Shell Case Study – Royal Dutch Shell
Royal Dutch Shell was formed in 1907, although the history dates back to the early 19th century.
Shell’s headquarters are in The Hague, the Netherlands, and the Chief Executive Officer is Ben van Beurden. The parent company of the Shell group is Royal Dutch Shell plc, which is incorporated in England and Wales.
Reasons for Success
The key reasons for the success of Shell Oil Company are associated with the oil major’s multinational oil business operations backed up by more than 22.000 staff and the consolidated companies. Shell’s main business direction is natural gas production, petrochemical, gasoline and natural gas marketing. At that, Shell leads the market through the network of its branded gas stations exceeding 25.000 in the US alone. This ensures the corporation solid public presence.
On an international scale, Shell partners with Saudi Aramco to jointly operate refineries. With the help of its partners (Chevron) and subsidiaries (Aera Energy LLC; Motiva Enterprises), Shell expands strategic drills in offshore locations; produces fuels, oils, and explores, produces, and refines petroleum products.
Furthermore, Shell Oil Company has always associated its success with the high-quality workforce regarded as its most invaluable asset. The corporation therefore invests solid funds into the improvement of professional capacity of it enormous staff and attempts to implement flexible working practices as far as possible. Overall, the company pays competitive dividends, and makes considerable investments to ensure the company’s profitability.
Threats and Problems
Recently, Shell faced serious ecological challenges considering the reports of the U.S. Environmental Protection Agency. In connection with the Notice of Violation, Shell violated the Clean Air Act in 1998. At that, within a week 28.4 m. gallons of gasoline were released in the air without the compulsory vapour recovery equipment. This resulted in 56 t. hazardous emissions in the atmosphere. Another accusation was related to the illegal construction of loading bay without the allowance from the State Department of Environmental Protection.
In accordance with the most recent 2008 lawsuit launched against Shell, the company allegedly violated Clean Air Act.
Therefore, the company is seriously challenged with the environmental concerns, including sulphur dioxide emissions, volatile organic compounds, carbon monoxide emissions; emissions of nitrogen oxides. In addition to this, Shell operations are reported to produce adverse affects to the vast majority of migratory birds’ community due to drilling operations North Sea. Taking these and other facts into account, Shell should reconsider its environmental policies and limit hazardous effects to the surrounding environment in the foreseeable future.
Considering the effects of the spreading financial crisis, Shell is prone to take certain measures to keep a competitive pace. For Shell, as well as other major oil players, the overall situation is intensified by the oil reserve crisis. Since the prices per barrel have substantially decreased, Shell should smartly coordinate its price policy and spot the current tendencies on global markets.
The current situation is such that in light of the financial crisis, energy prices are plunging and force oil companies to delay their projects and scale back spending. Therefore, major oil players like Shell are expecting the soonest moderation of the industry costs. As many oil players, Shell is leading well-balanced business strategy to foresee further economic fluctuations and win competitive advantage.
Most importantly, the company is becoming less environmentally hazardous and only this factor may assure the company high publicity and brand promotion in the near future.
Overall, the briefs enabled to analyse the current business situation of some lead multinational players that are currently expanding their global markets. In most cases, their business success is associated with sound brand management and international expansion through partnerships, mergers and acquisitions, and re-branding. At that, the companies tend to emphasize on the cutting-edge technologies and human factor as their main asset while managing enormous workforce internationally.
On the other hand, however, mainly all companies have recently been subject to serious claims and lawsuits associated with the lack of social responsibility, and most importantly, unsound environmentally-based policies. Now, it is high time these internationally acclaimed brands reconsidered their environmental and social-oriented policies and made them more transparent and sufficient.
Furthermore, the ongoing financial crisis places additional challenges to these multinational players. Overall this indicates the uncertainty of future forecasts and corporate strategies intended even for the short-term periods. At that, it is apparent that the revenue rates and financial stability of the aforementioned brands have not suffered during the third quarter of 2008.