Royal Dutch Shell

empurpled Dutch thumproyal stag Dutch tap out is a global, publically traded Public Limited Company, whose chief(prenominal) focus is on the energy and petrochemicals line of credit. Royal Dutch/Shell authorisedly make in 1907, with the fusion of a London based Transportation Company called Samuel Shell transport and trading phoner ltd., and a youthfully formed rock crude colour company from the Netherlands, the Royal Dutch Petroleum Company. This merger facilitated the transportation of rock oil throughout the world, giving Royal Dutch Shell a global presence in the thence emerging foodstuff of oil. Until 2005, Royal Dutch and Shell were two entities, with a 60/40 derive sharing mix, Royal Dutch and Shell respectively. The two companies officially merged into one entity, eliminating the slash afterward Royal Dutch. They have a principal listing in the London Stock exchange and their official headquarters ar located in The Hague in The Netherlands. Shell as it is no tably abbreviated as, began with the imaging of its first operational manager Henry Deterding. Henry Deterding, provided the suppuration company with a strong backbone, victorious Shell from a small player in the oil exporting tune to a study(ip) competitor. Royal Dutch Shell, took control of Mexican Eagle Petroleum Company in 1919, and in 1932 formed an alliance with British Petroleum, and was Shell-Mex and B.P. Ltd until 1975. Its break major acquisition was in 2007 of the Ukrainian oil company august Petroleum. Today, Shell is based in over 140 countries, and is engaged in oil and float exploration and product, transportation and marketing of inbred tout and electricity, and marketing and shipping of oil products and chemicals. They withal have interests in renewable energy, like wind, solar and hydrogen based energy. Royal Dutch Shell has come a long way since its inception and has become a world leader in the oil and bumble market. This is in large part due to th e companys leadership, since the formation of the company strong leadership has brought Shell into a well-built company. Royal Dutch Shell through their strong leadership, ethics and corporate social responsibility and their business environment have become according to fortune 500, the largest Corporation in the world. Leadership and Managemen The Management of Royal Dutch Shell, like other major oil companies BP, Amoco, Exxon and Mobil is highly complex. Controlling and efficiently profitably cartroad an organization that is active in over 140 countries is not an easy ponder. Each country and realm has its own difficulties and limitations that put the managements strategy in challenge and force it to change regarding the political, economical and social situations. This is the challenge that Shell accepts and moulds itself according to the situation. Strengths Shell is one of the largest oil companies in the world and has a strong market position. Its trading operations inclu de upstream and downstream operations in over 100 countries. The company has interests in oil production operations in 37 countries and majority interest in 40 refineries worldwide. Shell operates the worlds largest single- shuffling retail network, with more than 45,000 service stations. The cornerstone of the company is its leadership position in various field such as oil products, deep-water production, Natural gas, and polyolefin. The company has established a strong brand image operating for over 100 years worldwide. Shell is ranked second in 2009 Forbes spheric 2000, up from sixth in 2008. It was ranked eighth in 2007. The company is ranked First in 2009 Fortune Global 500 ranking. The companys strong market position gives it significant bargaining power in the global oil industry. Shells business operations are vertically integrated with presence in twain upstream and downstream businesses. In upstream, the company is engaged in the exploration and production of oil and gas . In 2008, the companys total hydrocarbon production totaled 3,170 thousand pose of oil per day. During 2008, the company participated in 224 successful explorative wells. The company is also involved in the natural gas supply, storage, transport, distribution activities, and marketing of natural gas and electricity. The companys gas and power business operates in 35 countries around the world. In downstream, the company produces and markets refined oil color products. Its refining and marketing division operates 40 refineries with an installed capacity of 4 meg barrels per day. The company conducts its operations through an extensive distribution network comprising 9,000 miles of pipeline in about 70 countries, over ccc distribution facilities, and 3,000 storage tanks. Shell is one of the largest single branded retailers with more than 45,000 service stations spanning 90 countries. The companys vertically integrated operations give it significant competitive advantage in the glo bal market in terms of economies of scale, synergies, and cross-marketing opportunities.WeaknessesThe company has been witnessing a consistent decline in its hydrocarbon production in the recent past. The hydrocarbon production totaled 3,170 thousand barrels per day in 2008. This was 2% lower than the production in 2007 and 7% lower than in 2006. The decline in production is attributed to field declines, lower volumes, price cushions of production-sharing contracts, the make of the hurricanes in the US Gulf of Mexico, and the planned maintenance turnarounds in the UK related to the shutdown gas touch on facilities. The field declines affected oil production in the Australia, Brunei, Denmark, Nigeria, Norway, the UK, and the US during 2008. In addition, natural gas production was affected by declining fields in Brunei, Germany, Malaysia, the US, and the UK. Declining production would adversely affect the companys revenue growth.Shell confront an administrative action in 2008. Shel l was fined $109,600 by Washingtons Department of Labor and Industries, in June 2008. The company was fined for dual safety violations in its Anacortes refinery. The refinery is the second largest of the four major facilities supplying gasoline and other petroleum products to the Puget expert region. The department cited 23 violations ranging from inadequately instructing operators on how to deal with emergencies to faulty inspections. Shell paid $120 million in June 2008, to fix a class action lawsuit led by the Pennsylvania disk operating system Employees Retirement Board and the Public School Employees Retirement Board. There was an allegation against Shell of overstating oil and natural gas reserves and artificially inflating stock prices over a five-year period from April 1999 to March 2004. In 2004, Shell admitted to have overstated its oil reserves by about 20%, 3.9 billion barrels. Many of the companys executives confused their jobs, including chief financial officer Ju dy Boynton. In April 2007, Shell agreed to pay $352.6 million, plus administrative costs, to settle a lawsuit with investors outside the US who purchased the companys shares. In May of 2009 Shell settled a $15 million dollar civil rights lawsuit in Nigeria. They were accused of paying soldiers to abuse locals in preponderantly oil rich regions in Nigeria. Such huge penalties can have nix effects on the companys profitability as well as Shells overall reputation.OpportunitiesShell announced a proposal by Shell Canada for the acquisition of all of the outstanding shares of Duvernay Oil Corp, in July 2008. The acquisition was completed in lofty 2008. Duvernay, based in Alberta, is engaged in the exploration and development of natural gas and crude oil in the deeper, western portion of the Western Canadian Sedimentary Basin in Alberta and Northeastern British Columbia. The company owns about 450,000 acres in two large gas project areas. Duvernay owns and controls the natural gas proce ssing and delivery infra coordinate in both the project areas. The company produces over 25,000 barrels oil equivalent per day predominantly in natural gas. The company plans to accession production to about 70,000 barrels per day by 2012. Shell has a strong presence in North America smashed gas activities. With the acquisition of Duvernay, Shell could strengthen its portfolio through enhanced technology and scale. Duvernays acreage together with Shells operating expertise and financing capabilities provide a strong platform for future growth.Increasing demand for melted natural gas, the demand for liquid fuels is expected to increase to 108 million barrels per day by 2030, an increase of 30% from 2005. The demand for global liquefied natural gas is expected to more than triple in volume from 2005 to 2030, driven by the demand in North America, Europe, and Asia Pacific markets. Currently, Shell is participating in the Liquefied Natural Gas projects in major projects, Pearl GTL an d Qatar gas 4 LNG in Qatar. The company is also participating in LNG projects in Australia. The companys focus on LNG projects implies it is well positioned to venture into opportunities in the growing market worldwide.ThreatsShells business is subject to numerous laws and regulations relating to the protection of the environment. With rising awareness of the damage to the environment caused by industry, especially regarding global warming, regulatory standards have been continuously tightened in recent years. One of the well-nigh all-important(a) developments in this area has been the introduction of the Kyoto Protocol for the reduction of greenhouse gases. The protocol calls on industrialized countries to subdue their greenhouse gas emissions level by 5.2% on an average annual basis during the 2008-2012 periods. The company has a significant presence across the US and the European markets. A weak economic outlook for these regions could disgrace industrial development and impa ct the demand for the companys products.Related threats to Shell include its major competitors, domestically and worldwide. These major competitors include and are not limited to Exxon Mobil, British Petroleum, Conoco Phillips, PETRONAS, Total, Chevron and CITGO. These companies are vital threats to Royal Dutch Shells bottom line because they, for the most part, offer the same types of products and services sometimes at a potent price discount. There are some main puzzles and issues inside Royal Dutch Shell that are evidently highlighted and should be resolved so the company can keep their competitive advantage when study and compared to other corporations. The predominant problem is the higher than normal employee turnover rate which can be contributed by the employees to the company. In recent years namely there was a large increase of employees that were leaving Shell, in exchange for other employment positions in oil and petroleum companies that are direct competitors of Shel l. Although this phenomenon did and does not impact all global operations, there is still a oppose impact on the performance of this business organization since these events happens in customer rich areas such as Asia, India and the center of attention east.Another major problem that is being faced by the company is its eroding supply base in the mall East and other oil producing regions due to the current friction between the United Kingdom and oil producing countries in the Middle East such as Iran with regards to topics such as the war on terror, the occupation of Iraq and the ongoing negotiations on the nuclear ambitions of Iran. Since Shell Company is partly British owned, these contemporary issues and news can without delay affect the supply and logistical train of the company. Due to the support given by the British disposal to the United States with regards to the occupation of Iraq and the war on terror, the company has been losing the influence and prestige when it i s viewed by Arabian and Middle East producing companies. This animosity against the corporation stem from the fact that it is a British company in the Middle East. This company has also supplied fuel, oil and other petroleum based products to the occupying forces in Iraq and Afghanistan which are wholly calm of the British and American Armed forces. To remedy these pressing problems, certain issues and concerns essential be addressed. To combat the negative publicity that is being shed against Shell in the Middle East countries and the loss of the preferential discourse previously offered by Middle East countries to the company, an appropriate campaign must be launched to erase this negative perception about the company. This publicity campaign go away not only be geared towards oil producing countries but will also focus on other Middle East countries. Reconciliatory talks and discussions must be established with the members of the OPEC in relation to the current prices of oil a nd petroleum based products. To further reinforce these steps, the company must assign area/regional managers in these countries who have a significant mind and immersion in the local culture and thinking to reduce the probability of misunderstanding and miscommunication that would add another(prenominal) injury to the present situation. The CEO must also have leadership qualities and characteristics to inspire his/her subordinates to respect Arabic customs and traditions. He must exude motivation, self confidence and necessary skills that are suitable for the job at hand. Lastly, the company must set up two programs so that it can remedy the last problem mentioned in this paper. First, to capture the new market, it must redefine its products to comply with strict government and environmental standards. The process of using, mining and manufacturing its products must be free from any pollution and contamination. These vital steps will not only please a government and a lobby group but would also earn the sympathy and recognition by the public. The company must also take steps in reengineering its internal structure to accommodate renewable sources of energy. It must train personnel and employees so that they would be attain to research, experiment and to test various sources of energy that is being developed by the oil industry. Similar to most global companies, Royal Dutch Shell has many strengths and weaknesses that affect the overall performance of the company. However, Royal Dutch Shell, through the companys commitment to strive for excellence combined with their upstream and downstream revenue streams, their leadership structure and corporate and social values have become the largest corporation in terms of revenue in 2009.