Shell Case Study

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Shell Introduction

This study seeks to look into the case of Shell in order to effectively and efficiently gauge its internal and external environment factors which put an effect on the company. The study seeks to outline the company profile primarily to get an understanding of the business of the company. The study then seeks to conduct a detailed SWOT analysis in the case of the company in order to understand the internal factors that affect its operations and market. The study also seeks to understand the external factors by effectively undertaking a PESTLE analysis in order to gauge the external influences on the company. 

Company profile

Company Name

Royal Dutch Shell

Type of industry

Oil and Gas Industry

Headquarters

Netherlands and incorporated in United Kingdom

Sales/Revenue

US $ 35.62 billion in 2018

Area served

Algeria, Cameroon, Egypt, Gabon, Ghana, Libya, Morocco, Nigeria, South Africa, Tunisia and 16 other countries.

Number of service stations

44000 Worldwide

Competition

Total, Chevron, Exxon Mobil and BP

USP

One of six world’s “Supermajor”

Target Group

All classes

Products

Shell Argina, Shell Corena, Shell Diala, Shell E-Fluids, Shell E-greases, Shell Gadus, Shell Morlina, Shell Mysella, Shell Omala, Shell Risella X, Shell Sporac, Shell Tellus, Shell Tonna and Shell Turbo

Website

https://www.shell.com/

Table 1: Company profile

Shell Swot Analysis

Strengths

  • Wide presence in the oil and gas industry (Ionescu-Somers, 2019)
  • Strong business strategy
  • Ability to adapt swiftly (Shell.com, 2019)
  • Strong core values
  • Strong relationships with customers

Weaknesses

  • Heavy Challenges faced due to sustainability
  • Slashing of resources (Durugbo and Amankwah-Amoah, 2019)
  • Prominent Ethical Issues

Threats

  • Heavy competition faced from British Petroleum and Chevron
  • Sustainable energy innovations (White, 2018)

Opportunities

  • Alternative energy segments

Table 2: Swot Analysis

(Source: As influenced by Bentham, 2019)

Shell Analysis

Strengths

As per the case study of Shell it can be viewed that the organisation has a wide range of strengths which include its strength in the oil and gas sector due to wide presence of the company. This indicates that the company holds a major proportion of market share in the case of the industry. According to Bentham (2019), Shell also has the ability to quickly adapt to its environment and this ensures that the organisation can make swift changes to its structure to adapt to its market. In the case of the Shell organisation the strong relationships with customers aids to the organisation's sustainability and market development.

Weakness

As viewed in the case study of Shell it has been viewed that even though there is a prevalence of string core beliefs the organisation still suffers from the major sustainability challenges in terms of the sustainability of the industry of oil and gas. The company has also in recent times, had to slash its resources and this has become a major drawback for the functioning of the company and its operations. It can also be viewed that in the case of Shell there are a number of ethical issues which are faced by the company such as that of spillage and this leads to adverse effects on the business.

Threats

The major threats to Royal Dutch Shell as studied in the case are that of its competitor companies such as BP and Chevron. These companies are major contenders in the case of the oil and gas industry and they also have brought about sustainable technology changes in their systems. This proves to be a major threat for the organisation as it needs to develop its processes and pertain to the ethical issues in order to ensure appropriate process compliance and efficiency.

Opportunities

As per the case study of Shell it can be understood that the company has a major opportunity area in the case of alternative energy sources. Shell may choose to move into alternative energy segments in order to effectively maintain the sustainability of their business in the industry. Alternative energy sources are more in consideration with sustainable development processes and this would also help the company in order to effectively secure a greater share of the market as it is an emerging segment. 

Shell Pestel Analysis

Political

  • Political instability in the organisations
  • UN SDGs and laws on sustainability incorporation – 17 SDGs (Denis, 2018)

Economical

  • The global debate regarding the oil and natural gas industry
  • The lack of investments in the sector (Rivetti and cavatorta, 2018)
  • Bovespa index fell by 0.78% (Forbes.com, 2018)
  • Joeseley Batista and Michel Temer fall by 27.75% (Forbes.com, 2018)

Social

  • Demographic shifts in the market towards alternative energy sources (Grubler et al. 2018)
  • Increasing demand for sustainable products in the market

Technological

  • Enhanced oil recovery
  • Waste management systems such as waste heat energy harvesting (Ekendahl et al. 2018)

Legal

  • UN Sustainable development goals and the governmental laws in accordance to the same
  • Trade regulations of various different countries (Antonio and Narayanan, 2018)

Environmental

  • Environmental concern regarding climate change
  • Rising concern for the preservation of the environment and incorporation of sustainability (Wright and Baldauf, 2018)

Table 3: Pestel Analysis

(Source: As influenced by Grubler et al. 2018)

Shell Analysis

As per the case study of shell it can be viewed that there are a host of different factors such as that of the requirement of sustainability in the processes which affect the organisational policies adversely. In the light of the changing demographic demand in the market and the focus on sustainability, the company is pressured by its external market in order to bring in sustainable methods. It can be viewed that the investment index of Bovespa fell by 0.78% and Joeseley Batista and Michel Temer fall by 27.75% (Forbes.com, 2018). As per the case study it can also be viewed that the Shell organization also lags behind its competitors in terms of the sustainable technological developments which are required to be brought in. the development of sustainable systems such as Enhanced Oil recovery and Waste Heat Energy management processes prove to pose a major threat to the organization in the case of the evolving, market. The organisation needs to effectively develop their systems to match the demands and needs.

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As observed further in the case study, it can be understood that here is a major need of sustainability in the case of the industry due to the rising environmental concerns and Shell’s systems are outdated for this. The company effectively needs to focus on developing its systems in order to effectively sustain itself in the case of the market. The market trends also show that here is a greater interest of the customers in order for effectively purchasing sustainable products and thus the company faces a major heat due to its sector of operations. 

As observed in tech case study it can also be viewed that the organization of Shell also faces major adversities in the case of the lack of investments which are flowing into the context of the industry. The lack of investments leads to the scrapping of important resources and processes which proves to be a major problem for the functioning of the company.

On an overall basis it must be understood that Shell needs to develop its systems in order to comply with the sustainable requirements of the global economy. Doing this helps in ensuring the long term sustainability of the company and its processes.

References

Antonio, K.M. and Narayanan, B., (2018). The General Equilibrium Effects of Environmental Regulations in the Electricity Generation. 9(4). 65-71.

Bentham, J., (2019). The Scenario Approach to Possible Futures for Oil and Natural Gas. In Managing Sustainable Business 19(10). 5-19.

Denis, S., (2018). Corporate Sustainability Peculiarities in Oil and Gas Industry: Comparative Case Study of Finnish and Russian Companies. 95(31). 91-162.

Durugbo, C. and Amankwah‐Amoah, J., (2019). Global sustainability under uncertainty: How do multinationals craft regulatory policies?. Corporate Social Responsibility and Environmental Management. 9(3). 143-160.

Ekendahl, S., Bark, M., Engelbrektsson, J., Karlsson, C.A., Niyitegeka, D. and Strömberg, N., (2018). Energy-efficient outdoor cultivation of oleaginous microalgae at northern latitudes using waste heat and flue gas from a pulp and paper mill. Algal research31(9), 138-146.

Forbes.com, (2018). Prices are up, but challenges remain for oil and gas companies. Available at: https://www.forbes.com/sites/uhenergy/2018/04/05/prices-are-up-but-challenges-remain-for-oil-and-gas-companies/#2c8f296e213d [Accessed on: 17 July, 2019]

Grubler, A., Wilson, C., Bento, N., Boza-Kiss, B., Krey, V., McCollum, D.L., Rao, N.D., Riahi, K., Rogelj, J., De Stercke, S. and Cullen, J., (2018). A low energy demand scenario for meeting the 1.5 C target and sustainable development goals without negative emission technologies. Nature Energy3(6), 515-601.

Ionescu-Somers, A.M., (2019). Revenue Flow and Human Rights: The Paradoxes of Shell in Nigeria. In Managing Sustainable Business 18(10), 171-193.

Rivetti, P. and Cavatorta, F., (2018). Algeria: oil and public opinion. In Public Brainpower8(8), 23-40.

Shell.com, (2019). Our strengths. Available at: https://www.shell.com/business-customers/chemicals/about-shell-chemicals/our-strengths.html [Accessed on: 10 July, 2019]

White, J., (2018). How Shell manages its Dutch dividend withholding tax. International Tax Review. 8(6), 161-170.

Wright, R.G. and Baldauf, M., (2018). Arctic environment preservation through grounding avoidance. In Sustainable Shipping in a Changing Arctic 7(2), 75-98.

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