Global Business Environment: Shell Plc. Analysis and Strategies

This report provides a comprehensive analysis of the global business environment, examining key drivers of globalization, including technological advancements, service development, consumer pressure, and global competition. It delves into the strategic complexities faced by multinational corporations, such as political changes, cultural diversity, currency fluctuations, and regulatory challenges, with a specific focus on Shell Plc. The report assesses the influence of globalization on organizational governance, leadership, structure, culture, and functions, utilizing frameworks like the McKinsey 7S model and Hofstede's cultural dimensions. It also explores various ways decision-making can work effectively in a global context and evaluates key barriers to globalization, offering recommendations for overcoming them. The report concludes with a critical evaluation of the global business environment and provides justified recommendations for Shell Plc. to adapt its organizational structure and decision-making processes.

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GLOBAL BUSINESS ENVIRONMENT
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Table of Contents
Introduction......................................................................................................................................3
Activity 1: Global business environment........................................................................................4
Analysis of the key drivers of globalisation................................................................................4
Progress and application of technology...................................................................................4
Development of services..........................................................................................................4
Growth in consumer pressure..................................................................................................5
Increase in global competition.................................................................................................6
Changes in political situation and government policies..........................................................6
Complexities of strategic challenges in global business..............................................................7
Political changes..........................................................................................................................7
Cultural diversity.........................................................................................................................7
Diverse currencies.......................................................................................................................8
Regulatory challenges..................................................................................................................8
Interdependency...........................................................................................................................9
Critical analysis of the strategic challenges caused by globalisation..........................................9
Business risk............................................................................................................................9
Diversification strategy..........................................................................................................10
Supply chain management.....................................................................................................10
Evaluation of the global business environment.....................................................................11
Activity 2: Scenario based analysis...............................................................................................14
Influence of globalisation on organisational governance and leadership..................................14
Organisational governance....................................................................................................14
Globalisation and leadership..................................................................................................15
Principles of corporate governance.......................................................................................15
Influence of globalisation on organisational structure...............................................................16
Influence of globalisation on organisational culture.................................................................16
Influence of globalisation on organisational functions..............................................................17
Ethics and sustainability on organisational functions................................................................17
Influence of ethics on organisational function.......................................................................17
Evaluation of global sustainability over organisational function..........................................18
Global market influence over organisational structure and culture of Shell Plc.......................19
McKinsey 7s model on organisational structure...................................................................19
Hofstede’s cultural dimension...............................................................................................20

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Different ways of decision making in Shell Plc........................................................................21
Decision making in global context........................................................................................21
Ways to enter global markets................................................................................................21
Evaluation of the key barriers to globalisation and recommendations..................................22
Justified recommendation for Shell Plc.................................................................................23
Conclusion.....................................................................................................................................23
Reference.......................................................................................................................................25

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Introduction
Globalisation is identified as a significant phenomenon in the current business practice. It
is associated with products, technology, information and the jobs beyond the national and geo-
political boundaries and cultures (Dieuaide 2018). From the economic perspective, it can be
defined that the interdependence of the nations across the globe facilitates a healthy environment
which is driven by free trade practices. In course of time the concept of globalisation expands its
original idea of economic relaxation and become a part of the society and culture. From the
research of Waddell (2017) it can be argued that the concept of globalisation is a dynamic aspect
and it connotes not only the economic paradigm but the political, social and the cultural aspects.
However, the research of Thomas (2018) clearly put emphasis over the economic aspects and
corroborated the fact that the initiation of globalisation has been started with the expansion and
development of economy. As a matter of fact, the paradigm of global business is related to the
process of shared and integrated environment. Technological advancement and the competitive
dynamics supplement the development of globalisation to a great extent and help to transcend its
foundation from single economy to free trade and free capital movement. Therefore, from the
research of Cramer (2017) it can be stated that globalisation is a process to open foreign financial
and investment markets for the international companies with the characteristics of deregulation
and improved communication. Based on this understanding, this essay is going to prepare a
critical analysis of the key drivers and concepts of globalisation. In addition to this, the impact of
globalisation on companies like Shell Plc. will also be discussed in the essay for an in-depth
understanding.

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Activity 1: Global business environment
Analysis of the key drivers of globalisation
Progress and application of technology
The technological development makes it easier for people to communicate and connect
with each other. Therefore, the geographical boundaries and cultural barrier are no longer a
triggering factors for people and they can easily get connected with others even from distant
location. One of the most important advantages of technological progress is that a global village
has been created through expanding a vast network of communication. Mukherjee and Dutta
(2018) stated that the technological development and innovation supplements the process of
globalisation in business as the business organisations are also understood the importance and
significance of implementing cutting edge technologies. According to Rowley, Ishikawa and Oh
(2019) the development of technology put great impact over the relationship between the
organisation and the customers and a transparency can be made between them. Nevertheless,
there are some challenges like high costs and maintenance measures of the cutting edge
technologies is very complex that increase the expenditure of the organisation to recruit experts
who can monitor and resolve the issues.
Development of services
The gradual increase in demand and expectation of the customers have a great deal of
impact over globalisation. There are significant benefits of service development which are
supported by the empirical evidences. Faghih (2019) stated that people are well aware of their
demands and very much concern about the quality of service. Therefore, it becomes a pertinent
measure for the business organisations to deal meet the demands and expectations of the

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customers effectively. In course of developing service facility, the companies feel the need of
expanding its business operation further in the international market to attract more customers. By
meeting the needs of the customers, companies are trying to ensure more profitability in business
and solidify the business to a great extent so that for future sustainability. The impact of
development of service has a positive side in terms of encouraging the business organisations to
expand business. As a result of that an opportunity to increase profitability can be created for the
business organisations in the competitive market. However, certainly a number of challenges are
arose such as the fluctuation in the consumer behaviour can jeopardise the entire service
development process. In the international market it is very much uncertain to have a preconceive
idea about the consumer behaviour. As a result of that vulnerability for the business organisation
is increased subsequently.
Growth in consumer pressure
The consumer pressure is also associated with their demands and expectations. Unique
expectations of the customers and the changing needs also pave the way for influencing the
process of globalisation. In fact, the growth in consume pressure is identified as one of the
leading advantage for the progress in globalisation. From the research of Bartsch, Riefler and
Diamantopoulos (2016) it can be derived that consumers are trying to influence the business
organisations to a great extent by placing demands and influencing the market trends. Apart from
that Jha and Gozgor (2019) confirmed that the global population is growing at a gradual pace and
it becomes important for the business companies to stretch its business operations beyond the
national market. Therefore, it also heightens the growth of globalisation to a certain extent. As a
result of that globalisation is able to be developed as per the market demand and trend. Still there

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are some challenges like growth limit even for globalisation and the uncontrolled development
can create serious threat for the business organisations to survive in the market.
Increase in global competition
Competitiveness in the market is another important advantage on which the progress and
relevance of globalisation depends. The development in the global competition can facilitate a
positive impact over globalisation where the market trends can be identified properly and the
business organisations can deliver an effective organisational practice so that it will ensure high
profitability. However, from the research of Steenbergen and Siczek (2017) it can be found out
that competitiveness in market can take bad turn and it will definitely be a catastrophe for the
business organisation to pursue with heavy burden of the market. Therefore, a balance is always
required to meet the interests of the organisation and the keep the objectives intact. Therefore, it
will be a challenge for the small and medium scale companies to survive in the competitive
market properly.
Changes in political situation and government policies
High interference from the government can also influence the development of
globalisation. Fong and Leibrecht (2019) advocated that it is an advantage for the business
organisations to follow the government regulations in order to practice a hustle free business. As
a result of that a guidance can be provided to the business enterprises so that they can easily
develop their business. Nevertheless, it can be a challenge for the companies in the form of
interference from the government can pose threat to the autonomy of the business and it is grave
challenge for the business organisations. Nevertheless, the political stability and government
policy will help a business company to follow ethical business practice. It will definitely have a

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deep impact over the globalisation process where the orientation of the organisation determines
the outcome of globalisation.
Complexities of strategic challenges in global business
Political changes
Political change is definitely identified as a crucial factor for the multinational business
companies while performing in the international or domestic market. Political strife and
instability can create a great deal of impact over to operational practice and sustainability of an
organisation (Habich and Nowotny 2019). In case of Shell Plc. the political changes is created
huge impact over the business orientation of the organisation. From the media release of Shell
Plc., it can be derived that the Nigerian government made a negotiation with Shell for
exploration and production of oil. On the other hand, the Brexit issue has been a triggering factor
for Shell Plc. to operate in the European region as there is a growing tension between Britain and
European Union that affects the business of Shell Plc. as well.
Cultural diversity
According to the research of Endong (2018) cultural diversity is considered to be a
potential factor for the business companies in order to set sustainable development. The cultural
diversity practice provides a clear picture of the stand of the organisation either for or against
discrimination. In case of Shell Plc., the company is strongly focuses on the diversity and
inclusion practice. From the sustainability report of the organisation, it can be found that the
management also interested to support the interests of LGBT. As a matter of fact, focusing on
talent rather than gender, ethnicity or sexual orientation is identified as a crucial factor for Shell
Plc. to establish a strong team. In fact, Balli, Pericoli and Pierucci (2018) opined that it is

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considered to be one of the leading organisational practice to foster talent management in the
competitive market.
Diverse currencies
Fluctuation in the currency rate is a determinant factor for the success of a multinational
company. For instance, in the emerging markets the value of national currency is lower than
international standard of USD. Therefore, the giant companies can get the opportunity to recruit
more people from the emerging markets rather than the developed countries so that enterprises
have to pay less for the labourers of the emerging market than the workers in the developed
market (Dabija, Pop and Postelnicu 2016). Henceforth, Shell Plc. also focuses on the same
strategy of recruiting people from the emerging market. However, it can deliver a threat for the
business organisation in terms of over-dependency on the emerging market. Shell Plc. must keep
in mind of that factor.
Regulatory challenges
The regulatory constraints are referred as vital measures that all the business
organisations must abide in order to facilitate a sustainable business practice. It is also essential
for the business companies to render sustainability in course of achieving sustainability. The
regulatory aspects is divided into the international norms and the national or domestic
procedures. In the domestic market, the regulatory framework depends on the characteristics of
the government. For Shell Plc. the regulatory challenges are mostly related to the environmental
consideration in both the international and domestic market. However, over interference from the
government can bring a significant impact over the business practice of Shell Plc. and it is a
crucial challenge for the organisation.

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Interdependency
As per the research of Yay and Aksoy (2018) it can be argued that interdependency in
international business can be defined from a relationship between the business company and the
government. On the other hand, Woods (2018) pointed out the interdependency is an internal
matter for a business organisation where the role of the organisation is to facilitate an extensive
relationship between the employees and the managers. The interdependency between the two
helps any organisation to enhance the performance and sustainability for the organisation. In case
of Shell Plc. also such interdependency can be seen where the management decides to share the
policies and maintains a transparent communication channel for bringing the employees into the
organisational fold dedicatedly. However, a significant challenge for creating interdependency is
to choose the right communication mechanism to build up strong interdependency.
Critical analysis of the strategic challenges caused by globalisation
Business risk
The most important business risk for Shell Plc. is related to the he environmental
degradation. It can be stated that the organisation is identified as one of the ecology damaging
company. It is a threat for the business and brand image of Shell Plc. In response to this, Shell
Plc. is trying to establish a strong sustainability report which is associated with the process of
rebranding the image of Shell Plc. In fact, the risk creates enough advantage for the organisation
as Shell Plc. is willing to reconstruct the infrastructure and engaging the local communities in
the business practice as a part of facilitating transparency in business practice. According to
Pauwels (2019) business risk is not only create challenges for the business organisation but also
provide advantage for the company in terms of pushing for further development process.

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Diversification strategy
Shell Plc. is very much aware of the social practices and trends in recent times.
Therefore, it can also be seen in its diversification strategy where the management is highly
aspired to include people as per their talent rather than racial, gender and ethnic differences. In
addition to this, Shell Plc. also facilitates its support to the international LGBT movement by
recruiting people irrespective of their sexual orientation (Shell.com 2020). It is definitely a
positive approach carried out by Shell Plc.. However, there are different problems that the
organisation can face in terms of its diversification strategy. For instance, lack of communication
initiative can dissolve the positive measure of diversification strategy. From the research of Le
Coze (2017) it can be derived that one of the biggest disadvantage of futile diversification
strategy is to create distance within the workforce due to lack of communication and
acknowledgement regarding the different cultural prevalence. Henceforth, Shell Plc. must work
on this to ensure its effective diversification strategy.
Supply chain management
The supply chain of Shell Plc. is associated with importing cutting edge technologies,
materials vendor and other service companies. In this regard, a great challenge has been faced by
Shell Plc. in terms of environmental degradation. From the research of Chen and Wu (2017) it
can be derived that the organisation is suffering with huge challenges regarding its responsibility
towards environment so that Shell Plc. intends to reconstruct its supply chain management by
putting great deal of emphasis over the environment service providing suppliers. The
technologies and materials are also eco-friendly in order to procure an eco-friendly initiative.
However, there are few companies that can provide such kind of services and materials to Shell

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Plc.. Therefore, it is considered to be both advantage and disadvantage for Shell Plc. to focus on
the eco-friendly initiatives.
Evaluation of the global business environment
Advantages and disadvantages of globalisation
It is important to figure out both the advantages and disadvantages that Shell Plc. can
witness in course of developing an effective global empire of business. The external factors are
definitely played crucial role in this regard so that the organisation can influence effectively. In
this process, both the internal practices and the external factors are very important for Shell Plc.
to gain strategic advantage in the competitive market. The advantages and disadvantages of Shell
Plc. in globalisation can help to foster a critical understanding about different approaches and
elements that can inspire Shell Plc. effectively and ensure sustainability of the organisation in
future business orientation.
Advantages
As far as the advantages of Shell Plc. are concerned, it can be defined that the workforce
strength and working environment in Shell Plc. are identified as the most effective advantage for
Shell Plc. to expand its business further in the international market. In fact, Shell Plc. is started
initiating a number of important steps like supporting the LGBT practice in workforce diversity
management strategy. As a result of that it will deliver a good brand image for the organisation
in the global business platform. In addition to this, Shell Plc. is also succeeded to establish a
strong relationship with the suppliers in the competitive market. It helps the organisation to
ensure the continuous flow of supply of materials and develop in a hustle free manner. As per the
research of Reader (2017) creating effective communication and relation with the suppliers will