Disclaimer. This case is written solely for educational purposes and is not intended to represent successful or unsuccessful managerial decision making. The author/s may have disguised names, financial and other recognizable information to protect confidentiality. DOI 10.1108/EEMCS-09-2014-0220 VOL. 5 NO. 3 2015, pp. 1-15, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1