Performance Of Shell Oil In Nigeria Commerce Essay

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In the modern business world, internationally operating companies are faced with numerous different cultures. Due to globalization, cross-cultural business is more important than ever. Companies that wish to succeed in a foreign country need to carefully assess cultural differences and possible cultural issues. Still, many companies find it difficult to accommodate their organization to a different culture which will inevitably result in problems. Furthermore, multinational companies face various dilemma's when entering a foreign market. Which stakeholder's interests will be served best? The interests of the customers, the shareholders, the employees, the environment all differ and finding an balance between those interests is one of the main business challenges for multinationals.

In this paper will be studied how the multinational petroleum company Shell does business in Nigeria, the African country with one of the largest oil reserves in the world. How they react on business challenges, cultural issues and how they serve their stakeholder will be answered on the following pages.

Case Description

Nigeria is referred to as the "giant of West Africa," with a population of over 98 million, and a land mass of twenty-two times the size of the Netherlands. Nigeria is the sixth largest oil producer in the world, currently over 95 percent of its foreign exchange market is from the sale of oil. Nigeria does not have its own refineries and therefore depends on outside foreign oil companies for oil exploration, drilling and shipping. The Royal Dutch/Shell Group is one of the world's largest, most fully integrated petroleum companies, and controls about 60 percent of the domestic oil market in Nigeria (Rowell, 1994). This company has ties to the coal mining, forestry, metal mining, as well as oil. The uniqueness of this organization is it controls the oil from beginning to end, starting with exploration, production, pipelines, tankers, refining, marketing, and even distribution. In 1994, Royal Dutch/Shell made more money than any other company in the world, reporting profits of over 6.3 billion dollars (Lawrence, "Shell Oil in Nigeria", 2008).

This highly successful global corporation began more than a century and a half ago. In 1830, British entrepreneur Marcus Samuel founded a trading company to export goods from England and import other products, which included seashells (ergo the name Shell.) Then in 1890, they started transporting kerosene via the Suez Canal to the Far East. Around this time a group of Dutch businessmen launched a company to drill for oil. In 1907, the two merged and became Royal Dutch/Shell, because Royal Dutch held 60 percent of the company (Lawrence & Weber, 2008).

Royal Dutch/Shell began exploring for oil in Africa in 1930, and in 1956 oil was discovered in the Niger River, south-east of Nigeria. The Nigerian Oil is of a high quality compared to other petroleum resources, in what the industry refers to as "sweet crude." This means the oil requires less refining than other oil to turn it into gasoline or other products. The company was a joint venture with the Nigerian Federal Government, which owned 55 percent of the stake, Royal Dutch Shell owned 30 percent and the remaining percentages was owned by two other European companies (Lawrence, "Shell Oil in Nigeria", 2008). To break this down, Nigeria's portion of the output is about 1 million barrels of crude a day, about half the total output.

Nigerian Oil

Dutch/Shell company named the corporation in Nigeria "The Shell Petroleum and Development Company of Nigeria" called by most Shell Nigeria. The corporate vision is "Helping people build a better Nigeria through our commitment to sustainable development." The corporate mission or objective is:

"To grow a business that positively impacts the business of our customers and the lives of Nigerians through our produce range and presence. To deliver value to customers using the highest standards and simple efficient business processes delivered by motivated and well-trained employees." (Shell Nigeria - About Us)

. They continue to develop a strong decentralized management style. The company strives to integrate the company into the nation of location, and act flexibly to open up opportunities and unique conditions. Shell Nigeria followed this corporate policy as it has developed. They employ over 2,000 people, ninety our percent of which are Nigerian to include half of the senior management (Shell Nigeria - About Us). This being said very few came from the impoverished delta community, where most of the facilities are located. Less than 2 percent of Shell Nigeria's employees are Ogoni (Lawrence, "Shell Oil in Nigeria", 2008).

Business ethics is the "application of general ethical ideas to business behavior." (Lawrence & Weber, Business and Society, 2008). It deals with how companies act and protect others from harm. Was Shell Oil ethical in their dealings in Nigeria and did they protect the environment and others from harm? Did they live up to their written objective "to find, produce, and deliver hydrocarbons safely, responsibly, and economically for benefit of our stakeholders." (Lawrence & Weber, Business and Society, 2008). What ethical challenges from the people and Government did they face? What have they been doing to make the lives of the Nigerian people better?

The oil and gas industry is a tough field to be in and to compound the problems; Shell is in a country ravaged by poverty and violence by militant groups. The Nigerian government takes in 90% of the oil revenues with little going back for the betterment of their people. Lives are tough for Shell Nigeria employees and the people in this oil rich country. The company workers, with 95% of them being Nigerian citizens, are brothers, sisters and friends of the people in the Ogoni and Delta

In 1995, World Bank released a report that found significant problems of air pollution, oil spills not being cleaned up properly and poor waste management practices. Gas flaring was a twenty-four seven operation producing large amounts of carbon dioxide and methane. This practice subjected the local people to heat and air pollutants and is a direct contributor to acid rain and global warming. It was evident that the lax enforcement of environmental regulations was taking a toll on the land and people.

What has Shell been doing to turn the tides of public criticism and their ethical troubles? According to Shell's website, numerous programs have been instituted to help the people. A program such as LiveWIRE Nigeria have trained and helped 263 people start their own small business. They have worked with the Foundation for Ethnic Harmony in Nigeria, sponsoring 200 youths so they could attend nonviolence and conflict management training. Other community involvement programs are taking place through partnership initiatives between Shell Nigeria and other organizations. It is a step in the right direction, but time will tell if it is enough.


De verschillende soorten dilemma's

Wat is cultuur / corporate

mean and lean

versus investing for


The Bet your Company Culturewhere big stakes decisions are taken, but it may be years before the results are known. Typically, these might involve development or exploration projects, which take years to come to fruition, such as oil prospecting or military aviation.

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