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Shell is a global energy and petrochemical company group. Operating in Nearly 100 countries, Royal Dutch / Shell Group, bring together the most competitive products for its customers a unified image. As the annual report for 2009 defined, Shell is targeted for effective, responsible, and is profitable in oil, gas, chemicals and other selected businesses and to participate in research and other energy development. In fact, the results will always be in the clear objectives and strategic plan development and compliance.
Operation's Strategic Performance Objectives
The petroleum product business takes the action, and sells based on the petroleum product scope round the world for domestic, industry and transportation use. With about 45,000 service stations, Shell is the world biggest only the fuel retail sales network which irons records. Its future stimulation and the carbon dioxide business unit develop the biological fuel, the hydrogen, and sell the synthetic fuel which produces by the GTL process of the product. It also leads in the carbon dioxide management entire company activity (Brownlie, 2003).
In the search for exploration and production Services, Shell is restoring the global oil and gas activities by joint venture, often with the National Oil Company (Shell Malaysia Bhd, 2002). Shell has brought more fuel technologies around the world and dedicated themselves for the better fuel economy in coming days.
Shell continues to strengthen in liquefied natural gas with strong presence, helps more markets, to gain the clean combustion natural gas. The liquefied natural gas output increased in 2008 and at the beginning of 2009 by 1/4. Shell is increasing the advanced transportation fuel and the lubricating oil, may help the customer to enhance the fuel oil efficiency and the reduced emissions the usability, and is formulating a huge transportation bio fuel service (Royal Dutch Shell, 2010). Being engage in petrochemical sector Shell put itself the prime choice of petrochemical exploration and production for its dedicated service towards the energy solution, ahead of many famous companies such as Exxon Mobil or British petroleum.
Diversified Core Business
Shell's current investments ensure that the future of uninterrupted. Research on bio-fuels, solar, wind and energy from the to help organizations diversify, and addresses the issue of longevity of fossil fuel reserves (Shell Malaysia Bhd, 2008).
Diversity into products such as fuel cards and credit cards inside the shell to help maintain a wider product portfolio spread the risk. Shell for early work in the range of possible future situations is to explore the use of scenarios, planning tools, and adaptation strategies to ensure that future requirements can be met. Organizations work hard to improve its general reputation and believe that for sure now than it has been seen.
Shell also manufactures and supply oil products literally throughout the world which satisfy the needs of the customers by constantly achieving operational excellence (Shell Malaysia Bhd, 2005). They have a safer environment for hazardous business operation which is economically optimum and enjoys a strong diversified, innovative and result-oriented workforce to delivery their excellence (Elkington, 1998).
Despite of technological advancement, many of Shell refineries still used the petroleum gas exploitation which burns coal for exploration caused the massive environmental pollution. Shell was also accused of deforestation in USA and Canada for exploration involvement which the company does not disclose to stakeholders. Due to volatile political involvement, Shell Nigeria was a continuous target of attacks by the people affected of Shells unethical business there. Several legal barriers has also been placed which damages Shell's reputation (Brownlie, 2003). Moreover, compare to rival's Shell failed to keep its promise to business integrity by facilitating bribery to political leaders to obtain license in Kazakhstan and Canada.
Shell is one of the first energy companies to recognize the threat of climate change and called for action. Shell to understand their role in helping to meet this challenge:
First, through the management motion, has about 750,000 tons, in 2008 greenhouse gas withdrawal. Next, through help client management, from transportation fuel and other energy product use withdrawal. These withdrawal usually surpass 6,900,000 tons carbon dioxide, every year about 2.4 fossil fuel's carbon dioxide withdrawal % (approximately 1.5% year humanities make every year greenhouse gas withdrawal). Third, advocated that widespread needs to come from government's policy change (Shell Malaysia Bhd, 2008).
However, in the Shell refinery, energy-saving has deteriorated in 2008, (see above picture), although a good level of more than 2002. 2008 results in part because they have more unplanned downtime. It is also due to run at their full capacity under the refinery, so less efficiently, as a cast during the year of their products (GRI, 2005).
Figure 3: Energy Intensity ratio [available at]
Profitability is essential fulfillment these responsibilities and the service remains. This is one already weighs and the efficiency value, the customer places the Shell Oil Company product and the service. What is very important is the essential enterprise resource distribution, and will support them to continue to invest develops and the production future energy supply, will meet consumer's need (Royal Dutch Shell, 2010). If does not have the profit and the formidable financial basis, it is impossible to fulfill the above responsibility. Considering the product range of shell, it has widened its hand to the many economical sectors like petrol, diesel, and natural gas for vehicle, liquefied petroleum gas, engine oils and lubricants and household gas services. Shell jet fuels are also widely used for aviation fueling. Compare to Exxon Mobil, for example, Shell has built a close relationship with its suppliers and vendors to update and upgrade service packages and this virtually help Shells to be more economical
Designing and Developing Operation Strategy
Shell's gas & power services, transportation of liquefied natural gas, gives customers the alternative energy choices such as GTL, the process of combustion of the gas to less polluting natural gas into synthetic fuels and other products By developing the solar power and intervention. It also allows Shell coal gas technology that enables the use of coal as a chemical raw materials and more efficient power generation (Royal Dutch Shell, 2010).
The industrial production of petroleum chemicals includes the uses in textile manufacture and detergent plastic raw material, the coating, the medical commodity and the computer (Royal Dutch Shell, 2010). In the oil sands affairs, Athabasca oil sands injection, extracts bitumen - particular thick, heavy oil from oil sands in Alberta, western Canada, and can convert it into a comprehensive range of products of crude oil (Elkington, 1998). Shell also has implemented global sales and marketing campaign by engaging with various social activities such as sports racing, community education services which build their superior images to the customer base although other competitors has launched the similar activities, Shell has had these for a large span.
From the business philosophy, Shell includes the promotion of sustainable development, which means to meet the global demand for energy growing economic, environmental and the socially responsible approach. This is to produce more cleanly products: The Burning of natural gas, for example, or working in the establishment of transport bio-fuels business. The business: construction projects, business facilities and management of supply chain security, and in ways that reduce the impact on the environment and the creation of the benefits to society. The people: to use their expertise, creativity and skills so that Shell can successfully compete and help meet the energy challenge. The relationships: with customers, business partners, government, academic institutions, non-governmental organizations, as well as neighbors.
Despite of leading global petroleum products, Shell has failed to keep the promise of free of political engagement with the Governments where they operate. The main agenda of Shell's corporate vision and mission very often uttered that Shell had always keep good relations with government. But it has ended up corrupted with many political activities (Elkington, 1998).
In addition, Shell had recently reached formal agreement with OPEC countries to resolve the supply issued of its petroleum products. Shell has offered to invest in petroleum exploration in more areas of these member countries. However, despite being actively engage, Shell's involvement in anti social activities put them gain much popularity in making good images in these countries (Manifest Information Services, 2004).
Shell has failed to disclose its uncharacteristic activities despite of numerous court orders in various countries. Shell either doesn't accept the responsibility or they made it up to some other situations which literally turn the situation to something else (Brownlie, 2003; Manifest Information Services, 2004).
Environmental assessment is widely recognized as the big failure of Shell's business. In various reports and publications Shell has claimed that they are getting more environmental friendly (Economist, 1990). Despite the efforts published in their propaganda report in many countries Shell has caused environmental destruction for which they didn't accept responsibility; neither had they paid any compensation so far. Due to their mismanagement, they had wasted large amount of fuel cells during exploration for which they were not accounted for (Economist, 1990).
Facility & Infrastructure
By holding a global trusted band, Shell has always came up with a sound internal infrastructure. It has focused the value of the shareholders, continuously disclose the financial information; also retain a large number of talented workforces by providing excellent career improvement opportunities. However, Shell didn't forget that its primary focus is still the customer as well as delivery of continuous health, safety, security and environmental excellence. Shell practice a well educated management team who are committed to sustain a robust system, maximize refinery margins, safeguard asset integrity and deliver structural cost reductions. Despite of having such an extra ordinary management services Shell was often accused of human rights abuse and bribery to the political arms where they have interest.
Shell also spends a considerable amount on research and development to innovate new products, new technologies to unlock the difficult resources such as bio-fuels which could lead to reduce mass dependency on fossil fuels (Royal Dutch Shell, 2010). Shell has increased their stake to 50% in Iogen, a Canadian company that produces bio fuel technology as well as formed partnerships with six leading universities in the world to study and research further on development of bio fuels.
Beside, in order to lessen the business risk, shell has taken steps to maintain trust in stakeholders such as behave with integrity, maintain and follow shell business principle and code of ethics, runs the facilities safely, be a good neighbor and to find solution for growing energy challenge.
Human Resource Management
The use of local contractors and suppliers and recruitment of local staff is important way to create a place of benefits and build trust. Shell has training programs to attract and use of local companies and local staff in business more than 90% of low-and middle-income countries (Royal Dutch Shell, 2010). These programs include efforts to assimilate, education and skill building programs and training to help local companies meet the standards and successfully compete for contracts.
Shell has continuously dedicated itself for technology development. For example, Shell intelligent Fields technology which produces more choices in the existing domain (Shell Malaysia Bhd, 2003) compared to the traditional drill-in which many companies still uses. Instead of backdated seismographic technique, it uses underground sensor to obtain the condition real-time information in a production domain, allows the operator to rebel rapidly should arrive at the situation and a better plan of the operation production. With this information, unifies with the newest well drilling and the reservoir surveillance technology, shell expected that can increase the oil amount which restores from the reservoir 5-10%.
Shell's daily business runs through in millions. The corporation makes approximately 3% of worlds oil supply and holds 55 refineries in 33 countries. By ensuring a high tech platforms, shell has to keep all facilities has a constant supply of raw materials and equipments and this is where shell has established own procurement towards technology innovation. By engaging with SAP technology, Shell innovated supplier relation management system to settle the transactions electronically which cut costs and ensure transparency (GRI, 2005).
Business Growth Processes
The new petroleum and the gas reserves were still discovered that and has the possibility to discover are more. Shell Oil Company Corporation can enter the reserves rich area, too take risks originally operation, for example Iraq (Shell Malaysia Bhd, 2006). Shell Oil Company's positive response, moves to the environment unfriendly criticism, possibly causes with the environmental protection association to be few antagonism relations. The emerging economy has huge, and grows unceasingly to the fossil fuel demand. The new product and the substitution fuel's diversification may develop the new market (Manifest Information Services, 2004).
Operating Risk Management Processes
Fuel prices in recent months have been particularly volatile, initially rising rapidly, but then fell sharply, reducing the potential profits in some areas, particularly in Nigeria political issues, threatening actions. A court order requiring Shell in the Niger Delta Web site to local their ownership. The summer of 2008 saw oil tankers Hoyer, Shell suppliers, negative publicity (Elkington, 1998), Shell's high-margin criticism and Shell forecourt supply problems caused by the work of the driver strike. An economic downturn led to reduce demand for fossil fuels may be in the driving habits for high oil prices in 2008 has deteriorated. Moreover, rising concern over fossil fuels and development of alternative sources such so solar power could place a potential threat on shell profitability (GRI, 2005).
The shell code of conduct for showed in detail in the business principle request's behavior's staff member (Manifest Information Services, 2004). All staff members must complete the explanation the training any shell code of conduct to request them. Because of the business principle request, the shell also provides the staff member in the specific region by on-line and the training face-to-face, including with the bribe which and the corruption and the compliance competition law joins battle (Royal Dutch Shell, 2010).
In addition, Shell actively encourage governments to use the taxes, royalties and other income generated by the activities as a catalyst for development, to reduce poverty and to safeguard against corruption. And the company continues to strongly support the Extractive Industries Transparency Initiative, which promotes transparency in relation to income received by governments from energy and mining companies.
Figure 2: Shell technology at a glance. Adopted from Group Annual Report of 2008 [available at]:
Area of Improvement
To deal with the frequent global political changes, shell requires adopting few task oriented approach. One them could be continuous development in infrastructure. The reason why it is considered an area of improvement is that by growing structurally, Shell will sustain more responsibility in countries and thus it will seek more transparent stand in the politics where shell holds business (Holliday, Schmidheiny, and Watts, 2002).
Shell definitely needs to improve performance of paying respect to the laws internationally and domestically. It has been dramatically put the organizations reputation ad values in stake. To gain competitiveness in local market and increase its market value Shell obviously put more effort on liaison with law changes as well as governmental changes (Economist, 1990).
In addition, Shell would also needs to disclose its activities to the local and global entities to ensure that it compliance with standards and its vision mission doesn't create discrepancies among people. For example, race and religion or demographic location or economic condition shouldn't create different standard of operation in countries (Holliday, Schmidheiny, and Watts, 2002).
Shell also shouldn't in any way support any political activities both formally and informally. During the political changes it should always stick to the business principle and must not motivate or influence any team to pursue any political aim.
Shell also should keep it local services for the people surround them. Any damage and loss caused by Shell should not be ignored as if Shell is an international company. The profits it makes from its various businesses should also be shared with communal services in its local market (Elkington, 1998).
Just because of Shell is a European company doesn't necessarily should put Shell's business focus on around the people it works. Shell must not consider that its business policies are for those people or countries where its products are sold and has interest. As they said, the global company should put more effort on helping poor countries which are in danger due to its environmental pollution. In addition, Shell also should enhance its perception to fight with global warming and climate change for which many held Shell is a prime responsible figure.
Although Shell Group's public commitment is the sustainable development and human rights, the community will benefit. Community input on the recommendation of the neglect of shell group should first put their people's health and the environment, before profit. Shell Group also implements the highest international operations, environment, ethics, workplace standards and business practices of each country in its operation. Shell Group should provide access to information on accidents and incidents to the community (Brownlie, 2003). Open communications and transparency will certainly reward the company's public image and in the company and build trust between communities. Shell Group enables it to be a speech and investment impact of past actions of restitution on the people and the environment.