Shell Company: Market Strategies and Porter's Five Forces Analysis

This project report offers a comprehensive business analysis of Shell Company, a major player in the international energy and petrochemical industry. It begins with an overview of the company, its global presence, and its financial standing. The report then delves into Shell's market strategies, examining cost-cutting measures, vertical integration, and new revenue models employed in the oil and gas sector. A key component of the analysis is the application of Porter's Five Forces model to assess competitive rivalry, threats of new entrants and substitutes, and the bargaining power of buyers and suppliers. The project also explores Shell's brand value, positive aspects of the company, and changes in its position over time. The report concludes by highlighting the importance of business essentials in the oil and gas industry and the factors contributing to Shell's financial stability and competitive advantages, including the adoption of advanced technologies for oil and gas extraction and its focus on sustainable energy solutions.

Business Essential extended
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Table of Contents
INTRODUCTION...........................................................................................................................1
Company overview.................................................................................................................1
Market strategies....................................................................................................................1
Porter five forces model.........................................................................................................2
Brand value: ..........................................................................................................................5
Positive aspects related with Shell company..........................................................................6
Changes in position in recent time.........................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business is an essential aspect in which human beings are regularly engaged in some sort
of activity in order to satisfy certain unlimited needs and wants. It has been necessary part of
present era. This is associated with production and distribution of products and services
according to demand of customers (Saunders and Lewis, 2012).
Business essential provide crucial analysis of marketing strategies that are require to
determine performance of every organisation whether related with Oil and gas industry. As, gulf
countries are primary sources of oil exploration sectors. This project report provides information
about various oil and gas business as well as their competitors. The business is being analysed by
using porter's five forces model.
Company overview
Shell Company is an international group of energy and petrochemical industry. It is one
of the effective corporation which is operating without having any one support. This is one of
the sixth oil and gas company measured on the basis of total revenues US$233.6 billion. It's
headquarter is situated in London and England. In this, total number of employees working in
the company is about 92000 in more than 70 nations. Shell group is created by the amalgamation
of two major rival companies such as Royal Dutch Petroleum of Netherlands and shell transport
and trading company Ltd in UK.
They are using advance technologies that can help them to take an innovative tool to
develop a sustainable energy in coming future. As a international energy company which is
operating in this specific manner to maintain its set standards of performance and ethical attitude
towards other competitors. Shell company value is based on core aspects of honesty, integrity
and respect for every people those are associated with operations of the company (Becker,
Kugeler and Rosemann, 2013).
Market strategies
In context to consumers, they need to identify effective aspects that are related with the
Oil and gas industry. Oilfield involves the best services related with petroleum exploration and
manufacturing sectors. But they sometime not deal in development of petroleum by themselves.
It is mainly seen that successful companies employ marketing and sales initiatives to maintain
their brand and sell crude oil in different parts of the nation. By using effective marketing
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strategies, they can establish huge awareness regarding the company. Shell company or any other
industry those are associated with the same business segment have gone from boom to bust in
past few years. Thus, by using five strategies, oil-field service and assets of companies in
exploring to adjust as per the changing environment. Most operators featured with collapse in
crude prices that have slow down sharply on supply chain investments. As a results, OFSE seems
to indicate that business can get evaporated in few years. Some strategies those are essential for
oil and gas industry are mention underneath:
 Cost cutting: With the help of this particular strategies company can control the impacts
of falling revenues which have been faced by oil companies. The positive outcomes in
coming years of cost inflation and rise in expenses for per barrel among 5 to 15% every
year (Wilson, 2014).
 Vertical integration: The second strategy is an effective way to minimise costs. Many
services and assets purchase presently is outsourced to various providers those are
associated with complexity.
 New revenue models: By the help of this strategies that share financial risk in order to
gain future rewards by the use new methods. OFSE companies are able to provide
operators maximum flexibility through reducing total base costs.
Porter five forces model
This is considered as one of the crucial framework by which companies can use it in
order to evaluate potential opportunities and risk related with oil and gas industry. Some of
important points need to include under this model. Porter's five model for Shell Company:
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Illustration 1: Porter's five model
(Source: Porters five forces, 2018 )
Competitive rivalry: It has been seen that this company is having plenty of rivals those
are associated with similar financial structure and organisation position. This indicate that Shell
is been facing large competitors of this company those are always made plan to cover those areas
which is untouched. They want to steal entire marketplace share of shell in order to become more
effective company. Some major industries are Exxon Mobil, cairn and BP from UK. These are
consider to be the most significant players who are operating in same business line (O'Leary,
2017).
Threats of new entrants: After making evaluation about Shell Company it has been
found that they are having very low threat. Because it is more difficult for any new business
organisation to invest more capital for opening a new oil and gas business. It is hardly affordable
to every other people. Taking permission from government and other concern bodies for setting
up oil and gas plant is very difficult task. If someone have specific amount of money to make
investment, then role of technology can be another constraint that will stop them from taking this
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particular step. In most of the developing nation, few venture business are trying to enter in oil
and gas industry sectors but they don't have enough capability to damage operations of shell.
Threat of substitutes: It is considered as one of the crucial aspects in porter five forces
model. A substitute products is one that can offer similar advantages to a specific company as
goods of another industries. It is having low level of risk that a shell faces from switching by its
substitute. It is also too low. Companies such as Tesla and another auto-mobile sector would
focus on selling electric vehicle but they cannot be taken as perfect substitute of oil and gas.
There are few sources of energy development such as Hydrogen, coal, water and nuclear. In the
present situation, they would not require to depend on these factors (Nicholas and Steyn, 2017).
Bargaining power of buyers: The availability of perfect buyers can minimise
productivity of a potential business organisation. They can help in order to enhance competition
within a corporate level through forcing down prices. It has been seen that customers of oil and
gas do not have any specific right. Company's in this specific sector needs to decide cost of their
products and services. It has been seen that they are offering similar products with the same price
so they do not have much option to shift for another company. They are not liable to transfer to
venture seller, if they are no satisfied with present one because cost and quality feature is been
almost the same.
Bargaining power of suppliers: Under this method, supplier power determine as the
pressure suppliers can exert on companies by increase price, low down the quality or minimising
availability of products. However, a strong supplier can have the ability to deliver more
competitive advantages to the oil company. In the mention case of shell they are don't need to
depend on any supplier because of having its own sources of oil which is been operated in
various nations. The happens to be that suppliers as does not have any capability to deal with the
company operations. Because of this, they are more safe and protected from getting any impacts
of growth as well as performances.
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(Source: The global oil & gas industry, 2018)
This particular organisation is utilising updated technologies for extracting oil and gases
in effective manner. It will reduce total cost of productions on an average basis. Some other
factors those are helping Shell company in order to gain profitability as well as competitive
benefits over other companies. They known that demand of petrol and diesel will decrease in
future which will create problem for the economy to manage and control requirement of people.
The primary reason those are concentrating on new types of fuel which help people to maintain
ozone-friendly environment and make plan for its sustainability (Doloi, Iyer and Sawhney,
2011).
Brand value:
It has been seen that shell has maintain perfect status as one of the most valuable oil and
gas brand with having US$36.8 billion. There are some aspects those making Shell company to
maintain its strategies divestment and marketing connection in order to boost its brand image.
With the growth rate of 40% in china and Singapore has help them to gain more attention of
people. Apart for this, almost every year leading valuation and planning firm brand finance
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create value of thousands of nationwide largest industries. Brand value evaluated in order to
determine its power and strength by providing letter grade up to AAA+. Shell continues to
remain as worlds largest valuable oil and gas company with an effective brand value that is
increase from last year. Its grade has been upgraded from AA+ to AAA-.
Positive aspects related with Shell company
It has been assess that potential impacts of various activities to manage and minimise
their activity on the surroundings as well as local communities. Shell is delivering energy in very
responsible manner through helping worlds towards a bright future under which energy can be
make minimum impacts on natural environment. They are working all around the world in order
to help others to control and maintain societal impacts those are arises because of oil production.
Because of their positive brand value they are able to cop up with plenty of issues those are not
able to maintain their business in more effective and efficient manner. They are making well
organise plan for maintaining their business as well as increase better future for the company in
next coming time. They are continuously planning to capture developing countries markets so
that goodwill of the company would be maintain in an effective manner (Chang, Walters and
Wills, 2013).
Changes in position in recent time
The British-Dutch oil and gas industry is one of the sixth largest super majors producers
of oil and gas business organisation. In terms of revenue they are considers to be seventh largest
sectors. They are associated with exploration and formulation, refining and marking or power
general. According the information mention about the shell business operations they are
operating in almost 70 nations and producing around 3.7 million barrel of oil in a day. This is a
US based subsidiary and happens to be the worlds widest businesses. In London stock exchange
shell is listed with a market cap of 193 billion.
Particular $million % changes
Revenue 240033 -11.8
Total profit 4575 135.90%
Total assets 411275 0
Total stockholder equity 186646 0
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Profit ratios
Profit as % of total revenue Total profit / Net sales*100 1.90%
Assets Net profit/Total assets*100 1.10%
Stockholder equity =Net profit available for equity shareholder/
Number of equity
2.50%
From the above financial position of Shell company they are having sustainable financial
position in recent time. Many of oil and gas industry has survived because of there strong
presence in the marketplace. It has been hard to make planning decision for the future. In near
future oil prices has gain a positive growth in every parts of the nature. It is more possible that to
spike in oil costs in next five to 10 year can become the most valuable and effective company
that can reach at leading position (Trompenaars and Hampden-Turner, 2011).
CONCLUSION
From the above project report, it has been articulated that business essential is an
effective part for every organisation. This can be useful to generate more specific outcomes from
the available resources. This project provide valuable information about Oil and gas industry as
how they are managing their business operations in order to generate better market position.
Various marketing strategies is being explained that are helpful in order to analyse exact problem
of Shell company. Use of porters five forces in order to identify their competitors those are
related with same line of business operations. Its current market position and upcoming growth
opportunities is also be derive from using proper analysis of their financial position.
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REFERENCES
Books and Journals:
Saunders, M. N. and Lewis, P., 2012. Doing research in business & management: An essential
guide to planning your project. Pearson.
Becker, J., Kugeler, M. and Rosemann, M. eds., 2013. Process management: a guide for the
design of business processes. Springer Science & Business Media.
Wilson, J., 2014. Essentials of business research: A guide to doing your research project. Sage.
O'Leary, Z., 2017. The essential guide to doing your research project. Sage.
Nicholas, J. M. and Steyn, H., 2017. Project management for engineering, business and
technology. Taylor & Francis.
Doloi, H., Iyer, K. C. and Sawhney, A., 2011. Structural equation model for assessing impacts of
contractor's performance on project success. International Journal of Project
Management. 29(6). pp.687-695.
Chang, V., Walters, R. J. and Wills, G., 2013. The development that leads to the Cloud
Computing Business Framework. International Journal of Information Management.
33(3). pp.524-538.
Trompenaars, F. and Hampden-Turner, C., 2011. Riding the waves of culture: Understanding
diversity in global business. Nicholas Brealey Publishing.
Online
The global oil & gas industry. 2018.[Online]. Available through:
<https://energyroutes.eu/2016/05/23/porters-five-forces-model-for-oil-and-gas-
industry/>.
Porters five forces. 2018.[Online]. Available through: <https://www.cleverism.com/threat-of-
substitutes-porters-five-forces-model/>.
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