Shell Case Study- Swot Analysis For Shell

Shell Case Study

Shell Case Study SWOT And PESTLE Analysis

Introduction

The following paper is based on internal and external market environment analysis of Shell which is commonly known for Shell Oil Company and wholly subsidiary of Royal Dutch Shell. The internal and external market environment analysis will be conducted with the assistances of effective marketing tool that is PESTLE and SWOT analysis. PESTLE analysis is a methodology for describing aspects that affect an organization's external environment. It entails a thorough examination of six important macro-environmental factors: political, economic, social, technological, legal and environmental. The six elements are listed from most important to least important to Shell Group. Shell is a British oil and gas business that explores, produces, and markets crude oil, natural gas, and natural gas liquids. On the other hand, the attributes of strengths, weaknesses, opportunities and threats are organised in a SWOT analysis.

Company Background

Shell, popularly known as Royal Dutch Shell Plc is a multinational oil and gas company which has its headquarters in The Hague, Netherlands and included in United Kingdom as one of the public limited company. It was founded in the year 1907 by Marcus and Samuel. As per 2020 Forbes Global, Shell was ranked as the 21st largest public company in the entire globe. In the year 2013 Fortune Globe 500 list, Shell was the first largest company in the world where the revenue was accounted to be 84% of the Dutch national $556 billion GDP. The organisation is vertically integrated and active in every area it is operating with gas and oil industry which includes, refining transport, distribution and marketing, exploration and production, power generation, trading, petrochemicals and renewable energy activities such as wind, biofuels and hydrogen. Concerns about the effects of oil extraction on the people and the environment have been expressed all around the world. The public, governments and regulatory authorities have intensified pressure on high-carbon-intensive energy companies to shift their focus away from crude oil and toward ecologically responsible biofuels.

SWOT Analysis

Strength:

Strong market position: Shell has interests in over 70 countries all throughout the world, both upstream and downstream. Shell has been one of the world's leading oil businesses, with a range of fuel brands under its banner, including Shell V-Power, Shell LPG and others. Shell has a robust cash flow, which allows them to make long-term investments. Shell, for example, invested $25 billion in capital and $1 billion in design and technology in 2018. Shell ensures the future viability of their business by doing so.

Exploration capability: Shell is vertically integrated in both downstream and upstream operations. From oil exploration through refining, distribution and marketing, the corporation is integrated in every step of the supply chain.

Vertical integration: The process of exploring is becoming extremely difficult. To obtain previously untapped resources, oil and gas companies must drill deeper. It takes a long time and after several attempt to seek fresh natural gas reserves. Shell has demonstrated that they have the know-how to continuously discovering new reserves. Shell realized significant discoveries in the United States Gulf of Mexico and Nigeria in 2018. Further, it continues to invest in fresh exploratory potential.

Weakness

Low presence of renewable energy: Electric vehicle refuelling is also becoming more popular. Shell is investing in new production and energy sources but its roots are in fossil fuels. Shell spent less on renewable energy investment in 2020 than it had anticipated, as per the reports. The company only allocated a small proportion of its budget to green energy initiatives. This is because of the difficult market environment in the oil industry, the corporation made this decision. It will be fascinating to see how the present market affects renewable energy spending.

Growing debt: Shell's debt has risen significantly in recent years. The debt of the corporation climbed from $37774 million in fiscal year 2012 to $58379 million in fiscal year 2015. Increasing debt raises commercial risks, and a proportion of the cash flow is then used to pay the interest. Increasing financial commitments may have an impact on the company in the long term.

Opportunity

Increased Global Energy: According to the United States Energy Information Administration (EIA), global energy demand will rise by 40% by 2040. Cleaner energy supplies are also be in high demand and Shell should be well positioned to seize control of future needs.

New Inventions: Exploration operations may result in new discoveries, helping the company to maintain its brand reputation. Shell has great exploratory skills, as indicated under strengths.

Threat

Climatic change concern: With rising electricity needs, emissions of carbon dioxide in both production and upstream are likely to increase, which Shell must keep under control. Shell must find a way to cut its carbon dioxide emissions or else it will face higher expenditures and more increased regulation. You should check plagiarism of your case study assignment.

PESTLE Analysis

Political: Political factors are political decisions, operations or influences that have an impact on an organization's finances or performance. International and regional agencies have announced that carbon emissions will be subjected to penalties, charges and taxation. Oil and gas businesses have devised survival tactics in consequence. They have been forming alliances and collaborations with governments, promising to provide economic growth opportunities. Despite the fact that the US government is still apprehensive about Shell's environmental impact, it has persisted to enable the firm to identify new deposits. Shell just formed a Climate Action Partnership with the US government. The company had made this effort to promote a positive public image as a socially responsible company and has kept using high-carbon-intensive industrial processes.

Economic: Product price and quantity, currency fluctuations, interest rates, economic development and inflation rate are all economic components that influence an organisation. Excessive government taxation is one of the explanations for the rise in cost of production. At the same time, energy consumption has been rising, with a significant rise of roughly 57% by the beginning of 2030. This is because there are few natural supplies of crude oil left to meet demand, this has surfaced as one of the main issues facing global energy sector. Shell has responded by investment in better projects for exploration and production of oil and gas from mineral resources in response to increased demand.

Social: Companies are under more social order to engage students in responsible production. Shell replied a few years ago by presenting itself as an ethical oil company and claimed that trash would be used to grow flowers. Shell was often accused of manipulating customers and inflicting environmental damage. Shell's actions have also generated security and health concerns. The company's activities in Nigeria have regularly resulted in gas flares. Despite the fact that the problem has garnered growing public notice, Shell has been hesitant to take additional actions. For example, three Shell employees were said to have deceased as a result of horrible conditions.

Technological: Shell and other oil-related businesses have gained significant benefits as a result of technology positive reinforcement years. More efficient devices for drilling and extracting oil and gas have been led to the development of technological advances. Despite this, the modern digital machines are rather costly. An organisation must invest considerably in innovative technological equipment in order to extract oil and gas from non-traditional deposits successfully. Shell has made substantial improvements in innovative technology and is among the firms that has benefitted the most from oil extraction and processing.

Legal: For all oil and gas firm Shell, restrictions on carbon emissions and environmental safety have been reinforced. Health and safety legislation, employment law, consumer protection laws, competition laws and safety regulations are all legal considerations. With mounting concerns about dramatic climate changes and global warming, countries and international regulatory bodies are under increased able to improve new policies that would help to prevent environmental damage. Shell is one of the major firms that the restrictions are pursuing. There are additional health and safety requirements that oil and gas industry must abide to.

Environmental: Health and safety law, employee rights, consumer law, antitrust act and discrimination law are all legal considerations. Shell has invested significantly in fuel manufacturing, and it is now the world's most nitrogen firm. Studies have showed that the average of pollution caused by techniques used to manufacture crude fuels is significantly higher. Furthermore, research conducted around the world has revealed that crude oil reserves are rapidly depleting and may become rare in the near future. Despite this, Shell has continued to spend in new reserve research. This has been accomplished at the cost of environmental degradation.

Conclusion

Hence, it can be concluded that Shell or Royal Dutch Shell, is one of the world largest major oil and gas businesses as well as one of the biggest private companies. This is because of the immense impact of the oil and gas industry on development, the environment and health impacts, administrations have been closely examining the operations of energy-related organisations. Technological considerations are placed third since they have massively affected the company's platform developed. As a result, economic and political considerations have the greatest influence on Shell's success.

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