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Based on Shell's case study it appears that Shell frequently use Blake and Mouton's as well as Kerr and Schriesheim theories when dealing with employees, suppliers, customers, shareholders, the local communities, the interest and pressure groups. For example, I believe Shell used the Blake and Mouton's theory - country club management style with the employees as well as the consideration part of the Ohio State Leadership model of Kerr and Schriesheim when dealing with its people for as stated in the case study the leaders considered respecting their employees a priority in addition to providing interesting terms of employment which keeps them motivated. Shell also encourages its people to share their views. According to shell.com (undated) "Every two years, for instance, we run a global Shell People Survey to discover the real views of people throughout the Group." There is also the fact that to remain number one in the industry, the workforce's safety is essential as mentioned in the case study "Mistakes can be costly in terms of reputation and the livelihood of other employees"
Shell considered the requirements and desires of customers and minimising the negative impact their products may have upon the environment fundamental, which is why, with reference to the Blake and Mouton's theory; Shell invests in market and product research. As cited in Shell's website (undated) "We may, for example, exclude certain chemicals or categories of chemicals from specificÂ applications when we consider them unsuitable for health, safety or environmental reasons." Its wellbeing is also vital as highlighted in the case study "Without customers a business would not exist." Shell knows providing the best products and keeping the environment safe will draw more customers, and referring to the Ohio State Leadership model of Kerr and Schriesheim, Shell has put in place procedures on how to proceed to supply and keep the customers satisfied in addition to keeping the company healthy financially and maintaining an unblemished reputation.
When dealing with the local communities, I believe Shell applied the Kerr and Schriesheim theory as Shell demonstrated its consideration by earning people's trust in taking indispensable precautions towards their safety. Shell has also set up guidelines on how to manage the plants safely and by informing its employees of plans and emergency procedures. According to Shell.com (undated) "We are working to prevent accidents by introducing simpler and clearer safety policies that are easier for employees and contractors to understand and follow." Shell went further in its endeavours to develop the local business communities by investing in its economy and social development.
Shell knows protecting the environment and human rights are crucial for the pressure and interest groups and it appears Shell applied the Blake and Mouton's theory - middle of the road management style when dealing with them. For instance, to prevent spills Shell took a responsible approach to their products from development to manufacture to haulage to dumping. According to Shell.com (undated) "Reducing spills we can control in our facilities requires clear procedures, consistent compliance and a lot of hard work." Shell has also set up the Health, Safety and Environment Management System which ensures that they can supervise safety thoroughly and also making sure they have the right skills, equipments, values and procedures.
Shell works only with suppliers who meet their pre-qualification standards for instance, adhering to values such as respect, consideration for people, honesty and integrity. As mentioned in the case study "Shell works with contractors and other partners in the supply chain who also demonstrate these values." Concern for production is also important for Shell, which is why I believe Shell applied the Blake and Mouton's theory when working with suppliers. They have to be "Exemplary and consistent health, safety and environment (HSE) performance" and have the "Ability to deliver consistent product quality" Excerpted from Shell's website
Shareholders are like customers, to keep the shareholders interested in investing in the company; Shell demonstrated again those core values such as respect, consideration for people, honesty and integrity by being transparent and honest while presenting the annual reports, Shell earns the shareholders' trust which builds its credibility as well as showing its business integrity. As stated in Shell.com (undated) "We are committed to publicly report on our performance and engage with our shareholders"
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With references to the case study and to the theories from the module, Shell is considerate towards all its stakeholders but sometimes the satisfaction of one stakeholder means another is not. For example, Shell provides its customers with the best products at good rates which makes Shell popular and gets more demand from the public but to be able to keep supplying the consumers, employees' workload automatically increase. When they are short staff, employees often have to do double shifts. On a short term basis, it does not affect the employees much as for them they consider the overtime pay a bonus but "doing double shift for months is demotivating and depressing" revealed an employee of Shell. On the financial side it is a plus for the family but on the downside, there is an accumulation of stress and in the long run their performance at work is affected.
This is one instance where satisfying one stakeholder needs has affected another negatively but there is also a positive side. For example, Shell employs over 100,000 people in more than 90 countries and territories. Its success is due to its firm belief in its core values of integrity, respect for people and honesty which earns them the trust of customers worldwide and to keep expanding its customer database, Shell communicates and confers with its people across the world in the planning of strategies to develop and improve its products/services. "We make the difference through our people, a team of dedicated professionals, who value our customers, deliver on our promises and contribute to sustainable development." Says Kiran Juwaheer, (2007) Shell's Sales and Operations Manager in Mauritius.The employees feel motivated and valued as they have contributed to the success of the company. Being rewarded financially for their good performance in addition to advancing their career is another motivation factor. As mentioned in Shell's website (undated) "We provide our staff with professional training and development programmes and support, and we offer leadership programmes. Working in international environments or abroad allows our staff new insights and knowledge."
Preserving the environment is essential for the pressure and the interest groups and Shell knows groups such as Friends of the Earth can create problems for example; influencing the EPA to refuse permit to drill. For the success of its projects, Shell chose to work with those groups and set up policies and procedures which in a way motivate Shell's employees for they feel they are earning their living and at the same time contributing to the protection of the environment. As stated in Shell.com (undated) "It helps to build trust with regulators and third parties so our projects can win approval and acceptance, it can make us the first choice for business partners, and can attract and motivate staff."
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When meeting any of the shareholders' needs, Shell knew conflicts would occur and would have to be managed without any detriment to the other shareholders. As cited in the case study "it is important to identify and balance the needs ad expectations of these groups, and to act responsibly in view of all of them in order to avoid conflict and ensure the business is as prosperous as possible and keeps its 'licence to operate." For instance, before Shell proceeds to develop a new project, it may need to take into consideration that some shareholders may be against it because of the cost or environmental issues. To obtain the shareholders' endorsement, Shell may respond to their concerns with honesty and transparency and alleviate their doubts by giving specific information. For example addressing its financial and environmental concerns and providing solutions in a precise and concise report, then arranging a meeting to discuss the merits of the proposed solutions. During the meeting, Shell and the shareholders should work towards finding solutions acceptable to both sides. After implementing the solutions, Shell should monitor the situation and meet the shareholders regularly to ensure that everyone is satisfied with the current situation or intervene if there is dissatisfaction; as mentioned in the module "if it seems as though there are continuing problems betweens the parties, intervene straight away."
Conflictual situations between companies like Shell and pressure and interest groups are common. Preserving the environment and protecting human rights are two priorities to groups such as Greenpeace and FairPensions, a British lobby group. Shell should realise the best practices to avoid conflicts is to communicate and work alongside these groups. For example, before launching a new project, Shell may consult with them on how best to protect the environment before setting their plant. Shell may also consult with them on the best safety measures to be taken such as setting up policies and procedures besides giving clear instructions on how to operate the plant and where and how to dispose the used oil rigs and ensured the health and safety of its personnel. By communicating and compromising, both sides would be satisfied with the results. According to Royal Dutch Shell (undated) "To conduct business as responsible corporate members of society, to observe the laws of the countries in which they operate, to express support for fundamental human rights in line with the legitimate role of business and to give proper regard to health, safety and the environment consistent with their commitment to contribute to sustainable development" is one of its responsibility."
Whenever Shells plans to set up a new plant in a local community, the population (local government, business owners, farmers etc) may fear the changes such a company would bring. Their fears naturally would cause tension which in certain foreign regions would have severe consequences like fights which ended with the military using force against the locals. Such conflicts can increase cost and project risk on top of reducing employee morale and jeopardising Shell's reputation. As Juergen H. Daum's mentioned in his report (2001) "According to a survey of 1000 U.S. consumers conducted by The Conference Board, companies are today judged more by image and reputation and business ethics than by economic or financial factors or size." To prevent such conflicts, Shell needs to reassure the population that all necessary precautions would be taken to ensure minimum negative impact upon the environment. Another way of ensuring that no conflicts arise would be for Shell to be accepted in the community it plans to set up its new plant. Creating jobs and going into partnerships with local businesses would show Shell is good for the community' economy moreover sponsoring local events or even offering scholarships to local students would be further proof of Shell's commitment to make a positive impact upon the community. Organising philanthropic programmes would be another way of becoming part of the community besides donating to local charities.
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I believe that balancing stakeholders' needs is indispensable for the success of a business.
For instance companies which acknowledged their employees as an important asset and respecting and showing consideration such as providing excellent, secure and healthy conditions at work, supporting the improvement of its people's talents and promoting employees fairly on their own merit, showing no discrimination because of race, colour, nationality, ethnic, political opinion or disability will be rewarded with the trust and loyalty of those employees. Companies which encourage its employees to share their views, for example on planning strategies or development and improvement of its products/services have a higher probability of achieving success than companies which dictates instead of communicating as those employees feel part of the company and they feel valued; employees who feel committed to the companies they are working for will perform better and will enhance productivity. Their enthusiasm, motivation and growing capacities will largely contribute to the success of those companies.
Without consumers and customers, there will be no business and to retain and keep increasing their customer base as well as growing in size; companies should be honest and not mislead when marketing their products/services. Market and customer research are fundamental but it is only the beginning. Companies should supply products/services at reasonable prices as well as offer quality. They should also make sure that their products/services do not impact negatively upon the environment. Companies should also protect their customers from being taken advantage of for example by taking measures to prevent counterfeits of their products. Another important factor in satisfying customers is ensuring that any problems which occurs with the products/services' quality or performance, should be dealt quickly and with efficiently with the minimum inconvenience to the customers.
Another key factor for business success is trustworthy suppliers. For suppliers to be efficient; the companies should build up reciprocally advantageous partnerships with them and to keep the relationship strong, companies should be honest and show integrity in all aspects of dealings with suppliers. One of the major disagreements between suppliers and companies is financial which can irrevocably destroy trust and may go as far as voiding contracts and those companies may find themselves being sued for breach of contract. To avoid this state of affairs on top of earning a bad reputation, companies should agree on terms of payments and should never avoid payment on any pretexts. They also have to avoid any ambiguity about what is expected of the suppliers. Companies should never do business with suppliers who make it a practice to bribe people in their business dealings.
Being careful of the environment is vital for business success because if companies do not respect the environment, the results could be ruinous for example, being sued, risk losing their development permit, invite bad press and gain a ruined reputation as well low productivity as employees' morals are low. According to R.Abrams (2000-2009) "Businesses are discovering that being environmentally friendly is not only good for the world, but it's also good for the bottom line since it saves money and boostsÂ employeeÂ morale." Companies should realise that their business activities, in many ways, have impact upon the environment. Working closely with the pressure/interest groups and the non-governmental organisations that have great influence over the media will be very beneficial. For instance, working with them on finding a solution on how to minimise the unfavourable effects on the environment and its natural resources as well as protecting human rights will make those companies be known as fair in addition to being environment friendly. As a result, there will be more demand from the public and investors will be more willing to invest in the business. Companies should have their own ethical criteria and set up their own values that comply with governmental requirements as well as monitor if their people are adhering to those values.
As for the local communities, it is crucial to meet their needs, any companies that want to proper in other communities should become part of those communities and to earn the population's trust, companies should develop a mutually beneficial relationship with them. For example companies should respect all laws and policies of each community in which they are operating. They should also become involve in the communities' activities for example supporting local charities, sponsoring local events or offering scholarships to local students. "This is also very effective way to show to your investors, clients, consumers and your staff the information about the company that this company is not making only profits but also is helping people who need even food and they do not have it." Says Z. Tvaladze (2002-2010)
Shareholders have direct and indirect influence on companies and because of the companies' dependence's on the investors, many companies considered meeting the shareholders needs a key factor. Trust, honesty and transparency and supplying the right information instead of just a few documentations especially during moment of crisis could make all the difference when the investors make decisions. For example, if a company is failing to increase shareholder value over time, the investors may lose confidence and either sells their stocks or pressure the company to take steps towards improving its performance, for example eliminating departments and firing employees to save money, replacing the acting CEO. Investors whose trusts are absolute in its board of directors will chose to support and work alongside them to find solutions. For instance Gulf Finance House who met the shareholders needs as well as earning their trust was rewarded with the reinforced faith in the executive management and their performance was highly praised. Dr. Fuad Al-Omar, Chairman of the Bank commented (2006) "the approval for the increase in capital will pave the way for the Bank to implement its ambitious expansion plans across the region and global markets. It comes at the right time when the Bank has announced exceptional financial results and has developed plans to enter new markets"
Based on my researches and findings, I conclude that for any business to be successful, balancing the stakeholders' needs is a very important factor to take into consideration.
Conclude by taking the key elements of your observations in steps a-c regarding Shell in order to make a recommendation for other organisations to consider implementing the approach ofÂ balancing Stakeholder needsÂ as a means to business success?Â (25%)
State key points (elements that you found interesting in reference to the success of the business. Give example to illustrate) to show that implementing the approach of balancing Stakeholders needs in a Â business is indeed in the business's best interest and contribute to its future success. Where the questionÂ asks 'may' instead of 'has', this means that youÂ can consider some circumstances beyond the confines of the cases study - as in c. conflict, this provides the opportunity to include content from further reading or own experience perhaps.
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Shell.com (undated) Employee Relations/Industrial Relations at Shell (WWW) available at http://www.shell.com/home/content/careers/current_campaigns/hrcareers/job_areas/employee_relations/hrcareer_employeerelations_05072007.html
Shell.com (undated) Our approach (WWW) available at http://www.shell.com/home/content/environment_society/environment/product_stewardship/approach/
Shell.com (undated) Our approach to safety (WWW) available at http://www.shell.com/home/content/environment_society/working_safely/personal_process_safety/approach_to_safety/
Shell employee. Mauritius (06/04/2010) Employee demotivation
Shell.com (undated) KPI: Spills (WWW) available at http://www.shell.com/home/content/environment_society/performance/environmental/kpi_spills/kpi_spills_000407.html
Kiran Juwaheer. (2007) OUR MISSION AND VISION STATEMENT
(WWW) available at http://www.shell.com/home/content2/mu-en/about_shell/ourmission_15110904.html
Shell.com (undated) Shell and biodiversity
(WWW) available at http://www.shell.com/home/content/environment_society/environment/biodiversity/shell_biodiversity/
Shell.com (undated) Supplier and Contractor Information (WWW) available at http://www.shell.ca/home/content/can-en/aboutshell/careers/contractors/
Shell.com (undated) Financial Report (WWW) available at http://www.shell.com/home/content2/src-en/investor_information/src_financial_report_1015.html
Royal Dutch Shell (undated) STATEMENT OF GENERAL BUSINESS PRINCIPLES (WWW) available at http://actrav.itcilo.org/actrav-english/telearn/global/ilo/code/royal.htm
Juergen H. Daum's (2001) TheÂ newÂ New Economy Analyst Report (WWW) available at http://www.juergendaum.com/news/05_12_2001.htm
Z.Tvaladze (2002-2010) Criteria companies should follow to decide which charities to support (WWW) available at http://www.helium.com/items/1632981-criteria-companies-should-follow-to-decide-which-charities-to-support
R.Abrams (2000-2009) RESPECT THE ENVIRONMENT (WWW) available at http://www.rhondaonline.com/content/hmrArticles_view.asp?did=133
AME info.com (2006) Gulf Finance House shareholders renew trust in Board of Directors & Executive Management, approve 60 per cent dividend (WWW) available at http://www.ameinfo.com/78462.html