Royal Dutch Shell, popularly known as Shell around the world, is a British and Dutch joint venture multinational oil and gas company. The headquarter of the company is situated in Hague Netherlands and it is incorporated as a public limited company in the United Kingdom. This company was set up in the year 1907 when two rival groups came together: Royal Dutch of Netherlands and Shell Transport and Trading company of the United Kingdom. The idea behind this amalgamation was to compete with another organization called Standard Oil. From the year 1940’s to 1970’s Shell effectively dominated the petroleum industry. Followed by this the company was also seen partnering with the world’s largest commercial sea transportation of liquefied natural gas. And since then gas has become an important part in the business run by Shell.
As of today, it is an extremely important organization, probably one of the most successful organizations within the oil and gas industry across the globe. By the measurement of its revenue earned in 2020 it is currently the fifth largest multinational company in the world. The most striking feature of this organization is the fact that it is based out of Europe and not China or the United States of America. The business fraternity across the globe has acknowledged the phenomenal success of the company, in the year 2020 it was ranked the 21st largest public company by Forbes Global 2020. Whereas in the year 2013 Shell was ranked first in the Fortune Global 500 list amongst many eminent organizations worldwide.
One of the most important strategies that the company has adopted that has attributed the organization immense amount of success, it is important to note that the organization is vertically integrated. Along with this, within the oil and gas industry around the world, Shell has shown exemplary success and leadership. The efficient management of the organization allows them to be involved in the exploration, production, refining, transport, distribution and in the marketing of petrochemicals, with this the organization also looks into the power generation sector and in the trading sector as well. Recently the organization has involved itself in the renewable energy sector and has begun dealing with biofuels. Hydrogen and wind.
The organization is spread across 70 countries and approximately produces 3.7 million barrels of oil everyday with close to fifty thousand gas stations located around the world. In 2020 the company made a revenue of 180.5 billion US dollars. Currently the products they are dealing with includes LNG, Lubricants, Natural gas, Petroleum and Petrochemicals. The organization has close to ninety thousand employees around the globe and has assets worth four hundred billion US dollars approximately. Although for the longest time Shell was known to be the largest emitter of greenhouse gases but the attitude of the company with regards to the preservation of the environment and sustainability is changing and in the year 2018 the organization announced, that they are changing their style of operations and it hopes to achieve net zero greenhouse gas emissions by 2050. You can get study help.
To understand and assess the external factors that affect the development of the business. In order to understand this the framework of a PESTLE analysis needs to be used. This analysis gives a very solid understanding of how the organization functions based on the political. economic, social, technological, environmental and legal factors this further helps in determining the threats and opportunities that the organization has. If you want to know how we work, take a look at our project management assignment who helps in managing your marketing analysis.
Political factors include the role of the government and the current political framework of the country. It is to be understood that the smooth execution of a business is also dependent on the kind of government interventions that are made towards the organization. With regards to the political factors the organization needs to understand the taxation policies, labor laws, trade restrictions etc. In the case study of Shell recently the governments are very focused on the kind of hazards the oil industry can unleash. Because of this concern Shell has to make certain changes in terms of their strategies, alliances and partnerships so that they are able to address and work according to the concerns raised by the government. Including this Shell along with others in the same industry are asked to assess their crude oil consumption and shift towards biofuels. However, Shell has been implementing a series of strategies and actively participates in Climate Action Committees with governments of many countries to figure out ways in which the organization can positively contribute in this crisis
The economic factors include situations that determine the product pricing, exchange rates, interest rates as well as economic growth and inflation rate. Generally, oil prices have seen an exponential rise because of the increase in the cost of production. And one very important reason behind this hike is because of the increase in the taxation policies by the governments. Another reason is the increase in extensive investments. However, in all this it is also important to note that the investment in the energy sector is increasing which is a very major threat since the natural reserves are already depleting. With regards to this Shell has begun investing in other sectors and new projects aimed at exploring and extracting oil and gas from natural reserves.
Generally, the social factors include the understanding of the culture and ethos of a place and how corporations need to look into these areas and strategize their business accordingly. For example, with regards to the oil and gas sector people now-a-days are more conscious about their consumption patterns. This has also forced the companies to be more responsible with their production sector. A very clever way in which Shell responded to these concerns is by advertising themself as a responsible producer of their product who are also very committed. They even mentioned that they used their waste materials to cultivate flowers. This definitely rendered a positive image in the minds of the consumers.
As the name suggests technological factors include advancements in technology and the kind of attitude a country or organization has towards automation, research and development. With regards to Shell, the organization has greatly benefited from technological advancements. In the oil and gas sector technological advancement is a major addition that has made extraction efficient. Along with this technology-oriented research has also enabled the organization to come up with new projects. Shell has been extremely smart in investing in expensive technological equipment that in a way has benefitted the organization
The legal factors include laws that guarantee the safety of the employee, their rights, consumer law, patents, antitrust laws, discrimination law etc. In this it is important to note that one legal regulation that Shell has to face time and again is with regards to the amount of carbon emissions. Along with this the company also is also scrutinized under the health and safety laws because working in the oil and gas sector does expose the employees to a lot of danger. And thus, it is Shell’s responsibility to keep a check in order to not float these regulations. Our law assignment help services will help you in legal problems.
Right now, owing to the plight of climate change and resource depletion the environmental factors are of utmost importance. Because Shell is directly involved in the fuel industry for the longest time it also has been responsible for emitting greenhouse gases and increased carbon emissions. It continues to be one of the most carbon intensive organizations. And reports also suggest that the company continues to carry out extractions despite knowing the fact that resources are depleting. The organization is still carrying out their exploration and research at the expense of environmental degradation.
Thus, some of the important points that emerged out of this analysis is the fact that the technological, political and legal factors are in favor of the company. Whereas, it needs to focus on the environmental factors that eventually will improve the social factors as well.
SWOT analysis is a form of assessment that looks into the internal factors of the organization that helps in laying out the strength and weakness of the company.
Therefore, to conclude Shell has been able to achieve a great amount of success because it very efficiently assessed and conquered the oil and gas industry. Despite the few weaknesses and threats, the strategic management of the company and their conscious decision to explore and bring in cleaner energy also places them in a good position to meet the future demands. As you can see, when you avail our Shell case study assignment help service, you get all-round assistance. Thus, if you want to stand out from the rest of the class, you can contact us.