SWOT Analysis for Royal Dutch Shell (1999-2003)
Simply known as Shell, Royal Dutch Shell, which was headquartered in The Hague, Netherlands, is a multinational oil company engaged in oil and gas exploration and production as well as transportation and marketing of natural gas and electricity and marketing and shipping of oil products and chemicals. Shell also has interests in renewable resources of energy such as wind and solar and hydrogen. With its extensive operation in over 140 countries, Shell now employs more than 300, 000 people. In the fiscal year ended December 2006, the company had reported revenue of 8, 845 with 3.9% increase from that of 2005. During the fiscal year 2006, Shell incurred , 777 million of operating profit and , 311 net profit, a 0.3% and 0.2% increase over the previous year, respectively. The SWOT analysis of the company is as follows:
STRENGTHS
§ Strong brand equity
§ Long standing and financially sound firm
§ Extensive resources
With a trademark that is globally recognized, Shell is the fourth largest company in the world and the second largest private sector energy corporation. The company has also several branches and sub-offices worldwide apart from its oil refineries and subsidiary companies, making possible the penetration of Asian, African and North American Markets. The image that the company had established over the decades is of integrity and honesty which was perceived to be the key in accumulating the large customer base. Apart from its long range of products consisting of oils, lubricants, diesel fuel, jet fuel, petroleum-based products and oil refinery heavy equipments, the company has also ventured into a large network and supply-based transportation of oil products in different destinations.
WEAKNESSES
- Operating in unstable environment
- Negative perceptions regarding operation
- Tendency of committing unethical environmental practices
- Prices
The dramatic shift to renewable sources of energy has been one of the main challenges, and this hurts the company since the core business of making and manufacturing oil-based or –related products is increasingly becoming inefficient and ineffective. Provided that Shell acquire the majority of its products from the Middle East, there are several international disputes, ethics and labor dilemmas and negative activities in that region that affecting the Shell brand. For instance, proper waste disposal in oil refineries is a persistent issue that Shell struggles on. Cross-border delivery of products usually adds up to the total cost of diesel, gasoline, fuel and oil as well.
OPPORTUNITIES
- Re-establishment of image
- Make amends with people affected by operation
- Creating parties which will be held accountable for unethical practices
- Establish partnership with local stakeholders
- Extensive research and development
- Explore new fields
Creating a new dependable, ethical culture is daunting for Shell. The least that the company could do is to conduct an ongoing dialogue with local stakeholders who are otherwise are affected by business practices of the company. In addition, Shell must venture into the development, research and promotion of renewable energy sources. The company should conduct studies and researches about the techniques, materials and policies that would contribute in decreasing the company’s reliance on oil that is very harmful to the environment and human health. The company should also increases its demand on nuclear, solar and hydroelectric as sources of power. The exploration of potential oil fields in order to ease the dependence on Middle East oil could be another opportunity that Shell could exploit.
THREATS
- Continued opposition from local nationals who are affected by operations
- Continued discrediting of operations
- Continued negative images and publicity
- New oil players
- Lobby groups
Biennially, new oil players emerge within the global oil industry, and they can quickly adjust to the market demands and requirements. Further, these companies are equipped with new technologies and materials in their products and are somehow less affected by state legislations and regulations which govern the use of oil and petroleum products. Lobby groups are another threat to Shell wherein local and international legislations are being influenced in order to make law and statutes stricter, and in a way that it will uphold the ecological and environmental protection. Publicity and press releases are among the many avenues that lobbyists and special interest groups are using in order to convey the message while thereby damaging the reputation of the company.
References
Financial Analysis – Royal Dutch Shell. Report. Research and Markets. Retrieved on www.researcghandmarkets.com/reports/353424/.
The Top Ten Oil and Gas Companies. Industry Report. Gravitie Limited.
Credit:ivythesis.typepad.com
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