Business Strategy Analysis: PESTLE, Porter, and Internal Environment

This report provides a comprehensive business strategy analysis of Royal Dutch Shell. It begins with an introduction highlighting the company's vision, mission, financial performance, and key competitors. The report then delves into macroeconomic and internal environmental analyses, utilizing PESTLE and Porter's Diamond models, along with a stakeholder analysis matrix, to assess external influences and their impact on the company. The internal environment is examined using appropriate theories, focusing on resources, capabilities, and organizational structure, including Porter's Value Chain and McKinsey 7S models. The report further evaluates the competitive landscape through Porter's Five Forces, and concludes with a discussion on strategic planning, incorporating various theories to provide insights into the company's future direction. The report highlights both strengths and weaknesses within the company and provides recommendations for improvement and strategic adaptation in a dynamic market environment.

BUSINESS STRATEGY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................................3
P1 PESTLE and Porter diamond model with Stakeholder analysis matrix along with its applicability in
the business.............................................................................................................................................3
CONCLUSION...........................................................................................................................................5
P2 Internal environment by using and applying appropriate theories....................................................5
CONCLUSION...........................................................................................................................................7
P3 Porter’s five forces for evaluation of competition..............................................................................8
CONCLUSION...........................................................................................................................................9
P4 strategic planning using various theories...........................................................................................9
CONCLUSION.........................................................................................................................................10
CONCLUSION.............................................................................................................................................11
REFERENCES..............................................................................................................................................11

INTRODUCTION
Under the study the macroeconomic environment analysis is done with influence over the
strategies of the company and internal environmental analysis is done. Porter’s five forces and
various theories and models are used under the study for strategic planning of the company
(Hsieh, Ma. and Novoselov, 2019). Royal Dutch Shell is the company chosen for the study the
vision of the company is spread over the world and mission of company is to raise its sales by
50% by next 3 years. Royal Dutch Shell has achieved the sales target of 3788 million US dollars
which is a 40% hike compared to last 3 years. The profit made by Royal Dutch Shell in 2019 is
9% of its sales and has raised almost 30% this year. The main competitors for the Royal Dutch
Shell are SABIC, Total, chevron and BP. All these companies are having better machinery and
better infrastructure which is competent to Royal Dutch Shell. All these companies are having
better policies for the workers in which they are allowed to work flexibly.The provide oil and gas
at competitive price. The strategies used for marketing are prominent and their vision and vision
is also great which will help them achieve success in the business.
P1 PESTLE and Porter diamond model with Stakeholder analysis matrix along with its
applicability in the business.
"Strategy is a plan to achieve objective which is of long term taking care of aim of the
company".
"Over all solution and problem is taken under the plan in strategy which includes desired future
of a firm. The plan includes most effective and efficient strategies for achieving the goals of the
company".
Similarity
Both definition focus on achieving the aims and objectives of the company and both
definition focuses on planning.
Dissimilarities
The first definition is considering only aims and objective whereas second definition is
considering effectiveness and efficiency. Second definition is having wide spice whereas it is not
so in the first definition.
PESTEL
It is a analysis which done to find out the external influence over the company and how
they will effect the company in positive and negative manner.
Political factor
Political factor takes into account all the government policies that will affect Royal Dutch
Shell. The change in the government will positively affect Royal Dutch Shell because they are
providing subsidiary to the firm (Eker. and Eker, 2019). Whereas the political factor which will

adversely affect the company is the pollution ban, which the government is planning to take
action by increasing the tax rates.
Economical factor
The economical factor which will affect positively to Royal Dutch Shell is the change in
exchange rate as the price of petrol will fall and the same will increase sales. The economical
factor affecting negatively is the inflation as the cost of the product and refinery will increase and
will result in increase in the price of oil.
Social factor
Social factor affecting positively is the lifestyle in which the petrol will used for the
fertilization of plant and this is the cheap and best way increase the life of a plant. This is under
trend among the lifestyle and will increase sale of petrol. The negative effect of social factors
over Royal Dutch Shell is the usage of petrol in vehicles is becoming less popular in the lifestyle
the people are using eco friendly vehicles. This will lead to fall in the sales of the company and
the profit of the company will decline.
Technology factor
The government engineering has produce a technology which will effect positively by
quickly producing oil and on much cost effective manner. The negative affect over the Royal
Dutch Shell due to Technology will be electronic vehicle emergence and the same will result in
fall in demand of petrol and oil.
Legal factor
Legal factor that will affect positively Royal Dutch Shell is the concession will be
provided under law for the advance tax payment and which will help Royal Dutch Shell to save a
lot of tax. The negative affect over the firm will be legal penalty for not taking proper care of
storage area of the oil and gas and this will lead fall in the value of shares and fall in profits of
the company.
Environmental factors
The positive affect of environment over the Royal Dutch Shell is usage of petrol in
environmental improvement and the same will lead to creation of eco friendly environment. The
negative affect will be usage of petrol is creating a lot of pollution to the environment and same
is resulting in climate change. All this is not good for environment and the future generation and
the earth will suffer due to this.
Porter Diamond Model
The model focuses on factor which include what is the reason some industries are
compatible whereas other are not.
Firm strategy, rivalry and structure

If the strategy of Royal Dutch Shell is sound then till help the company in long run. It
will help the company to stay ahead of rivalry companies and structure which includes the type
of business if the business is of large scale then it will help the business to do better investment
(Zucchella. and Previtali, 2019). All of these factors will effect Royal Dutch Shell by helping
firm to have better infrastructure and better cost effective way of production.
Demand condition
The demand of oil and gas is immense in UK which will help Royal Dutch Shell to
increase its price and also increase profits. The company must focus on green energy because it
will help in protecting environment and gaining customer attention.
Supporting industry
Automobile industry is the top supporting industry to Royal Dutch Shell. The innovation
by that industry will support more the company and this will lead to high growth of the company.
Chance
As per the model chance also plays a major role and it is very much necessary for Royal
Dutch Shell to play it’s luck by taking risk. Company must take risk by increasing its budget for
research in which new products must be experimented towards the launch and customer
attraction.
Stakeholder analysis matrix
It is the analysis which used to Interrelate business and stakeholders. As per this analysis
the stakeholders are customer and the same can be increased by decreasing the price of the
product (Koh, Singer, S.J. and Edmondson, 2019). Competition in the market is high and the
same can affect Royal Dutch Shell if better services in consistent basis are not provided. Supplier
and distributor of oil and gas are available for the company as there is great demand for the
product.
CONCLUSION
As per the analysis Royal Dutch Shell must take seriously macroeconomic factors and
should make required changes to survive in the market. There is great demand of oil, gas and
petrol in market and also the competition in the market are very high. Royal Dutch Shell should
focus on increasing its budget on research because this helps the firm in giving competition to
other companies. The new and innovative product the company must focus on is the green
energy and technology advancement.
P2 Internal environment by using and applying appropriate theories.
Internal environment included the culture of the company and the members of the
company which are having the ability to influence the decision making.
The resources included in the Royal Dutch Shell are the human resource, technology
resources, resources related Information Technology and Financial resources. Capabilities, with
the strong vision to expand business by spreading boundaries the company can achieve high

growth (Quinlan. and et.al., 2019). Royal Dutch Shell is having capability to recruit best
financial experts in order to get help from them regarding management of finance. The
organizational structure of the firm is goal oriented which will help the company to reach its goal
of sales maximization if the structure is followed and revised regular per as per demand.
Porter Value chain Analysis
As per this method the customers are given more importance rather giving importance to
departments. The system and activities are customer focused. Those systems are linked with the
profitability and cost of the company (Gans, Stern. and Wu, 2019). The value chin focuses on
what are values added by the company in order to increase the competitiveness of the firm.
Advantages
Royal Dutch Shell is having inbound logistic which will help the company in having
sound relationship with customers.As per the internal analysis Production of Royal Dutch Shell
is also sound in which modification as per the customers need can be made with ease by the
production department. The system of operation is also sound in which the feedback is taken
from the customer of Royal Dutch Shell and policies are made accordingly.
Disadvantages
As per the internal environmental analysis of Royal Dutch Shell is not having sound
marketing team in spite of having great product features and functions (Bommaraju. and et.al.,
2019). As per the analysis the company expends fewer amounts for the marketing and traditional
methods of marketing are used which are costly as well as less effective. The infrastructure of
Royal Dutch Shell is also not par which increases the cost of production per unit and the same
result in increasing the price and shifting of customers.
The strong points in the value chain customer are inbound logistic, production and system
operation whereas the weak point in the value chain includes poor marketing team and poor
infrastructure.
Mckinsey 7s Model
This model is evergreen model which used to make business focused towards its aim and
objectives. The model is applicable in variety of situation in which how the various parts of the
Royal Dutch Shell can be Interrelated and integrated towards the achievement of goal is done in
the present as well as future (Setiawan. and et.al., 2019). The model divides the whole study
which is used for the purpose of analysis into 7 elements and they are as follows:
Hard elements
Strategy
This include sound plan which is better than the competition. If for Royal Dutch Shell is
seen the company is having sound manufacturing and innovative strategy which is better then
competitors.

Structure
How well Royal Dutch Shell is organized is seen in structure. Royal Dutch Shell is well
organized with sound reporting relationship in which the structure is clear about who will report
to whom. This is Strength of Royal Dutch Shell.
System
This includes the day to day activities of the staff. This point is weak of Royal Dutch
Shell as there is no proper management of day to day activities and to achieve the target the
employees used to be active at the last time of deadline or it’s like last minute crunch. This is
weakness of Royal Dutch Shell.
Soft elements
Shared value
This include the culture of the Royal Dutch Shell and the culture and ethics are well
maintained in the company and each employees used to enjoy working due to flexibly and
friendly ethical conditions. This is Strength of Royal Dutch Shell.
Skill
This includes company of the employees. Royal Dutch Shell employees are lacking in
required skills (Morgan. and et.al., 2019). The employees are not trained well. This is the
weakness of Royal Dutch Shell.
Style
Style used by Royal Dutch Shell is the democratic leadership style which allows
employees participation. This makes the employees feel they are valued in the company and they
also work well in the firm. This is the strength of the firm.
Staff
This includes the general capabilities of the employees. The general capabilities of the
employees are sound in which they can easily manage to work on software, machinery etc but
their advance knowledge towards operating them are not that well. This is the strength of the
business.
All the strengths are the advantages for Royal Dutch Shell. Which include structure,
strategy, shared value, style and staff. Whereas the disadvantages for the company are skill and
system.
CONCLUSION
As per the internal analysis of Environment Royal Dutch Shell is good towards the
management but there are areas in which the firm needs to improve. The areas are the marketing
in which the firm must include advanced and cost effective marketing strategy for example

digital marketing. The same strategies must be given training to the employees because this will
increase the productivity in work.
P3 Porter’s five forces for evaluation of competition.
The meaning of industry is a group of companies which are having business activities and
they can relate each other and they are best way to do Comparison.The Company selected in the
study belongs to oil and gas industry (Köhler. and Zerfass, 2019). There are various companies
available in the industry related to oil and gas. Royal Dutch Shell is active in oil, gas, natural
production and petroleum.
Porter five models
It is model which is used to do industry analysis and in the study it is used on Royal Dutch Shell.
If any of the five factors is high then there is a high competition.
Buyer power
The buying power is high as the number of customers is high and due to which the price
is sensitive. For Royal Dutch Shell if the price of the product is increased then it will result in
shifting of customers (Sparks, 2019). Royal Dutch Shell must not increase the price of the
product and if the firm wants to increase the price then the organization must see that what are
the prices charged by others companies. Due to not increasing the price the customer will be
retained and new customer will be attracted which will become reason for profitability.
Threat of new entry
The threat is low as the start-ups are focusing more on eco friendly energy. Royal Dutch
Shell is having huge investment by which the firm can invest on latest technology (Ju. and et.al.,
2019). There is low completion of new entrance so this is advantage for Royal Dutch Shell. Low
competition will increase the profitability of the firm as due to which the business can generate
more revenue and the same can be invested in future growth.
Supplier power
The supplier of oil and gas are low which is again a good sign for Royal Dutch Shell
because this will increase demand for the product. The company is having uniqueness in product
which will help the firm to give strong competition to its competitors and in due which the
profitability will increase.
Threat of substitute
The threat of substitute is high in which the customers can move towards the electronic
car which will directly affect Royal Dutch Shell. This will lead to shifting of customers
(Castaldi. and et.al., 2019). The business can increase its profitability by merger and acquisition
of small business which are making available product at competitive rate. This will lead to
decrease in the competition as there will be less competition and due to which the profits of the
company will increase.

Competitive rivalries
There are a great number of rivalries available in the market which steals the business of
Royal Dutch Shell if wrong decision are taken. To stay in the competition and lead the
competition the company must focus on providing best services to its loyal customers and they
will bring more business to the firm and due to which the profitability of will increase.
Advantages
The advantages are the Threat of new entry as there is less threat because the Royal
Dutch Shell has already expanded (Kitsios. and Kamariotou, 2019). Suppliers are few which is
as advantage because low supplier which increase the demand and due to increase in demand
there are higher chances of making profits due to rise in sales.
Disadvantages
There is high buying power which means there is price sensitivity in the market due to
which the customers can shift. There is high treat of substitute and high rivalries and due to
which the Royal Dutch Shell can lose it’s customer.
CONCLUSION
According to analysis it is found that the industry is good but the competition in the
industry is high. Royal Dutch Shell can increase its competitiveness in the market by selling
product at reasonable rate which acceptable in the market and providing quality services
especially to its local customers.
P4 strategic planning using various theories.
Bowmen strategic clock is used do comparison because the comparison done under
model takes into account cost and competitive analysis (Zucchella. and Previtali, 2019). The
price is categorised under three categories named as lower price, medium price and high price.
For the comparison in corporate level strategies Wheelen and Dessler strategies are taken.
Stability Vs Diversification strategy
Wheelen's stability strategy more focused towards following one strategy again and again
in order to achieve the same result again. Whereas Dessler's strategy says Diversification is
required as per the need in the market which can include increase in the price and decrease in the
price of a product.
Growth Vs vertical integration
Growth strategy pays attention to investing the profit earned in the growth of the
company instead of distributing to employees. The vertical integration strategy is different and
says on order to save cost increase the working of employees. For example a retailer is hanging
manufacturing, purchasing and selling.
Consolidation Vs geographic expansion

As per the consolidation strategies all the subsidiary companies must be merged and then
result must be shown which make the company's performance result in higher in combination.
This strategy will hinder the growth of the business as showing small thing higher by combining
is not good for expansion. Geographic expansion strategy says that it is better to expand business
in different locations. Expansion will lead to increase in the beading of the company and the
same will bring awareness among the audience about the multinational operations of the firm.
For Royal Dutch Shell comparing both the strategies for corporate level the best strategy
selected from Wheelen is the growth strategy because it is better then then vertical integration
strategy (Koh, Singer, S.J. and Edmondson, 2019). This strategy will help Royal Dutch Shell by
spreading all across the boundaries as per Bowmen the cost is higher for growth but it will give
long term reward.
In Dessler the strategy selected for Royal Dutch Shell is the diversification strategy. The
reason for selecting this strategy after Bowmen clock Analysis is this strategy will keep company
competitive and always ready for challenge. As per the Bowmen Analysis the price for change is
low if it is done by planning.
For business level strategies Porter and Asnoff strategies will be studied:
Cost leadership Vs Market penetration
The Porter cost leadership strategy only takes into account cost as beloved that in order to
lead in the market only cost plays a big role (Quinlan. and et.al., 2019). Market penetration
strategy takes into account various factors such as current market, the price of the product,
promotion and distribution body the product. Cost of the product solely does not play a major
role but all other factors for pricing are important.
Differentiation Vs Market development
As per the differentiation strategy the company must invest in different segments of the
products. For example cosmetic, oil and gas, metal steel etc. A variety of products are selected
for the purpose of one fails then the other is ready. In the market development the product chosen
is the product which will grow as per the development of the market. But no one knows whether
the market will develop or not and due to development the same product will be influenced.
Focus Vs product development strategy
Focus strategy pays attention to focusing only on one strategy due to which the growth of
the company took place (Gans, Stern. and Wu, 2019). The other things are ignored but in
development strategies the strategy due to which growth of the product took place is taken along
with the other trending strategies.
For porter the strategy selected is the differentiation strategy whereas for Asnoff product
development strategy will be selected because these both strategic will bring higher outcome for
Royal Dutch Shell.

CONCLUSION
As per the analysis it is important to compare the two different strategies in order to find
the best strategy for the segment.
CONCLUSION
As per the study it is concluded that for a company it is necessary to prepare a strategic
plan which will help in increasing profitability and productivity. The strategic plan must include
various models such as PESTLE, Porter models, 7 S etc. All these models are scientifically
proven model which focused towards achievement goals in much effective manner. These
models help in doing analysis where the firm is strong and where the business needs
modification. These models help in Analysing where the company is today and where it has to
reach in the future. The oil and gas industry is safe for the old players as there as fewer chances
for new entrance. But the industry is very competitive because a small rise in price can shift all
its customers. Internal analysis helps the organization to improve its internal structure which
helps the operational Excellency in long run. It is also very important to differentiate with the
best performing firms because this lead to knowing the actual positioning the company in the
industry.The value chain is required to be strong of the firm because without which there will be
delay in the customer expectations and the final product.
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