The Business Environment : Shell

The Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Nature of the environment that organisations operate in............................................................1
Impact of environmental forces on organisations at a micro and macro level............................2
Significance of impact of environmental forces at an organisation, market, sector or industry
level.............................................................................................................................................3
Requirements of a variety of stakeholders to organisation.........................................................4
Measure and appraise the effectiveness of the responses of organisations to policy actions
taken by key stakeholders...........................................................................................................5
CONCLUSION................................................................................................................................5
REFRENCES ..................................................................................................................................7

INTRODUCTION
Business environment is sum of all the external as well as internal factors which play
important role (Prajogo, 2016). These are need and expectation of customers, employees,
management, demand and supply, technology innovation, social trends, economic changes and
so on. Sum up of all these factors influence organisation environment and situation directly or
indirectly. This assignment is based on Shell which is oil and gas industry sector organisation
founded in 1907 by Marcus and Samuel Samuel. They are serving at worldwide level and
product offering by them are Petroleum, natural gas, LNG, Lubricants and petrochemicals.
Respective report will going to discuss nature of environment in which organisation operates and
impact of micro & macro level factors on company. Along with this, significance of
environmental focreces on company and requirement of several stakeholders.
MAIN BODY
Nature of the environment that organisations operate in.
Business environment simply means sum of individuals, institutions as well as other
forces which are not in the control of companies but they directly or indirectly impact on the
performance of company (Hamilton and Webster, 2018). Shell an oil and gas industry
organisation as well as operating at international level. Although, there are several nature of
business environment in which company is operating explanation of these are as follows :- Uncertainty – Nature of environment in which Shell operates is uncertain because several
changes take place like innovation in technology, modification in present rules and
regulation etc.. Thus, respective organisation is operating in uncertain business
environment.
 Totality of external forces – Business environment is full of external forces and on Shell
company they play important roles. These are competitors, legal factors, technology and
many more. Thus, it simply means that respective organisation is operating in such nature
where external forces totally impact.

Impact of environmental forces on organisations at a micro and macro level.
Business environment involve several macro and micro level factors which gives direct
impact on the working of Shell company (Kolk, 2016). Thus, for identifying effect of macro
level factors PEST will be conducted by respective business firm are as follows :- Political factor – These factors are government measures, intervention or influence
which impact the economy as well as performance of company. Political factor influence
intervention of government in several areas like tax policy, labour tax, environmental law
etc.. Recently, regional and international bodies had declared to impose some charges as
an taxes or penalties on carbon emission (PEST analysis of Shell Group, 2019). Shell is
part of oil and gas industry which have responded through devising survival strategies. Economic factor – It involve factors which affect company are price of product,
exchange rate, economic growth, inflation rate and so on. Price of Shell company's oil is
increasing globally because of increasing cost of production as well as reason behind this
is enhancement in government taxes. Thus, it result in high cost of products for company. Social factor – It include several elements which have impact on organisation such as age
distribution, population growth rate, health consciousness, career attributes and so on
(Erasmus, Strydom, and Rudansky-Kloppers, 2016). Now a days consumer are getting
aware about the responsible consumption which result in social pressure for Shell
company to do production in responsible manner.
 Technological factor – It involve environmental and ecological aspects like advancement
in technology, technology incentives etc.. All these have positive impact on Shell
company because advancement in technology result in more effective machines for
drilling as well as extracting oil and gas. But these are much expensive to implement.
Apart from this, there are some micro level factors also which gives impact on working
of Shell company are mention below :- Customers – They are the micro environment factor which directly impact on the Shell
company. For generating profit it is important for business firm to attract large number of
customers through different pricing strategies, discount and so on. Increasing and
decreasing number of customers directly impact on the working of Shell (Bah and Fang,
2015).

 Availability of employees – They are important asset of company without them it will not
possible for shell to fulfil their customers needs and wants as well as to generate revenue
(Virglerová, Dobeš and Vojtovič, 2016). Thus, it is important for Shell to make their staff
member satisfied so that they will sustain in organisation for long duration and help in
generating revenue.
 Distribution channel and suppliers – It is micro level factor which impact on the
working of Shell as it is important for production purpose that they have better
distribution and supply chain. Because they are oil and gas manufacturers which relay on
material suppliers. Along with this, respective company should have good supply channel
so they can operate profitably and get good value of their offerings.
Significance of impact of environmental forces at an organisation, market, sector or industry
level.
As discussed above environmental factors have significance impact on the working of
Shell as well as they give effect on their market area and industry also. Below mention are the
factors along with their impact on organisation, market as well as industry :-
Political factor - It is environmental factor which involve rules and regulation of
government, tax policies, environmental law, labour tax and so on. All these factors gives direct
impact on Shell, their market as well as its industry position also. The impacts of thee factor on
company is in implementation of all the rules and regulation while conducting their daily basis
operations it become easy for them to offer their products at worldwide level without facing any
issue related to legal factors. For instance price of oil and gas are set by the legal bodies which
have to be follow by company (Eling and Schaper, 2017). Political factors can also impact on the
market of Shell oil and gas company when it is working according to legal bodies and following
price given by them. Then such practices will result in building good image within market area.
In terms of oil and gas industry, some of the countries and organisations make trade agreement
with government for exchanging the resources of energy for money. Thus, the political
regulations has direct impact on each organisation that incorporate in this industry.
Technological factor – This environmental factor mainly involve advancement and
innovation within technology. It have major impact on Shell oil and gas organisation because
their work get more easy as well as respective company is able to supply quality products to their
customer at global level. All these have positive impact on Shell company because advancement

in technology result in more effective machines for drilling as well as extracting oil and gas. But
implementation of advance technology is not easy for company there is requirement of huge
funds. Apart from this, technological factor have its impact on the overall market of shell oil and
gas company because it assist them in doing production in effective manner and gaining better
place within market area. If respective business firm is providing product produced through latest
technology and having fine quality of offering. Then it will assist them in taking better place
within market area and gaining competitive advantages. Moreover, technological factor also
have impact on the working of overall oil and gas industry because with the assistance of it
company is able to produce new product as well as can come in market with some new process.
In addition to this, through technology cost of marketing and advertising has been decrease
incredibly.
Requirements of a variety of stakeholders to organisation.
Group, person or company which has interest as well as concern in an organisation.
Although, stakeholders are the one who can get affect or be affected through the actions,
objectives and policies of company. There are several stakeholders such as creditors, directors,
employees, owners, government, union, suppliers and so on. Each and every stakeholders are not
equal. Shell is oil and gas industry organisation working at worldwide level as well as they also
require several stakeholders for performing their day to day operations in effective manner.
Explanation of stakeholders and their requirement for Shell oil and gas company are as follows :- Customers – They are important assets of the organisation without customers it is not
possible for company to gain long term sustainability within market area. Thus,
customers are important stakeholder of Shell and company also require them for
generating revenue. Staff members – They are the one who help Shell oil and gas company in conducting
their day to day operations. As well employees are important part of company and
without them it is not possible to meet daily basis targets in effective manner
(Schaltegger and Wagner, 2017). Along with this, they help Shell in fulfilling customers
needs and wants in effective manner. Thus, company require staff members as an
stakeholder. Suppliers and contractors – It is not enough to produce or manufacture oil and gas
there is requirement to supply it to the end users. Thus, there is requirement of suppliers

as well as contractors by Shell for providing their offering within market or to
consumers. Suppliers and contractors are those stakeholders which company need for
providing their offerings at worldwide level. Thus, respective organisation need
suppliers and contractors as their stakeholders.
 Investors – For doing daily basis activities there is requirement of funds, if Shell oil and
gas company don't have funds then it will not possible for them to conduct daily basis
work. Thus, investors are the stakeholder who invest money for company and help them
in doing their day to day operations.
Above mention are some stakeholders of Shell oil and gas company as well as they are
required by organisation for taking better place within market area and also help in generating
revenue.
Measure and appraise the effectiveness of the responses of organisations to policy actions taken
by key stakeholders.
There are several stakeholders in organisation who take policy actions for organisation as
well as to these policies business firm respond in effective manner. Thus, employees are
important stakeholders of Shell oil and gas company they had taken policy action and these are
in the favour of them. So in relation of it, manager of respective company have to measure
effectiveness of these policies and take major steps in relation of that. Although, staff member
will give proposal of such policies that will be beneficial for them because individual will work
only when they will get satisfied. Thus, Shell will work on these take major step for employees
motivation as well as satisfaction.
Apart from employees company have some other stakeholders also such as suppliers who
also take action in relation of policies related to supplying good and services from one play to
another. They are important part of organisation because without supplying offerings it is not
possible to generate revenue and make customers satisfied. Thus, company evaluate their
policies and work on their implementation within Shell.
CONCLUSION
From the above discussion it has been concluded that business environment is dynamic in
nature and there are several external and internal factors which directly impact on the working of

organisation. Along with this, Shell in working in uncertain and totality of external factors nature
of business environment. There are several micro and macro level factors which directly impact
on working on respective organisation such as political, economic, social, technological,
customers and so on. Moreover there are some environment factor such as political and
technological which directly impact on organisation, their market and position in industry. It is
important for company to have different stakeholders.

REFRENCES
Books and Journal
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.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1),
pp.23-34.
Erasmus, B., Strydom, J. W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
management. Oxford University Press Southern Africa.
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Virglerová, Z., Dobeš, K. and Vojtovič, S., 2016. The perception of the state’s influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
Public.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research. 258(3). pp.1082-1094.
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Online
PEST analysis of Shell Group, 2019.[Online].Available through:<https://bohatala.com/shell-
pestle-analysis-project-report/>