In this report I have selected Shell to identify its major stakeholders. This report will discuss and identify major stakeholders within shell. The information contained within this report comes from a hard copy from the times 100 case studies. Other sources have been noted in the reference list below.
The definition of a stakeholder is "An individual, group of people, organisation or other entity that has direct or indirect interest (or a stake) in the system." (Requirements Engineering, by Elizabeth Hull, Ken Jackson and Jeremy Dick) Stakeholders can be directly affected or they can influence the organisations actions, objectives and policies. Not all stakeholders are equal as some stakeholders can hold more of a percentage in the organisation. Typical business stakeholders can include, the shareholders, financial bodies', employees, trade unions, managers, government, customers and the suppliers. All of these stakeholders have an interest in the organisation and its future stratagem . Managers have to settle the assortment of interests that individuals and groups stand for. Shareholders may be mainly interested in large dividends and a rise in the cost and the value of the shares so then that would meant that they would be in favour of a plan or strategy which would therefore maximise profits rather than to worry about the long term development and growth of the company. On the other hand the employees are mainly worried or concerned about how stable and secure their job is but also about the level of benefits and pay. But also not forgetting the most important stakeholder the customer. Customers are worried and concerned about the price of the products and goods the company produces and sells, their quality and where they are available. (Management concepts and practices, Tim Hannagan)
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Stakeholder mapping is way to analyse their influence on an organisation or company, but also to show how anxious each group is to express and let the company know its expectations and its choice of strategies. Some strong and powerful unions are engrossed in exerting significant pressure on a company's on the preference of strategy. On the other hand if the union is frail, subsequently workers interests possibly will not be such a central pressure on the company. However if some particular employees are in short supply, maybe because of specialised skills or trades, therefore this will put a greater pressure strategy option on the company , which will therefore put the employees in a greater position to influence the strategic choice of the company. This leaves managers confronted with these and other deliberations for exactly when and how they choose strategies or different approaches for the organisation or company. This report is going to identify the major stakeholders in shell. (Management Concepts and practices, Tim Hannagan)
Shell distinguishes five key areas of accountabilities, to the shareholders, customers, employees, suppliers and society.
Shell's main group of stakeholders are its shareholders , who are made up of employees and suppliers. Shareholders play a substantial portion in the existence of the business. The shareholders provide a considerable amount necessary to set up and run the business. Every year the directors must create a report for the shareholders
Another group of shell stakeholders are its employees. Shell employs just over 100,000 staff internationally. These incorporate geologists, site engineers, market research office administrators, business analysts and of course oil platform workers, but there employees also include senior international managers specialising in marketing, oil, sales, finance and gas exploration. The employees within shell are influenced by shell, but also the employees affect how shell operates. Shell needs the employees to be happy, so that staff produce a good standard of work and commitment to health and safety and excellence is vital in order to preserve shell as a leader in the energy field. If the employees are not happy they tend to make more mistakes, mistakes can be costly and in terms of reputation and the livelihood of other employees. (Times 100, Edition 15, Shell Case study)The last group of internal stakeholders are the suppliers. Suppliers are key to shell, they are the partners in the chain of production. For example in transporting petrol from the oil wells to the petrol pumps. The suppliers have to make sure that they demonstrate these values, if they do not shell will no longer use them. (Times 100, Edition 15, Shell Case study)
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Shell also has external stakeholders as well as the internal stakeholders. External stakeholders are not part of the business but they have a keen interest in the business or organisation. They could possibly influence some of Shells decision making. Shell's external stakeholders are there customers and the local communities. Without customers not business would be able to run therefore shell has one objective "To win and maintain customers by developing and providing products and services which offer value in terms of price,quality,safety and environmental impact, which are supported by technological, environmental and commercial expertise. Achieving the objective is difficult for shell, as customers want value for money as well as providing the highest quality fuels at competitive prices. The Environment and safety aspect are key ingredients of the development and research process. Nowadays customers are increasingly worried and concerned about the environment and pollution damage. So customers are looking and require cleaners and more economically efficient fuels such as biofuel. As the moment the is a global interest in liquid biofuels as more and more people use their cars but as well for business use, as the price of fuel is on the rise. Shell has many different ways in responding to customer's views and its pursuit to try and improve customer expectations. The company tries to help customers emit less C02 and less energy. Shell sells a range of products ranging from fuels and lubricants for all types and means of transport, such as aeroplanes, cars, ships and trains. Shell had a set of expectations and standards that they need to abide by, these include managing greenhouse gases, energy efficiency, control of waste and the impact on water. (Times 100, Edition 15, Shell Case study) The other group of external stakeholders are the local community. Shell has a policy, with the aim to create economic and social development while minimising negative impacts on the local community. It seeks to financially invest in long-lasting benefits for the community. Such issues have been raised in the community with people who live close or next to oil refineries fearing for their safety. This is where shell seeks to endeavour confidence to overcome these fears and earn the communities trust by taking the necessary safety precautions. These precautions include making sure the plant and employees inside are operating correctly and safety. Shell also make sure there staff are well trained for emergency procedures, but also sharing with the community the plans for the future. Shell also has a policy to and a commitment to improve the welfare of the local community, they has shown this by creating local partnerships. Shell have delivered health amenities and supported the creation of universities and local schools. Shell has an initiative program called "Shell livewire" this program is to help you entrepreneurs into business. This is another way that shell helps the community, which therefore make the happy stakeholders. (Times 100, Edition 15, Shell Case study)
Another group of external stakeholders for shell are the interest groups. The interest groups, are what make up shell, shell need to cooperative with them and they are the decision makers, but also they form the opinion makers. Some of shells interest groups are formed of people and organisations in positions of influence and they make decisions and form opinions that can affect shell. Examples of people and organisations are the government, academics, non-government organisations, the media, financial community and business leaders. All these examples of organisations all interact with shell in different ways.
The main interest group is the government, as shell operates in many different countries and across areas of the globe, it has to show many different countries that it is operating in the right way. Operating in the "Right way" includes creating jobs, paying the correct amount of tax and most importantly providing energy supplies. At the moment shell is operating with governments to encourage the need for more regulation on C02 emissions. Other oil companies- Shell as a company has to work with different international oil companies in the country of operations, but also with government owned oil companies. Shell in the past have worked with them and have built new oil and gas refineries and supply lines. The media is essential to any competitive business, as the media report on anything, so this means that shell has to operate in a way so that it can receive positive press for all different types, for example, television, newspapers and the radio. The media helps shell to strengthen its position in the market and this can also lead to shell gaining more customers.
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At the start of this report it concentrated on the importance of stakeholder and how vital they are to shell as a company or organisation. As a company and organisation shell believes it has a key responsibility to look after and shield a shareholders investment, and then give back a return which is competitive with other oil companies. Shell's profits over the years have been used to recompense shareholders in the way of putting their profits back into research and investment into new products and services, new forms of energy for the future. Shell believes that through balancing stakeholder's needs it can develop and assist to encounter the world's energy needs. (Times 100, Edition 15, Shell Case study)
In making decisions to avoid conflict, shell asks itself 3 main criteria questions: Whether
" The economic impact of the activity is likely to yield a good return for stakeholders ?
The social impact will be suitable for the employees and communities?
The long-term effect of its activity will harm the environment?" (Times 100, Edition 15, Shell Case study)
Also to evade conflict, Shell arrays a minimum level that must answer the three question above, when making major decisions or making investments in anyone. For example when shell wants to do something, whether it's to build a new refinery or an oil platform. Shell will look to foray a steadiness between the impact and financial risk and return and social opportunities.
As shell have said it is not easy to always make the stakeholders happy. In order to try and balance these areas of responsibility, shell has recognised 5 key areas, Suppliers, customers, shareholders, employees and the society. (Times 100, Edition 15, Shell Case study)
It is vital that shell keeps a continuing communication with all these groups mentioned above, this way it is possible to take account of every person needs and expectations in manufacturing decisions for today and the future. Shell determines and diminishes conflicts and arguments, between its actions and activities, through its pure plans and policies and its promise to corporate morals and standards. Through taking into account and balancing environmental considerations and economic and social, Shell always tries to make decisions that will maximise the value of the company. (Times 100, Edition 15, Shell Case study)
Gallangher K, Rose E, Mcclelland B, Reynolds J and Tombs S (1997) People in organisations, an active learning approach, Unit 4, Pg 226-227
Hannagan T (1995) Management concepts and principles, Chapter 5,Pg 154-155
Hull E, Jackson K and Dick J Requirements Engineering, (2002)
(Times 100, Edition 15, Shell Case study)