LSBM306 - Strategic Analysis of Royal Dutch Shell's Business

This report offers a comprehensive strategic analysis of Royal Dutch Shell PLC, a prominent player in the oil and gas industry. It begins with an introduction to the company, its history, mission, and vision. The report then delves into an analysis of Shell's internal environment, utilizing the VRIO framework to assess resources and capabilities such as global presence, quality product offerings, software, and employees. A value chain analysis further examines support and primary activities, highlighting inbound logistics, operations, outbound logistics, marketing and sales, and customer service. The analysis extends to the external environment, considering political, economic, social, technological, environmental, and legal factors impacting Shell's operations, including the effects of Brexit and technological advancements. The report also includes a SWOT analysis, identifying strengths, weaknesses, opportunities, and threats. Finally, the report evaluates the competitive forces within the industry, providing a holistic view of Shell's strategic position and challenges.

Royal Dutch Sell
1

INTRODUCTION -150...................................................................................................................3
MAIN BODY...................................................................................................................................3
Analysis of internal environment...........................................................................................3
Analysis of external environment-.........................................................................................5
Political:.................................................................................................................................5
Analysis of competitive forces within the industry................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
2

INTRODUCTION
Business environment is a collection of internal as well as external factors which have direct
and indirect impact upon organisation operations and profitability. There are different factors
like stakeholders, consumers, industry, suppliers, regulation of government, economic and social
factors, technological development etc that have tendency to impact organisation business
operation in number of ways (Bartman and De Groot, 2021). It is essential for a company to
conduct market analysis with the help of significant tools and techniques to identify the impact
of these factors and further implement strategies to overcome them. Present report is conducted
on Royal Dutch Shell PLC which is operating in oil and gas industry. Company was founded in
the year 1987 and offer wide range of services with high quality products and consumer
facilities. Present discusses company's internal and external market analysis alone with the
evaluation of organisation competitive forces in industry.
MAIN BODY
Shell from history to mission and vision statement
Royal Dutch Shell PLC was founded in the year 1890 as an amalgamation of two rival
companies. Company operates its business operations with strategies and have a mission which
is to safely market as well as distribute petrochemical and energy products while providing
innovation and value-added services. While mission statement of company is to make difference
through their team, people and dedicated professionals in order to deliver high quality products
and contribute in sustainable development.
Critically analysis of internal resources and capabilities that give Royal Dutch
Shell plc a competitive advantage
Competence framework
Threshold Resources
 Digital resources
 Global Presence
Threshold Capabilities
 Highly skilled employees
 Competitive training facilities
3

Distinctive Resources
 Quality products and services
 Employees
 Software
Distinctive Capabilities
 Software
 High security measures
To evaluate company internal environment manager of Royal Dutch Shell PLC have
undertaken use of VRIO analysis:
Distinctive Resources
and Capabilities
(Core competences
(Examples)
V
Is it
valuable?
R
Is it rare
(unique)
I
Is it
inimitable?
(difficult to
imitate)
O
Does it support
the
organisational
structures,
systems,
efficiency,
culture etc
Implications on
competitive
advantage/strategy
(e.g sustainable,
temporary etc)
Global presence Yes Yes - - Competitive
Disadvantage
Quality product
offering
Yes Yes Yes Yes Competitive
advantage
Software Yes Yes Yes - Competitive
advantage for
temporary basis
Employees Yes Yes Yes Yes Competitive
advantage
Valuable: Competencies which is helpful for Royal Dutch Shell PLC to grab valuable
opportunity and analyse threat from the internal and external market is.
Global presence:
Royal Dutch Shell PLC is having global presence as this organisation is operating in
more than 70 countries. It indicates that organisation generate its competitiveness with global
presence in effective way.
Quality product offering:
4

Royal Dutch Shell PLC provide high quality products to consumers that have been a
source of the brand a with consistent and high-quality increase Royal Dutch Shell PLC capability
to attract consumers to repeat purchase.
Software:
Royal Dutch Shell PLC take advantage of unique software in order to manage their
operations and activities to accomplish organisation goals.
Employees:
Company as having highly talented and skilled employees and also provide in-house
training for specific different job roles to employees, invest in training and development to have
a strong organisation workforce which is increasing company ability to overcome changes
(Enneking, 2019).
Rarity: Competencies which are unique in nature had developed and process by number of firms
in oil and gas industry (Benjamin and Seck, 2021). With the help of having some rare elements
Royal Dutch Shell PLC effectively build competitive edge in industry.
Global presence:
Royal Dutch Shell PLC is having global presence and operate in number of regions and
countries which allowed them to build and expand consumer base and enhance their ability to
earn revenue from multiple regions. This global presence provide company to have higher
financial strength which enhances its competitiveness.
Quality product offering:
Royal Dutch Shell PLC offer unique and high-quality products and services which is rare.
Software:
Software which company undertake to maintain records and execute operations is rare as
it is basically developed by organisation according to the requirement of particular market.
Employees:
Employees act as rare element for company as they enhance high scale of competence.
Along with this organisation invest in training and development programmes which helps in
enhancing employees’ capabilities.
Imitable:
5

Software:
Royal Dutch Shell PLC take advantage of software according to the different market
needs which is hard to be copy by other individual if the expand their operations on multiple
platforms.
Employees:
Employees of company have highly talented and specialised skill in which company also
provide them additional training according to the different job roles and requirement which
cannot be copied by other competitors.
Quality product offering:
Royal Dutch Shell PLC provide high quality production services which comes under the
category of imitable. With the help of high-quality products which is internally known by the top
management of company, quality product offering ring of company is hard to be copied.
Organized: These sources are mainly developed by company in a unique manner and cannot be
utilised by competitive rivals in industry (Gaghman, 2020). These resources have no
substitutions and cannot be employed by other organisation which allow organisation to take use
of opportunity and take this resource is to build business growth and development.
Employees:
Royal Dutch Shell PLC provide in-house training to employees for different job roles and
job designs to build a professional and personal growth.
Quality product offering
Royal Dutch Shell PLC offer high quality products and services to consumers for which
they invest in research and development to evaluate market trends and consumer behaviour.
Along with this to enhance product quality company have multiple financial sources, take use of
mergers and acquisition and invest in human resources to develop a positive organisational
culture which is helpful in providing quality products and services to consumers.
Value Chain analysis
6

Support Activities (Resources)
Firm infrastructure
Planning, strategic control, accounting, quality management, financing. With the help of efficient
infrastructure management, It is important for Royal Dutch Shell PLC maintain value chain effectiveness,
Human resource management
It is important for Royal Dutch Shell PLC to evaluate various HR elements like rewarding, performance
management, selecting, coaching. This will allow company to overcome the pressure with the help of
motivation, working team and commitment. The massive trust between Royal Dutch Shell PLC workers
enhances this value chain support activity.
Technology
It has been evaluated that all the value chain activities are dependent on efficient support of technology. The
human resource activity needs Royal Dutch Shell PLC to understand the importance of technology
development. A few examples are technology-supported customer service, data analyse and automation
software.
Procurement
Royal Dutch Shell PLC indeed offer high quality products and services to its customers in which they acquire
raw material range from machinery to material effectively. It this it is essential for the to carefully evaluate
procurement activities to operational and outbound value chain. This is inevitable as company offer unique
quality of products and services.
7

Primary Activities (Capabilities)
Inbound logistics – raw
materials
Royal Dutch Shell PLC have
smart inbound logistic function
in which they use of cost
leadership management. Value
chain analysis also states that
respective company keeps of
upgrading security so to
enhance effectiveness of their
inbound logistic operations
(Kumar, 2019).
Operations/
Processes/
production
With the help
of taking use
of IT
department
Royal Dutch
Shell PLC
maintain
supply chain
management
and develop
high quality
offerings.
Outbound
logistics
(e.g
distribution
channels)
Royal Dutch
Shell PLC as
compared to
other rivals is
having strong
leadership in
online and
offline
segment.
Along with
this Royal
Dutch Shell
PLC with the
help of its
software
develop smart
domain
patterns which
helps them to
influence large
base of
consumer
attention.
Marketing
and sales
Royal Dutch
Shell PLC
offer loyalty
programs
facilities to
customers
with the help
of IT
department.
With the help
of this
company
retain
customers.
Customer service
Royal Dutch Shell
PLC keeps of
increasing consumer
service experience for
which with the help of
efficient IT
department and
system company
provide 24/7 service
assistance to
customers.
8

SWOT analysis
STRENGTH WEAKNESSES
 Royal Dutch Shell PLC offers high
quality products and services to
customers.
 Company is having highly talented
and skilled employees.
 Less investment on digital marketing
compared to other rivals.
THREATS OPPORTUNITIES
 Dynamic changes in needs and
demand of customers.
 To enhance digital marketing and
invest in high-technology tools to
enhance competitiveness.
Identification and critically analysing the key drivers of Royal Dutch Shell plc
External factors to
consider
Factors effected
within industry
Importance to
organisation
Political: Policies of
government
Tax regulations
There are number of
elements and factors
in marketing in
political environment
which can affect an
impact upon Royal
Dutch Shell PLC
profitability for
longer period of time.
This company is
majorly operating its
High
High
9

operation in gas and
oil industry in
number of countries
which enhances
political system risk
(Macchi and van
Zeben, 2021). Brexit
is the major political
factors which have a
higher impact upon
company business
operations and
increases level of
legal framework.
For this company is
required to emphasize
upon intellectual
property protection,
trade regulation and
tariff, implement new
antitrust laws, pricing
regulations wage
legislation extra in
order to avoid
systematic risk of
political environment.
In this with the help
of emphasizing upon
implementing
10

different strategies
company can
overcome these
factors.
Economic: Economic growth
Changes in rate of
saving
Labour costs
Inflation rate
Due to Brexit, there
is a major economic
change in in United
Kingdom in which
there is significant
changes in foreign
exchange rates,
saving rate, inflation
rate, interest rate and
economic cycle
which is affecting
Royal Dutch Shell
PLC business
operations.
According to the
prevailing economic
factors in external
environment. It is
essential for company
to use United
Kingdom consumer
spending, industry
growth rate and other
High
Medium
High
Medium
11

factors to conduct
operations
effectively.
Organisation with the
help of taking
advantage of
government
subsidies, higher
economic growth rate
can recover from the
economic losses due
to Brexit and can
enhance their growth
rate.
Social: Changes in consumer
needs and preferences
Lifestyle
Consumer buying
habit
Social culture and
manner community
have skilled level of
population education
level have direct
impact upon
organisation. Attitude
and shared believe of
population is having
direct impact upon
company in which
they require to
modify their
strategies (Oom,
2020). United
High
Medium
High
12

Kingdom have
individuals with high
income level and
lifestyle of individual
is also higher.
In this company is
required to emphasize
upon attitude power
structure and skill
level of population in
society in order to
provide products and
services according to
their interest.
Technological: Dynamic changes in
technology
AI
Big data analytics
Technology is
disrupting every
industrial sector
around the world. It
is transforming
organisation to make
changes in their
business operations
(Pupovac and
Moerman, 2020). It is
essential for Royal
Dutch Shell PLC to
take advantage of fast
High
Medium
High
13

speed of
technological
destruction as
competitors of
company is taking
use of AI technology,
big data analytics to
offer products and
services which is
increasing
competition and
impacting upon cost
structure of Royal
Dutch Shell PLC.
In this help of
understanding the
rate of technological
diffusion and its
impact upon value
chain structure of
company Royal
Dutch Shell PLC can
speed up the
implementation of
technology in their
business operation
which will help them
per drive long-term
14

growth.
Environmental: Corporate social
responsibility
Environmental
restrictions
Environmental
standards are having
major impact upon
organisation
profitability in all
geographical regions
around the world.
United Kingdom
have number of
liability and
environment laws
which is essential for
Royal Dutch Shell
PLC to abide (Silva,
2020). This company
is operating its
operations in oil and
gas industry which is
having major impact
on environment,
however respective
organisation as
compared to other
rivals in industry
emphasise less of
environment
protection.
Medium
High
15

In this it is essential
for organisation to
implement laws
regulating
environmental
pollution, implement
waste management
program and have
positive attitudes
towards green or
ecological products
and support
renewable energy to
enhance
competitiveness in
industry.
Legal: Health and labour
law
Employment law
Due to Brexit, there
is almost a complete
change in legal
framework and
institution which is
essential for company
to abide in order to
have robust legal
structure.
High
Medium
16

Royal Dutch Shell
PLC is required to
carefully evaluate
new Market before
entering as this will
impact upon
company long term
success. Royal Dutch
Shell PLC is required
to emphasize upon
discrimination law,
employment law,
data protection,
health and safety law
etc to operate in oil
and gas industry
without facing legal
consequences.
The impact of the main competitive forces that are influencing
entrepreneurial activities and profitability
Porter five force analysis is a strategic management tool which helps in evaluating industry
in having understanding of the elements of profitability in a particular industrial sector. Royal
Dutch Sell plc manager undertake use of Porter five force analysis in order to efficiently
understand the manner in which five competitive forces have ability to influence organisational
profitability. It will help companies to develop strategies to enhance organisation competitive
advantage for long-term growth and development in oil and gas industry.
17

Threat of new entrants:
In oil and gas industry new entrants are bringing Innovation and the manner of doing
things which is putting intense pressure upon Royal Dutch Shell PLC. This indicates that threat
of new entrants is high. This led organisation to develop cost pricing strategy and provide new
value proposition to consumers. All these challenges are needed to be efficiently manage by
company in order to build efficient barrier to safeguard their competitive edge in industry
(Sousa, 2020). Threat of new entrants can be effectively overcome by company with the help of
innovating new services and products and provide consumers are reason to buy products while
building economy of sales.
Bargaining power of suppliers:
There are a number of organisations in gas and oil industry who take raw materials from
many suppliers. In terms with Royal Dutch Sell plc it has been identified that bargaining power
of suppliers is low (Williams, 2021). In terms with Royal Dutch Sell plc they have powerful
suppliers from different locations and have efficient negotiating power which enhancing
bargaining power of company. With the help of taking use of efficient and effective supply chain
with multiple suppliers Royal Dutch Sell plc have efficient supply chain network with multiple
suppliers.
Bargaining power of buyers:
Bargaining power of buyer in oil and gas industry in the provinces of United Kingdom is
relatively high, as there are a number of other competitors like Imperial oil Limited, BP PLC etc.
All these are providing exciting discounts and offers. It is creating pressure upon Royal Dutch
Sell plc profitability for long run. This threat can be effectively overcome by building a large
base of consumers and rapid innovation techniques. In this industry consumers often seeks
discounts in which Royal Dutch Sell plc by coming up with new product can duly limit the
bargaining power of buyers.
Threats of Substitute Products or Services
In oil and gas industry threat of substitute product is relatively high due to oil related
products, chemical and natural gas is produced by its competitors which is highly substitutable.
Competitors of Royal Dutch Sell plc is providing same or similar form of products and services
which is increasing competitive forces for company. This it is creating situation in which Royal
Dutch Sell plc is required to differentiate their products and services in order to enhance
18

competitiveness in market (Katičić, 2020). In this Royal Dutch Shell PLC can overcome this
threat by serving service oriented rather than just product-oriented services. Along with this
company by enhancing evaluating needs of consumers can overcome this threat by enhancing
switching cost for consumers.
Rivalry among the Existing Competitors
In oil and gas industry rivalry among competitors are relatively high. Royal Dutch Sell
plc is operating its operating in intensive competitive gas and oil industry in which company is
required to put efforts to build sustainable differentiation for products and services. In this
company with the help of building a sustainable differentiation and collaborating with small
competitors can enhance their market size. This will help company to ensure long-term growth
and profitability in industry.
From the analysis of Royal Dutch Sell plc competitive forces in industry it has been
evaluated that all five competitive forces indicates that it is essential for company to be
innovative and differentiate products and services according to the changing trends in industry
(Hopkins, 2021). By exploiting emerging opportunities Royal Dutch Shell PLC can shape those
forces in their favour and can maximize their competitiveness and profitability.
CONCLUSION
As per the above-mentioned report it has been concluded that Royal Dutch Shell PLC is
second largest oil company with having global operations in number of countries. In this with the
help of internal and external analysis organisation identify factors which have direct and indirect
impact upon organisation growth and profitability. It has been identified Brexit is having major
impact upon company in which they require to modify and change their strategies of consumers
in efficient manner. Royal Dutch Shell PLC have strong capital base for competing in this
competitive industry and strong base of employees and software, a high-quality product offering
capability. However, company get disrupted due to adopting changes and ineffectiveness of
implementing environmental strategies. In this with the help of implementing all the laws
regulating environment pollution. recycle and waste management and supporting renewable
energy company can enhance brand image in market. From this report has been identified that
19

respective company is facing high threat of new entrants bargaining power of buyers and
competitors. In this organisation with the help of implementing highly advanced technological
equipment’s, emphasising upon environmental consciousness and legal laws as per Brexit can
efficiently shape these forces in their favour and can enhance competitiveness and profitability.
REFERENCES
Books and Journals
Bartman, S.M. and De Groot, C., 2021. The Shell Nigeria Judgments by the Court of Appeal of
the Hague, a Breakthrough in the Field of International Environmental Damage? UK
Law and Dutch Law on Parental Liability Compared. European Company Law. 18(3).
Enneking, L.F., 2019. Transnational human rights and environmental litigation: a study of case
law relating to shell in Nigeria. In Human Rights in the Extractive Industries (pp. 511-
551). Springer, Cham.
Gaghman, A., 2020. Learning from Royal Shell’s Logistics and Supply Chain
Management. Konfrontasi: Jurnal Kultural, Ekonomi Dan Perubahan Sosial. 7(1).
pp.91-104.
20

Hopkins, S and et.al., 2021. Okpabi and others v Royal Dutch Shell Plc and another [2021]
UKSC 3. Northern Ireland Legal Quarterly. 72(1). pp.148-158.
Katičić, M., 2020. The acquisition of BG Group by Royal Dutch Shell (Doctoral dissertation,
University of Zagreb. Faculty of Economics and Business. Department of Organization
and Management).
Kumar, B.R., 2019. Acquisitions by Royal Dutch Shell. In Wealth Creation in the World’s
Largest Mergers and Acquisitions (pp. 147-153). Springer, Cham.
Macchi, C. and van Zeben, J., 2021. Business and human rights implications of climate change
litigation: Milieudefensie et al. v Royal Dutch Shell. Review of European, Comparative
& International Environmental Law.
Oom, J.M.S.C., 2020. Royal Dutch Shell Plc: balancing Oil with energy transition Shell’s
businesses adapting to climate change (Doctoral dissertation).
Pupovac, S. and Moerman, L., 2020. Bringing Shell and Friends of the Earth on stage: A one-act
spectacle of oil spills in the Niger Delta. Critical Perspectives on Accounting, p.102264.
Silva, P.I.B., 2020. Royal Dutch Shell PLC balancing oil with energy transition (Doctoral
dissertation).
Sousa, S.R.D.S., 2020. Equity research-Royal Dutch Shell, PLC (Doctoral dissertation, Instituto
Superior de Economia e Gestão).
21