Business Environment - Shell Assignment

Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Overview of different types of organization; public, private and voluntary...............................1
Detailed explanation of size and scope of different organizations..............................................2
Critical analysis of different types of business structures and interrelationship between
organizational function................................................................................................................4
CONCLUSION................................................................................................................................6
References........................................................................................................................................7

INTRODUCTION
Business environment refers to the sum total of the internal and external factors which
leads to bring influences on the business organization. Business environment acts as integral part
of the efficient and effective management of the business. The report is about analysis of
different type of private, public and voluntary by Business analyst of Shell Petroleum which is
oil and gas company. Shell is a global group of energy and petrochemical companies owned
subsidiary of Royal Dutch Shell which is transnational corporation This report will provide the
brief description about different type and sizes of business. will be done. This report will also
include the size, legal structure and scope of different businesses. Critical analysis of
complexities of different types of business structure and their interrelationship on different
organizational function will also be done in the report.
MAIN BODY
Overview of different types of organization; public, private and voluntary.
The different types of organizations such as: public, private and voluntary, which are
explained in detail as follows:
Public Company
These companies are government-owned organizations and it is traded publicly (Ahmad
and et.al., 2017). The basic objective of company is to serve the citizens of the nation and raises
money from the public revenues such as tax, penalty, duty, etc. The public companies are free to
transfer their shares. For example, Bank of America Corporation, Danske Bank A/S, British
Broadcasting Corporation (BBC), National health service, Metropolitan police, etc. are the
public companies. British Broadcasting Corporation (BBC) is the British public service
broadcaster. The fee is set by the Government of UK, agreed by Parliament, and used to fund
the BBC's radio, TV, and online services covering regions and nations of the UK.
Legal structure
Minimum members required in the public company are 7 and maximum number are
unlimited. There needs to be 3 directors in the public company (Difference Between Pvt Ltd and
Public Ltd Company, 2019). The business can be started after receiving the Certificate of
Commencement of Business and Certificate of Incorporation. Statutory meetings are compulsory
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for this type of organization. The firm complies with legislation like, Telegraphy Act 147 which
is focused on encoding of electric cables with messages without licence.
Private Company
These companies are not government-owned organizations and products and services are
provided by the organization outside of the government. In simple terms, private companies are
owned by the individuals (Ahmady, Mehrpour and Nikooravesh, 2016). The basic objective of
the private companies is earning profit. Private companies are restricted to transfer their shares.
The examples of private company that operates as public limited company includes, British
Petroleum, Prudential PLC, Aviva, Tesco and Shell Oil and Gas. Shell petroleum is an owned
subsidiary of Royal Dutch Shell which is a transnational corporation and is largest company of
oil across globe. The team of Shell petroleum is dedicated towards value of customers by
delivering promised services and sustainable development.
Legal structure
The minimum member required to form a private company are 2 and maximum 200
members can form the private company. There needs to be 2 directors in the private company.
The business can be started after receiving the Certificate of Incorporation. Statutory meetings
are option for this type of organization. Under unification of 2005 firm was operated as dual
listed company but Dutch and British companies managed their legal presence and operated as
single unit for partnership business and the firm is on primary list of London stock exchange.
Voluntary Company
These organizations are the group of people who voluntarily enter into the agreement for
forming a body in order to achieve a specific purpose. Many voluntary organizations work for
the socio-economic development of the rural people and also for promoting and dissemination of
art, sports and culture (Deasy and et.al., 2016). The voluntary organizations are not the part of
any governing department, statutory body or local authorities. For example, cancer Research,
Oxfam, Red Cross and Charity Job are the different voluntary organizations. Oxfam is a
charitable organisation which is focused on removing global poverty by helping people under
poverty line. The enterprise states that no value is small and each and every contribution is
important and useful.
Legal Structure: Voluntary organizations have the legal structure, being an
unincorporated association, trust or company limited by guarantee. Community and voluntary
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organizations are generally favoured by small and new groups. The voluntary business
organizations are governed by constitutions, legal document that leads to govern the business
association. Oxfam form the Council of Trustees which is a governing and regulating body of
Association of Oxfam. The enterprise is not for profit and limited liability company.
Detailed explanation of size and scope of different organizations.
British Broadcasting Corporation (BBC) (Public Company): It is British public
service broadcaster company and it headquarter are situated at Broadcasting House in the
Westminster, London. BBC is the world's oldest national broadcasting company that was
founded on 18 October 1922 (Král and Králová, 2016).
Shell Oil & Gas (Private Company- public limited): This is the wholly owned
subsidiary company of Royal Dutch Shell. This company was founded in the year 1912 and its
key people are Bruce Culpepper. This is one of the largest oil company in the world. The
company is headquartered in Hague, Netherlands (Johnson and Zinkhan, 2015).
Red Cross (Voluntary organization): The British Red Cross Society is United Kingdom
body of worldwide impartial and neutral humanitarian network. It was formed in the year 1870
and it is registered charity organization. Red Cross is committed to help society and people
without discriminating them regardless of their nationality, ethnic origin, religion or political
belief.
Basis of
comparison
Public Company
(British Broadcasting
Corporation- BBC)
Private Company
(Shell Oil & Gas)
Voluntary Company
(Red Cross)
Size BBC provides
employment to more
than 20950 staff in total
and among them approx.
16000 are in public
sector.
Shell provides
employment to approx.
81000 people around the
worldwide (Royal Dutch
Shell employees 2009-
2018, 2019).
Red Cross UK provides
employment to approx.
32500 volunteers and
almost 3500 staff people.
Scope Since BBC is a
transnational
corporation, therefore,
Shell Oil & Gas
company is a
multinational company
Red Cross is an
International Committee
and it is funded by the
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the scope of BBC is
limited (Madi and et.al.,
2018). This is because
transnational corporation
operates substantial
facility and can-do
business in more than
one country and it cannot
consider any specific
country as its national
home.
that deals in oil and gas.
Therefore, being a
multinational company,
it can own and control
production of products
and services in at least
one nation other than the
home nation (Prajogo,
2016). The company has
the scope for expanding
into those countries that
have low labour cost
which will lead to
increase the market
share and also
profitability.
voluntary contributions.
This also promotes
importance of international
humanitarian law and focus
on drawing attention to the
universal humanitarian
principles. The scope of
Red Cross is very wide as
it spread in 80 countries
across the world (The
International Committee of
the Red Cross (ICRC),
2019).
Products &
Services
Products and services of
British Broadcasting
Corporation- BBC
includes Radio, Web
portals, Broadcasting,
Television, Radio and
online.
The products and
services of Shell oil &
gas includes fuels, oils
and car services. It also
involves exploration,
production and even
refining of the petroleum
products.
Red cross provides food,
shelter, health and even
mental health services for
helping the families and
whole communities so that
they get back on their feet.
Key
Stakeholders
The key stakeholders of
BBC are producers,
employees, BBC Trust,
Program editors, social
media, government
bodies and commission,
The key stakeholders of
Shell Oil & Gas
company are organized
labour, employees, host
communities, oil
companies and
The key stakeholders of
Red Cross are employees,
volunteers, corporate
donors, people of
community and society.
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etc. (BBC Stakeholder
Map. 2011).
suppliers, regional
interest bodies and
government authorities.
The different business organizations work for specific purpose and these objectives and
purpose leads to bring impacts on the different aspects of the business organization. All the three
above mentioned companies have different objectives and purpose which lead to make impacts
on the functions and activities and overall effectiveness of the company.
Critical analysis of different types of business structures and interrelationship between
organizational function.
Organizational structure is considered as very important aspect of the business as from
the point of view of effectively managing the business activities, operations and functions
(Romero, 2016). Organizational structure varies from business to business and which leads to
define the work structure of company. The environment and structure get influenced due to the
type of organizational structure. Code of conduct and organization's value leads to inspire all the
activities which are involved in the company and makes impact on overall effectiveness of the
company. Different companies having different objectives and purpose, different structures,
aspects, values, and they also different products and services.
The chosen organization that is Royal Dutch Shell has developed highly decentralized
structure and it manages the business activities and functions through the three-way matrix
structure (Organizational Restructuring within the Royal Dutch Shell Group, 2008). The
dimensions of this matrix were regional coordination structure, business coordination structure,
and functional coordination structure. Royal Dutch Shell Group’s structure is almost impossibly
complex– the combination of the Group’s joint-venture structure, its three-way matrix, and also
200 operating business organizations has meant that few outside of Shell (and certainly not
everyone within it) have been able to comprehend how Shell operates. The goal of a matrix
structure is to permit coordination across multiple dimensions: within geographical areas,
business sectors, and functions. But the critical issue is the allocation of controls and decision-
making powers in relation to these three dimensions of the matrix. However, Shell industry is
changed and it has increased the global integration and also reduced importance of vertical
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integration. At the same time the critical strategic priorities for Shell are to boost financial
performance through cost reduction.
Figure 1: Organisational structure of Shell petroleum
(Source: Royal Dutch/Shell reinventing itself as total energy company, 2019)
Shell Petroleum combines decentralization with a top-heavy administrative structure.
Shell’s service companies in London and Hague are having a total employment which is greater
than the corporate and divisional administration of any other oil and gas company (Stevens,
2016). Moreover, the cumbersome three-way matrix means that the benefits of decentralized
decision-making are compromised by Shell’s slow-moving bureaucracy, while, at the same time,
effective central control is absent.
The link between organizational functions and organizational objectives is very essential
and important as it makes impact on the overall effectiveness of the company. This is because
these functions bring great impacts on the overall performance and achievement of the
organizational goals and objectives (Winnubst, 2017).
All the functional units of firm are linked with corporate centre and the firm has five
functional area which are organised in hierarchical order. The departments are not interlinked
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with each other but are coordinated via corporate centre and by segregated operational heads of
the company. The functions of the Royal Dutch Shell or Shell Oil & Gas company are focused
for achieving the organizational goals and objectives. The goals and objectives can be
accomplished by leading the efforts in direction towards overall goals of organization. There are
different factors that can make impact on the overall effectiveness of the organizational functions
of the business organization which can be related to micro and macro environment. Role
structure of Shell petroleum is divided according to sperate departmental functions an is headed
and regulated by operational heads and corporate centres of functions units.
CONCLUSION
There are different types of business organization such as public, private and voluntary.
Different business organization have different legal structure that leads to impact the working of
business. The present report has explained size. Scope, legal structure, key stakeholders and
products and service offered by different types of business. All these are linked with the
organizational goals and objectives. Different types of business structure have complexities
which is being critically analysed in the report. The business structure also brings influences on
the various organizational functions. The report has also shown the interrelationship between
different functions of the business organization.
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REFERENCES
Books and Journal
Ahmad, W.N.K.W. And et.al., 2017. Evaluation of the external forces affecting the sustainability
of oil and gas supply chain using Best Worst Method. Journal of cleaner
production. 153. pp.242-252.
Ahmady, G. A., Mehrpour, M. and Nikooravesh, A., 2016. Organizational structure. Procedia-
Social and Behavioral Sciences. 230. pp.455-462.
Deasy, S. and et.al., 2016. Controlling use of a business environment on a mobile device. U.S.
Patent 9,247,042.
Johnson, M. and Zinkhan, G. M., 2015. Defining and measuring company image. In Proceedings
of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 346-350).
Springer, Cham.
Král, P. and Králová, V., 2016. Approaches to changing organizational structure: The effect of
drivers and communication. Journal of Business Research. 69(11). pp.5169-5174.
Madi, S.A. And et.al., 2018. The Organizational Structure and its Impact on the Pattern of
Leadership in Palestinian Universities.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Romero, A. M., 2016. “From oil well to farm”: Industrial waste, Shell Oil, and the petrochemical
turn (1927–1947). Agricultural History. 90(1). pp.70-93.
Stevens, P., 2016. International Oil Companies. Chatham House.
Winnubst, J., 2017. Organizational structure, social support, and burnout. In Professional
burnout (pp. 151-162). Routledge.
Online
BBC Stakeholder Map. 2011. [Online]. Available through: <https://prezi.com/eju0zldlpobs/bbc-
stakeholder-map/>
Difference Between Pvt Ltd and Public Ltd Company. 2019. [Online]. Available through:
<https://keydifferences.com/difference-between-public-company-and-private-
company.html>
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Organizational Restructuring within the Royal Dutch Shell Group. 2008. [Online]. Available
through:
<https://www.blackwellpublishing.com/content/GrantContemporaryStrategyAnalysis/
6th_Edition/case_teaching_notes/CSA6CaseNotes_08.pdf>
Royal Dutch Shell employees 2009-2018. 2019. [Online]. Available through:
<https://www.statista.com/statistics/279425/number-of-royal-dutch-shell-employees/>
The International Committee of the Red Cross (ICRC). 2019. [Online]. Available through:
https://www.ifrc.org/en/who-we-are/the-movement/icrc/
Royal Dutch/Shell reinventing itself as total energy company. 2019. [Online]. Available through:
< https://www.ogj.com/home/article/17241800/royal-dutchshell-reinventing-itself-as-total-
energy-company>.
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