SWOT Analysis of Shell PLC

This report provides a detailed SWOT Analysis of Shell PLC, one of the largest oil and gas companies. It examines the internal environment, definition of SWOT Analysis, distinctive competencies and capabilities, competitive advantage, importance of SWOT, business model, resources, organisational structure, and TOWS Analysis. The report concludes with recommendations for the production and finance departments.

SWOT Analysis
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
1. Internal Environment...............................................................................................................3
2. Definition of SWOT Analysis:................................................................................................3
3. Distinctive competencies and distinctive capabilities.............................................................4
4. Competitive Advantage...........................................................................................................4
5. Importance of SWOT..............................................................................................................4
6. Business Model........................................................................................................................4
7. Resources.................................................................................................................................5
8. Organisational Structure..........................................................................................................5
9. TOWS Analysis.......................................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
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INTRODUCTION
Royal Dutch Shell PLC is a British Oil and Gas company which has its headquarters in
Netherlands and the company has been incorporated in England. It is one of the largest company
in the industry and has vastly spread operational activities. In the following project report, an
attempt has been made to understand the strengths and weakness of the company with the help of
a SWOT Analysis.
MAIN BODY
1. Internal Environment
Internal Environment refers to the factors which exist within the organisation and have the
power and ability to influence the process of strategic decision-making by the management
(Kuratko, Hornsby and Covin, 2014). Internal environment factors for Shell Plc are as follows:
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 Employees
 Organisational Structure
 Resources
 Mission and objectives
 Value System
 Technological Capabilities
 Labour Unions
2. Definition of SWOT Analysis:
SWOT Analysis can be defined as a tool which is used by the management of any
organisation to determine and ascertain the internal organisational strengths and weakness and
identify as a result the opportunities and threats which may exist in the external environment of
the organisation. S stands for Strengths of the organisation such as skilled human resources, W
stands for weakness of the organisation such as low financial resources, O stands for
opportunities for the organisation such as expansion of business and T stands for threat which
may include increased competition (Helms and Nixon, 2010). It is important to realise that while
internal capabilities of the organisation determine the strengths and weakness of an organisation,
opportunities and threats are largely influenced by the external environment factors.
3. Distinctive competencies and distinctive capabilities.
Distinctive resources refer to the resources of an organisation which are hard or difficult to
obtain or imitate by any other firm in the industry and have the potential of creating competitive
advantage for the organisation.
Distinctive competence of a business can be defined as the aspect or any dimension which
is unique to an organisation and which provides the organisation a competitive advantage over
other firms in the industry.
Distinctive capabilities can be defined as any valuable business capability which is
possessed by one business organisation but it is very difficult for other firms in the industry to
replicate that capability.
It is important to understand that distinctive resources, competencies and capabilities of an
organisation determine its strengths and weakness and becomes a source of competitive
advantage for the company.
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4. Competitive Advantage
Competitive advantage is a business condition or any circumstance which gives a company
any dominance or favourable or superior position in the industry which can be used to derive
stable business performance in the long-term industrial environment (Barney and Hesterly,
2010).
5. Importance of SWOT
SWOT Analysis is one of the most important tools which is used by business managers for
planning and carrying out the effective operations of the organisation. It helps a firm to
undertake self evaluation to determine the strengths and weakness and whether a company has
any favourable opportunity or likely threat based on the strengths and weaknesses which have
been identified. It improves the efficiency of planning process in the organisation.
6. Business Model
Shell is one of the six largest oil and gas companies in the world which has expertise in the
process of development, exploration, production, refining and advertising related to oil and
natural gas. The company is based out of England and also has a market expertise in production,
marketing and manufacturing of chemicals related to the industry.
7. Resources
Physical Resources:
These are the resources which are used by Shell in production and manufacturing process
of oil and natural gas. The company has many physical resources which form the strength such
as equipment, machinery, enhanced oil recovery technology and vast infrastructure.
Financial Resources:
It refers to the funds which are used to execute business activities of Shell Plc. The
company has huge financial resources. In the year 2018, the total value of equity share capital of
the company stood at $198,646 Million (Shell Annual Report, 2018).
Human Resources:
Human resource refers to the employees or the workforce of the organisation which helps
in optimum utilisation of every other organisational resource. Shell Plc has a team of skilled and
competent human resources in different technical areas of expertise, marketing teams, production
specialists etcetera. The number of employees of the company is more than 90,000.
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Marketing Resources:
Shell Plc is considered to be one of the best and expert in devising marketing strategy and
campaigns which can help in improving the financial as well as operational efficiency of the
company. The company has developed a brand image of oil, natural gas and low-carbon energy
sources as the world is also shifting towards eco-friendly energy consumption.
8. Organisational Structure
An organisation structure determines how various tasks and activities in an organisation
are carried out and directed towards the attainment of organisational goals and objectives. It is
very important as it provides the guidance and direction to every member and employee with the
help of establishing reporting relationships in the company which govern workflow (Browning,
1991). Types of organisation structure includes – Functional, Geographic, Product, Matrix or
Virtual Structure.
Here is a diagram showing organisational structure of Shell PLC:
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9. TOWS Analysis
Internal Factors
External Factors
STRENGTHS
 Excellent
performance in new
markets
 Improved levels of
customer satisfaction
 Effective network of
distribution
 High financial
resources
WEAKNESSES
 Increased rate of
employee turnover
 Less investment in
new technology
 Ineffective demand
forecasting
OPPORTUNITIES
Technology : Increasing sales
from online sales platform
Economic : Rise in disposable
income of customers
S-0 PLANS/STRATEGIES
 S - High Financial
Resources
 O- Online sales
 Plan: Using financial
resources to develop a
comprehensive online
sales platform.
 S - Improved Customer
Satisfaction
 0 - Rise in disposable
income
 Plan: Offering a new
product range with
better quality to
capture the increased
revenue opportunity
in the industry.
W-0 PLAN/STRATEGY
 W - Low Tecnological
Resources
 O- Online sales
 Plan: Upgrading the
technical resources to
at least a level where it
facilitates taking
advantage of online
sales platform.
 W – Ineffective
demand forecasts
 O – Increasing
disposable income
 Plan: Making forecasts
for demand keeping in
mind the increasing
income of customers
and expected rise in
demand of high quality
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products.
THREATS
Technology : Innovation and
technological advancement by
competiting firms
Economic : Increasing level
of competition
S-T PLAN
 S - High Financial
Resources
 T – Innovation in
Competitors products
 Plan: Using financial
resources to invest in
latest technological
developments and
innovations.
 S - High Customer
Satisfaction
 T – Increasing level of
competition
 Plan: Increasing and
branding the high
customer satisfaction
levels to fight
competition and
maintain long-term
customer
relationships.
W-T PLAN
 W – High Employee
turnover
 T – Increasing
competitio
 Plan: Incresing job
satisfaction and
motivating the
employees to achieve
better retention rate
 W – Ineffective
demand forecasting
 T – Increasing level of
competition
 Plan: Accurately
forecasting the
dmeand and
undertaking market
research to identify
trends.
Production Department:
Based on the above analysis, the production department of Shell Plc has to utilise the
strengths of the company and update the technological and innovation aspects related to the
company operations for fighting the increased competition in the industry. It will require a
traning and development of employees in the produciton department to use latest technology to
company’s advanatage.
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Finance Department:
Based on the above analysis, the finance department needs to increase budget allocation
for upgradation of technological aspects in the company so that the company can fight the
competition from other firms and also make use of latest sales platform of online sales.
CONCLUSION
It can be concluded from the above report that the management of Shell Plc can identify
various strengths in the form of high customer satisfaction and strong financial resources and
some weaknesses in terms of outdated technology. The company has many opportunities with
respect to increasing customer income levels and online sales platform development and also
faces some threat of increasing competition in the industry.
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REFERENCES
Books and Journals
Barney, J.B. and Hesterly, W.S., 2010. Strategic management and competitive advantage:
Concepts and cases (pp. 4-25). Upper Saddle River, NJ: Prentice Hall.
Browning, L.D., 1991. Organisational narratives and organisational structure. Journal of
Organizational Change Management.
Helms, M.M. and Nixon, J., 2010. Exploring SWOT analysis–where are we now?. Journal of
strategy and management.
Kuratko, D.F., Hornsby, J.S. and Covin, J.G., 2014. Diagnosing a firm's internal environment for
corporate entrepreneurship. Business Horizons. 57(1). pp.37-47.
Online
Shell Annual Report. 2018. [Online] Available thru
<https://reports.shell.com/annual-report/2018/servicepages/disclaimer.php>
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