Economics for Business: PESTLE Analysis of Shell (Semester 1)
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Economics for Business 1
Economics for Business
Economics for Business
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Economics for Business 2
Table of Contents
Introduction....................................................................................................................................3
Task 1: PESTLE analysis of Shell.................................................................................................4
Overview of Shell.......................................................................................................................4
PESTLE analysis for Shell.........................................................................................................4
Task: 2 Impact of threat and opportunity on Shell business..........................................................6
Task 3: Evaluation of economic theory with respect to Shell Company........................................9
Conclusion...................................................................................................................................12
References..................................................................................................................................13
Table of Contents
Introduction....................................................................................................................................3
Task 1: PESTLE analysis of Shell.................................................................................................4
Overview of Shell.......................................................................................................................4
PESTLE analysis for Shell.........................................................................................................4
Task: 2 Impact of threat and opportunity on Shell business..........................................................6
Task 3: Evaluation of economic theory with respect to Shell Company........................................9
Conclusion...................................................................................................................................12
References..................................................................................................................................13

Economics for Business 3
Introduction
The main purpose behind this task is to elaborate and discuss about the pestle analysis of Shell
Company which is number one company in oil and gas industry. The paper will also discuss
how opportunity and threat put impact on the international trading activities in near future.
Additionally, Brief information about the economy theory of Shell will be presented or discussed
briefly in the task.
Introduction
The main purpose behind this task is to elaborate and discuss about the pestle analysis of Shell
Company which is number one company in oil and gas industry. The paper will also discuss
how opportunity and threat put impact on the international trading activities in near future.
Additionally, Brief information about the economy theory of Shell will be presented or discussed
briefly in the task.
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Economics for Business 4
Task 1: PESTLE analysis of Shell
Overview of Shell
Shell is a British Dutch oil and gas company which is operating and enhancing business
activities in more than 70 countries around the globe. The firm has employed approx 86,000
workers at the workplace. The organization uses advanced and innovative technologies to
support a developing sustainable energy future. Shell operates and manages in both the
downstream and upstream market and is headquartered in Hague, the Netherlands (Shell,
2019).
PESTLE analysis for Shell
PESTLE analysis is dynamic and unique method that helps business to understand and
evaluate the effects of the macro environmental elements on their businesses. It helps in
making dynamic and innovative decisions in the competitive market. PESTLE analysis for Shell
presented below.
Political factors: Political elements entail government affects in several areas like labor law,
tariffs, environmental law, tax policy, and political stability. Currently, regional and international
bodies have announced to impose charges inform of penalties and taxes on carbon emissions
(Krithiga and Sastry, 2011). In this way, it puts direct impact on the, performance, growth and
success of Shell Company positively. The company has responded by categorizing survival and
growth strategies in the UK. Furthermore, UK is a well-known popular destination for FDI. On
the other hand, Brexit would create a chaos inconceivable, whereas others believe it would
open doors to immense and intense opportunity for the country(David, 2019).
Economic factors: The economic elements that hamper Shell entail exchange rates, economic
growth, inflation rate and product price and demand. It has been studied that oil price has risen
internationally due to maximize in the cost of production. Along with that, the significant reason
for the rise in the cost of production is increased taxation by government. It has impacted on the
Task 1: PESTLE analysis of Shell
Overview of Shell
Shell is a British Dutch oil and gas company which is operating and enhancing business
activities in more than 70 countries around the globe. The firm has employed approx 86,000
workers at the workplace. The organization uses advanced and innovative technologies to
support a developing sustainable energy future. Shell operates and manages in both the
downstream and upstream market and is headquartered in Hague, the Netherlands (Shell,
2019).
PESTLE analysis for Shell
PESTLE analysis is dynamic and unique method that helps business to understand and
evaluate the effects of the macro environmental elements on their businesses. It helps in
making dynamic and innovative decisions in the competitive market. PESTLE analysis for Shell
presented below.
Political factors: Political elements entail government affects in several areas like labor law,
tariffs, environmental law, tax policy, and political stability. Currently, regional and international
bodies have announced to impose charges inform of penalties and taxes on carbon emissions
(Krithiga and Sastry, 2011). In this way, it puts direct impact on the, performance, growth and
success of Shell Company positively. The company has responded by categorizing survival and
growth strategies in the UK. Furthermore, UK is a well-known popular destination for FDI. On
the other hand, Brexit would create a chaos inconceivable, whereas others believe it would
open doors to immense and intense opportunity for the country(David, 2019).
Economic factors: The economic elements that hamper Shell entail exchange rates, economic
growth, inflation rate and product price and demand. It has been studied that oil price has risen
internationally due to maximize in the cost of production. Along with that, the significant reason
for the rise in the cost of production is increased taxation by government. It has impacted on the
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Economics for Business 5
growth of Shell widely. The inflation rate rose to 3.1% in November 2017. In addition, the
interest rate has gone up from 0.25% to 0.5% in 2017. All these factors will affect profitability
and revenue of Shell to a large extent. There is a leading and increasing demand for energy,
which is predicted to rise by 57% in the upcoming years. This becomes an issue when there are
fewer natural reserves of gas and oil left to fulfill this demand (David, 2019). Therefore, this
issue affects the performance and productivity of Shell negatively.
Social factors: The social elements that have impact on Shell include population growth,
buying behavior, age distribution, safety and career attributes and health consciousness. In
today’s modern world, the consumers are becoming more aware of the significance of
accountable and effective consumption and they have been putting liabilities on Shell to
promote and enhance accountable consumption. It is stated that initiatives of Shell have
increased security and safety concerns. For example, three years ago, three employees of the
company were described to have died due to ineffective and poor working environment. As a
result, it might impact on the performance and goodwill of Shell negatively. Despite the evidence
that the concerns and barriers have caught innovative and important social attention, the
company has been unwilling to make dynamic and unique actions or measures (Mallin and Ow-
Yong, 2012).
Technological factors: The UK is the biggest advanced technological nations across the
world. Hence, the Shell can expand and explore the business activities and operations globally.
The country is developing and enhancing new and innovative technologies to render the natural
gas and oil products for their wide range of customers. The innovative technological
infrastructure provides unlimited and dynamic opportunities to Shell conduct business in the UK
as it also maximizes performance and effectiveness of labor force widely (Gutierrez, et al,
2015).
Environmental factors: Environmental elements entail wealth, climate change and weather
conditions that may affect decisions and activities of Shell. It is evaluated that level of carbon
growth of Shell widely. The inflation rate rose to 3.1% in November 2017. In addition, the
interest rate has gone up from 0.25% to 0.5% in 2017. All these factors will affect profitability
and revenue of Shell to a large extent. There is a leading and increasing demand for energy,
which is predicted to rise by 57% in the upcoming years. This becomes an issue when there are
fewer natural reserves of gas and oil left to fulfill this demand (David, 2019). Therefore, this
issue affects the performance and productivity of Shell negatively.
Social factors: The social elements that have impact on Shell include population growth,
buying behavior, age distribution, safety and career attributes and health consciousness. In
today’s modern world, the consumers are becoming more aware of the significance of
accountable and effective consumption and they have been putting liabilities on Shell to
promote and enhance accountable consumption. It is stated that initiatives of Shell have
increased security and safety concerns. For example, three years ago, three employees of the
company were described to have died due to ineffective and poor working environment. As a
result, it might impact on the performance and goodwill of Shell negatively. Despite the evidence
that the concerns and barriers have caught innovative and important social attention, the
company has been unwilling to make dynamic and unique actions or measures (Mallin and Ow-
Yong, 2012).
Technological factors: The UK is the biggest advanced technological nations across the
world. Hence, the Shell can expand and explore the business activities and operations globally.
The country is developing and enhancing new and innovative technologies to render the natural
gas and oil products for their wide range of customers. The innovative technological
infrastructure provides unlimited and dynamic opportunities to Shell conduct business in the UK
as it also maximizes performance and effectiveness of labor force widely (Gutierrez, et al,
2015).
Environmental factors: Environmental elements entail wealth, climate change and weather
conditions that may affect decisions and activities of Shell. It is evaluated that level of carbon

Economics for Business 6
emission originating from the procedures of manufacturing crude fuels is very immense and
high. On the other side, natural reserves of crude oil are minimizing at a constant rate and might
become scarce in the coming future. Weather condition is one of the biggest issues that may
hamper the operations and functions of Shell negatively as it also affects performance of labor
force adversely because this issue may affect working condition of the company.
Legal factors: Legal elements entail health and safety law, antitrust law, discrimination law and
employment law. Rules and legislations on carbon emissions and environmental safety have
maximized for Shell dealing and managing with oil and gas. With the increasing issues and
challenges on the radical climate changes and weather condition, there is growing pressure or
burden on government of UK and other regulatory bodies to handle and deal with the new
norms that would support to reduce harm on the environment. Hence, Shell can take ample of
benefits while providing oil and gas products globally as it also increases performance and
productivity of the workers. Moreover, equality act 2010 also safeguards the employees from
any bias and discrimination.
It is noted from the above analysis that pestle analysis helps in evaluating and analyzing the
risks and challenges of the market. The company needs to conduct a depth research and
analysis to analyze and measure the external factors widely (Peto, 2011).
Task: 2 Impact of threat and opportunity on Shell business
Threat: It is observed that there are several threats that are being faced by Shell while
conducting business initiatives internationally. These challenges may affect international trading
activities in the near future. Shell company defendant by several environmentalists of causing
climate change is investing a huge amount in dealing and managing with this issue because this
issue hampers the international trading activities and operations adversely. The climate is
changing just because of greenhouse gases, and that has an adverse impact on community and
firm is operating something about it (Vishnevskiy and Karasev, 2016). It is analyzed from the
emission originating from the procedures of manufacturing crude fuels is very immense and
high. On the other side, natural reserves of crude oil are minimizing at a constant rate and might
become scarce in the coming future. Weather condition is one of the biggest issues that may
hamper the operations and functions of Shell negatively as it also affects performance of labor
force adversely because this issue may affect working condition of the company.
Legal factors: Legal elements entail health and safety law, antitrust law, discrimination law and
employment law. Rules and legislations on carbon emissions and environmental safety have
maximized for Shell dealing and managing with oil and gas. With the increasing issues and
challenges on the radical climate changes and weather condition, there is growing pressure or
burden on government of UK and other regulatory bodies to handle and deal with the new
norms that would support to reduce harm on the environment. Hence, Shell can take ample of
benefits while providing oil and gas products globally as it also increases performance and
productivity of the workers. Moreover, equality act 2010 also safeguards the employees from
any bias and discrimination.
It is noted from the above analysis that pestle analysis helps in evaluating and analyzing the
risks and challenges of the market. The company needs to conduct a depth research and
analysis to analyze and measure the external factors widely (Peto, 2011).
Task: 2 Impact of threat and opportunity on Shell business
Threat: It is observed that there are several threats that are being faced by Shell while
conducting business initiatives internationally. These challenges may affect international trading
activities in the near future. Shell company defendant by several environmentalists of causing
climate change is investing a huge amount in dealing and managing with this issue because this
issue hampers the international trading activities and operations adversely. The climate is
changing just because of greenhouse gases, and that has an adverse impact on community and
firm is operating something about it (Vishnevskiy and Karasev, 2016). It is analyzed from the
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Economics for Business 7
various studies that effects of changing weather pattern or climate growing wildfires, droughts,
hurricanes adversely. Hence, due to this concern, the company will fail to trade and operate
activities globally in the near future. Several researchers have argued that climate risk or
challenge is too complex to evaluate and manage because of a long time is involved in this
process, and lack of particular location data. Thus, it is complex to create the type of black and
white data required to drive measure. As a result, it could have an impact on the international
trading activities of Shell in upcoming years (Bhambhani, 2018). There are some factors which
affect the economy that is demand and supply, product price, and profit. By the changes in
climate, resource availability, and cost of products of Shell Company may increase, and this
affects the demand of the product as it decreases the demand and by that supply also
decreases. This has an adverse impact on the growth of the economy. Another factor is
government changes the regulations, then this having an impact on the funding of Shell
Company and this impact on demand and supply, and automatically it affects the economic
condition. Shell Company needs to provide effective focus on the different rules and regulations
because of climatic change; otherwise, it decreases the performance level (Bhasin, 2019). The
company deals in the oil sector and if global temperature increases, then demand heating oil
decreases and through this supply also decrease. This also has an adverse impact on the
economy as it decreases the sustainability level.
To minimize and overcome climate change issue, Shell is working as a supporter of CO2
minimizing technologies; the company is making sustainable energy endeavors around four
significant key areas like natural gas, biofuels, energy efficiency, and carbon capture and
storage. By 2035, the company plans to reduce its carbon footprint 25% and 50% by 2050
entailing the emissions not only from its own trading activities but from oil clients optimizing its
oil and gas products. Additionally, Shell is investing in other corporations, including GI energy,
which creates solar microgrids and other sustainable energy resolutions to minimize climate
change issues and challenges. Apart from this, the company must not wait for a price on carbon
various studies that effects of changing weather pattern or climate growing wildfires, droughts,
hurricanes adversely. Hence, due to this concern, the company will fail to trade and operate
activities globally in the near future. Several researchers have argued that climate risk or
challenge is too complex to evaluate and manage because of a long time is involved in this
process, and lack of particular location data. Thus, it is complex to create the type of black and
white data required to drive measure. As a result, it could have an impact on the international
trading activities of Shell in upcoming years (Bhambhani, 2018). There are some factors which
affect the economy that is demand and supply, product price, and profit. By the changes in
climate, resource availability, and cost of products of Shell Company may increase, and this
affects the demand of the product as it decreases the demand and by that supply also
decreases. This has an adverse impact on the growth of the economy. Another factor is
government changes the regulations, then this having an impact on the funding of Shell
Company and this impact on demand and supply, and automatically it affects the economic
condition. Shell Company needs to provide effective focus on the different rules and regulations
because of climatic change; otherwise, it decreases the performance level (Bhasin, 2019). The
company deals in the oil sector and if global temperature increases, then demand heating oil
decreases and through this supply also decrease. This also has an adverse impact on the
economy as it decreases the sustainability level.
To minimize and overcome climate change issue, Shell is working as a supporter of CO2
minimizing technologies; the company is making sustainable energy endeavors around four
significant key areas like natural gas, biofuels, energy efficiency, and carbon capture and
storage. By 2035, the company plans to reduce its carbon footprint 25% and 50% by 2050
entailing the emissions not only from its own trading activities but from oil clients optimizing its
oil and gas products. Additionally, Shell is investing in other corporations, including GI energy,
which creates solar microgrids and other sustainable energy resolutions to minimize climate
change issues and challenges. Apart from this, the company must not wait for a price on carbon
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Economics for Business 8
and other effective future norms and policies such as bans on gas and diesel cars for aiming to
move more effectively and speedy.
Opportunity: There are enormous opportunities for Shell, including maximizing demand for
fuel, planned expansion, and acquisitions by purchasing competition. As per the US energy
information administration (EIA), the total global energy consumption would rise by 40% by the
year 2040. Demand for cleaner energy resources is further maximizing and enhancing. Apart
from this, the company is well positioned to take control and measure of the potential demands
and needs in the near future. In this way, this opportunity will increase and enhance the trading
activities in the near future (Mivielle, 2019). The company has been monitoring on expanding
and increasing its activities and operations strategically and dynamically around the world to
provide to energy demands and needs of the developed and enhanced countries in the near
future. Due to the increased global economy, the firm has further entered merger or JV deals
and manages with the other corporations in some countries like China to establish its footprint in
those markets. Due to this opportunity, Shell is able to expand and explore international trading
activities and operations in the near future. This opportunity also will help the company to
compete with rivalries like BP and Exxon Mobile. Furthermore, international expansion will help
in increasing revenue and profitability globally (Gaidelys, 2013).
The expansion of the company also has a positive and negative impact on the economy. The
acquisition helps Shell Company in increasing profit, and this will have an impact on the
economic conditions. It also helps the company in implementing the new management and
process so that they can increase their revenue and automatically it boosts economic
performance. By merger and acquisition, Shell Company can expand its market size with more
research and development, and it helps in economic development by increasing the GDP rate.
Whereas merger and acquisition have some negative affect increased market share, which
leads to monopoly power, and also it increases the prices of products, and this provides a
negative impact on the economy. In the expansion of business, the company can face the issue
and other effective future norms and policies such as bans on gas and diesel cars for aiming to
move more effectively and speedy.
Opportunity: There are enormous opportunities for Shell, including maximizing demand for
fuel, planned expansion, and acquisitions by purchasing competition. As per the US energy
information administration (EIA), the total global energy consumption would rise by 40% by the
year 2040. Demand for cleaner energy resources is further maximizing and enhancing. Apart
from this, the company is well positioned to take control and measure of the potential demands
and needs in the near future. In this way, this opportunity will increase and enhance the trading
activities in the near future (Mivielle, 2019). The company has been monitoring on expanding
and increasing its activities and operations strategically and dynamically around the world to
provide to energy demands and needs of the developed and enhanced countries in the near
future. Due to the increased global economy, the firm has further entered merger or JV deals
and manages with the other corporations in some countries like China to establish its footprint in
those markets. Due to this opportunity, Shell is able to expand and explore international trading
activities and operations in the near future. This opportunity also will help the company to
compete with rivalries like BP and Exxon Mobile. Furthermore, international expansion will help
in increasing revenue and profitability globally (Gaidelys, 2013).
The expansion of the company also has a positive and negative impact on the economy. The
acquisition helps Shell Company in increasing profit, and this will have an impact on the
economic conditions. It also helps the company in implementing the new management and
process so that they can increase their revenue and automatically it boosts economic
performance. By merger and acquisition, Shell Company can expand its market size with more
research and development, and it helps in economic development by increasing the GDP rate.
Whereas merger and acquisition have some negative affect increased market share, which
leads to monopoly power, and also it increases the prices of products, and this provides a
negative impact on the economy. In the expansion of business, the company can face the issue

Economics for Business 9
of communication and coordination, and this affects the operational activities of Shell Company.
It decreases the economy development. These opportunities and threats have an impact on
Shell business and economy as well.
of communication and coordination, and this affects the operational activities of Shell Company.
It decreases the economy development. These opportunities and threats have an impact on
Shell business and economy as well.
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Economics for Business 10
Task 3: Evaluation of economic theory with respect to Shell
Company
Economic theory
The economical concepts and theories are very important for the Shell business as it is also
operating in the economy where other businesses are carrying out their businesses. The
economy theory states that the price of a quantity tends toward the position where the
demanded and supplied quantity is be equal. The economic theory is concerned about the
consumption of quantity with respect to its demand aspects (William and Steven, 2014). The
economic theory also developed the economic theories as demand and supply. The demand
and supply concept is also related to the economical theorem for the Shell business as this
business is dealing in the oil.
Figure: Demand and Supply
(Source: Abramovich, Avgerinos and Yannelis, 2012)
Task 3: Evaluation of economic theory with respect to Shell
Company
Economic theory
The economical concepts and theories are very important for the Shell business as it is also
operating in the economy where other businesses are carrying out their businesses. The
economy theory states that the price of a quantity tends toward the position where the
demanded and supplied quantity is be equal. The economic theory is concerned about the
consumption of quantity with respect to its demand aspects (William and Steven, 2014). The
economic theory also developed the economic theories as demand and supply. The demand
and supply concept is also related to the economical theorem for the Shell business as this
business is dealing in the oil.
Figure: Demand and Supply
(Source: Abramovich, Avgerinos and Yannelis, 2012)
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Economics for Business 11
The demand and supply factors are interconnected with each other as the price of oil increases
for the Shell Company than the demand of oil may decrease due to the higher cost of
consumption. On the other hand, if the demand of oil in the global market increases than the
price will increase ultimately. The economic theory developed the demand aspect as a product
to which the consumers wants to buy. On the other hand, the economic theory also explores
that the demand is the formation of two factors as ability and taste to buy. On the other hand,
supply is referred as the quantity of good which is offered at different level of price. The classical
economical theory also explained that the increasing supply is a complicated price because the
increases production leads to the increased cost which will require add to price of a commodity
in order to justify the production. So, the demand and price of the oil price for the Shell business
will changes with respect to the market tendencies, if the demand is increased than then slope
of price will increase in order to satisfy the demanded quantity.
Elasticity of demand and supply
The elasticity is referred as the degree of sensitivity in the demand and supply with respect to
changes in the price. The elasticity is segmented into three different responses as elastic,
inelastic and unitary elastic in which the elastic demand or supply is concerned with the higher
proportional changes in demanded quantity or delivered supply (Rao, 2016). If, the price of oil
changes from $100 to $110 than the supply is affected in 1000 units that is elastic demand.
The demand and supply factors are interconnected with each other as the price of oil increases
for the Shell Company than the demand of oil may decrease due to the higher cost of
consumption. On the other hand, if the demand of oil in the global market increases than the
price will increase ultimately. The economic theory developed the demand aspect as a product
to which the consumers wants to buy. On the other hand, the economic theory also explores
that the demand is the formation of two factors as ability and taste to buy. On the other hand,
supply is referred as the quantity of good which is offered at different level of price. The classical
economical theory also explained that the increasing supply is a complicated price because the
increases production leads to the increased cost which will require add to price of a commodity
in order to justify the production. So, the demand and price of the oil price for the Shell business
will changes with respect to the market tendencies, if the demand is increased than then slope
of price will increase in order to satisfy the demanded quantity.
Elasticity of demand and supply
The elasticity is referred as the degree of sensitivity in the demand and supply with respect to
changes in the price. The elasticity is segmented into three different responses as elastic,
inelastic and unitary elastic in which the elastic demand or supply is concerned with the higher
proportional changes in demanded quantity or delivered supply (Rao, 2016). If, the price of oil
changes from $100 to $110 than the supply is affected in 1000 units that is elastic demand.

Economics for Business 12
(Source: Geunes, 2012)
On the other hand, the inelastic demand of supply curve will be change in little percentage
change in the supply and demand. If the oil price of oil changes $100 to $110 and the demand
or supply change with only 2001 units that’s called inelastic. The unitary elastic demand or
supply is concerned with the changes percentage in equal manner in relation to demand or
supply quantity. In context to the Shell, the oil price changes from $100 to $110 than there is
similar change as 100 units, this position will be unitary elasticity.
Market structure
The economic theory also determined the structure of market in which the business is
functioning as the Shell oil company is operating as the oligopoly market structure. On the other
hand, the oil market for Shell Company is determined as the market where the large numbers of
buyers and few numbers of buyers which are tend to deliver the control of market by the
producers. In the oligopoly market, the buyers do not have alternatives (Davis, 2016). In this
market, the producers inflate the price in order to attract the more number of buyers.
(Source: Geunes, 2012)
On the other hand, the inelastic demand of supply curve will be change in little percentage
change in the supply and demand. If the oil price of oil changes $100 to $110 and the demand
or supply change with only 2001 units that’s called inelastic. The unitary elastic demand or
supply is concerned with the changes percentage in equal manner in relation to demand or
supply quantity. In context to the Shell, the oil price changes from $100 to $110 than there is
similar change as 100 units, this position will be unitary elasticity.
Market structure
The economic theory also determined the structure of market in which the business is
functioning as the Shell oil company is operating as the oligopoly market structure. On the other
hand, the oil market for Shell Company is determined as the market where the large numbers of
buyers and few numbers of buyers which are tend to deliver the control of market by the
producers. In the oligopoly market, the buyers do not have alternatives (Davis, 2016). In this
market, the producers inflate the price in order to attract the more number of buyers.
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