Analyzing the Global Business Environment: A Shell Case Study

This report provides a comprehensive analysis of the global business environment, examining the key factors driving globalization, such as cost, market, environment, technology, and competition. It uses Shell as a case study to illustrate the complexities and strategic challenges faced by organizations operating in this environment. The report delves into the impacts of globalization on organizational governance and leadership, evaluates market influences, and explores effective decision-making processes in a global context. It also identifies the different ways to enter the global market and highlights key barriers. Furthermore, it critiques strategies for adaptation, including organizational structure adjustments and decision-making processes. The report covers strategic challenges related to risk, diversification, communication, technology, energy reforms, and foreign regulations, offering a detailed perspective on navigating the global business landscape.

GLOBAL BUSINESS
ENVIRONMENT

Table of Contents
GLOBAL BUSINESS ENVIRONMENT..........................................................................1
INTRODUCTION.......................................................................................................................3
LO1..............................................................................................................................................3
P1) Analyze key factors which drive globalization............................................................3
M1) Critically analyze impact that key factors upon the global business environment.....5
LO2..............................................................................................................................................5
P2) Explain complexity of strategic challenges faced by organisation in global environment
............................................................................................................................................5
M2) Critically analyse strategic challenges in context of risk and diversification strategies
............................................................................................................................................7
D1) Critically evaluate global business environment including opportunities and challenges
faced by organisation..........................................................................................................8
LO3..............................................................................................................................................8
P3) Evaluate influences of globalization on organisation governance and leadership......8
M3) Critically evaluate global market influences in application to theories and appropriate
models...............................................................................................................................10
P5 Evaluate the different ways decision making can work effectively in a global context.12
P 6. Five ways to enter Global Market.............................................................................14
M 4 Key barriers...............................................................................................................16
D 2 Critique strategies that can be adopted by organisations operating in a global business
environment and ways in which they should adapt their organisational structure and
decision-making processes...............................................................................................17
CONCLUSION..........................................................................................................................18
REFERENCES..........................................................................................................................19

INTRODUCTION
Globalization is process in which companies and government of different countries are
trading with each other. It can be said as integration of market in global economies which will
increase connections in different countries. Business are affected by global environment which
is due to the local and international interactions. Global business environment is environment
of different sovereign countries with exogenous factors to home environment or organisation.
It will influence decision-making on the resources use and capabilities. Shell company is the
largest oil company in world. It was founded in 1912 by Gretchen Watkins. It is regarded as
largest oil company and natural gas marketers in America. Organization has expertise in
exploration, production, refining a marketing of oil and natural gas as well. Company is
operating in 70 countries and around 82000 employees are working in company. It is
operating 21 refineries and around 3.7 barrels of oil equivalent. Report is discussing global
business environment key factors and drivers which are affecting company. Complexity of
strategic challenges which have faced by organisation while operating in global environment
is also discussed as well. Influences of globalization on organisation governance will have
impact on working of company. Influences of globalization on organisation decision-making
process of employees is discussed as well. Routes and key barriers which are affecting
company is discussed along with that it will provide knowledge regarding global business
environment (Kasemsap, 2018).
LO1
P1) Analyze key factors which drive globalization
Globalization is free movement of good and services in all countries of world. In
globalization countries liberalizes their protocols for import and by welcoming foreign direct
investment in countries. Globalization have its positive and negative effects which will have
impact on company. Shell international energy is planning to work and strengthen the position
of company in global Market which will increase value of company. Due to globalization
competition is increasing because of new companies are entering in market along with local
companies are also trading in that market which will increase competition. Through entering
global market company will incur less cost on products and sell it in market at cheaper rate.
These will help company to increase market share and increase sales. Through globalization
mergers and joint ventures are increasing because foreign companies are investing in global

market which will develop the economics of developing countries. Drivers which are
increasing globalization are provided below(Lechner. and Boli, 2020).
Cost
Cost is main driver which is increasing globalization because single market of country
is limited. Along with entering market organisation will require promotion and advertising of
companies in other market. Foreign companies are investing in other economies through
which they will gain more profits. Companies are investing in other economies by way of
controlling cost which will include overheads, research and development as well. Companies
are using alternatives strategies by way of product differentiation which will increase sales.
Foreign direct investment is helping develop economies because they are able to trade with
foreign companies by way of mergers and joint ventures.
Market
In local country market is different and limited so, by way of globalization market in
large and customers will have variety of products and choices. Customers are changing their
preferences and attracted towards any type of new technology which will benefit them. There
are various factors which will affect customers decision is income, lifestyle and aspirations. In
globalization foreign companies can provide their products to customers in any corner of
world. In other way local companies can expand their business by way of globalization
(Pieterse 2019).
Environment
Environment is affected by globalization because it is improving lifestyle of people
and bringing innovation in countries. People are buying products of foreign brand which is
changing the lifestyle of customers. Companies are preparing products as per need of
consumer because consumers have different types of choices and cultures which will increase
sales of companies. Shell is engaged in oil refineries which can harm environment. So,
company is taking effective measures for protecting environment. It will emphasize on health
and safety of people because oil refineries are affecting the environment on large scale.
Technology
Technology is beneficial for company because these will have impact on sales of
organisation. Due to increase in globalization technology is increasing along with competition
is also increasing. Company is trying to fight competition by way of using the latest

technology in their products. So, company has started using new technologies in oil refineries
which will not harm environment and provide original products to customers (Pikhart, 2017).
Competition
Competition is affecting global environment because many companies are entering
market by way of globalization which will increase competition. Competition is affecting
globalization process because company is introducing new products in market and also
upgrading products as well.
M1) Critically analyze impact that key factors upon the global business environment
There are visors factors which will have impact on the sales of the company. There are
global factors which will include legal, political, social, technological, and economic factors.
Company is planning to enter the global market and it will have impact because of political
environment of country. Shell is using the latest technology but many countries will not have
the knowledge of technology which is used by the company in other countries. So, company
have to use the technology and look after that technology will not harm people and
environment of country. Social factors is also the ma jot factors which will have Impact on the
company sales. Country has different cultures and values and beliefs which will have impact
on the organization working in global environment (Shageeva, and et.al., 2017). Companies
are using new technologies for increasing their business and fighting competition in market.
Technology has been made by company or tackling with the problems of environment like low
carbon energy along with many more strategies. Local will be able to sell their products all
over the world and it will increase sales of company as well as productivity.
LO2
P2) Explain complexity of strategic challenges faced by organisation in global environment
There are various strategic challenges which have faced by company in global
environment.
Communication and technology
Shell is facing one of the biggest problems in communicating with employees
regarding operation. Company have started centralized communication system which will hep
company to work in effective way. Company has used the latest technology for
communicating with employees but employees will face problems relating to the protecting
environment. Organization is oil refinery and it has impact on marine life and also

environment as well. Organization is taking effective measures for protecting environment and
so it will have impact on company brand image (Tallman Luo and Buckley 2018). So,
company is using new technologies for protecting environment but it can protect environment
at very low cost.
Rising demand and fewer emissions
shell have entered Global market and demand for oil is been increasing but there are
fewer emission which will not fulfill demand. Energy demand is rising effectively which is
having impact on sales of company. In order to fulfill demand of customers company is
building energy systems which will provide them energy. Oil, and petroleum products are
extracted by company but these products are decreasing at large level. Excessive use of
products is having negative impact on sales of products. These all will have impact on
environment and company as well. Fewer emissions is one of the biggest challenge faced by
company while trading (Steger 2017).
Energy reforms
Company is gaining huge profits because prices of oil is increasing constantly which
will have impact on company. Customers cannot stop buying products but these customers can
eliminate the use of the products. The company is building energy reforms for providing more
and ore energy to customers which will have impact on company. Increase in price of oils will
increase profit margin for company but price need to be decreased because it is having impact
on lifestyle of people. So, company is making more and more energy station which will
produce more products and it will decrease the price of products. Organization is also looking
after reducing emission targets which will have positive impact on company image. Cost of oil
is not in control of company and these will have impact on company image (Hamilton and
Webster 2018).
Foreign laws and regulations
Foreign laws and regulations will have impact on company sales because company will
face problems relating to the laws. Different countries will have different rules and legislation
which will have impact on the sales of company. UK will have different rules and other global
countries will have different rules regarding oil refineries. Company have to follow these rules
and regulation which will help them to work in effective way. Company have to follow rules
regarding environment protection and all laws which are applicable on company. Organization

have to follow rules regarding employment and labor laws along with it will have to make
employees aware about these rules. Every country has different laws and act along with they
will also have different penalties for different crimes committed (Eriksen, 2018).
There are various types of impacts which are caused due to globalization as diversity in
culture had the influence on companies which operates as MNC as they face difficulties in
promoting the brand due to cultural differences. Other than this there are other things such as
impact on the rights of culture and intellectual property rights which has been affected.
M2) Critically analyse strategic challenges in context of risk and diversification strategies
Strategic challenges which will faced by company in global business environment. The
challenges will include risk relating to the energy reforms. Energy is in demand in market so,
company have to prepare strategies which will help them in overcoming challenges in
effective way. Organization is facing problems relating to the communication and technology
as well. Technology is used by the company but the company have to use the technology in
protecting the environment. Company is dealing with the problems of protecting the
environment and company will have to use environment protection models (Doh Luthans. and
Slocum 2016).
Supply chain
Company have around 82000 employees which are working in organisation. Mangers
and employees are facing problems in communicating with suppliers. It will increase the
chances of unethical and illegal work done in company. It is big risk for company which with
help them to work in effective way. In supply chain employees need to knowledge about
company and how its works. In some case employees are exploited, and they are not provided
proper facilities in working areas. These unethical behavior can have negative effect on
company performance and company brand value as well. Unethical behavior of supplier will
lend company in big trouble. There are certain advantages and disadvantage of supply chain
management which will affect the company on the large scale. It will include the customers of
diverse nature which can have negative effect on the company sales and productivity.
There are many types of risk for businesses which increases after globalization such as
frequent or unstable swings in the economy as the business relies on it.
Fluctuations in currency can affect the revenue of the company.
Assumptions by the companies on the basis of cultural differences.

D1) Critically evaluate global business environment including opportunities and challenges
faced by organisation
Company have opportunities of expanding the business in various countries. It will
increase business and sales of company at large scale. Shell will face problems relating to the
culture change and change in laws of other countries. Countries will have problems relating to
the laws because it is oil refinery and it is dealing with the environment protection laws.
Organization have to look after factors that work of company will not pollute the environment
of company. Due to globalization talented employees are hired by company which are
working in other countries. These employees are the face of company in that country. Good
leaders are one which are solving conflicts among employees and motivating employees in
effective way. Due to globalization company is not able to enter the market in an effective
way.
Advantages of globalization
It helps to increase the labour productivity and reduce the elements which cause inefficiency
in the system of production.
Disadvantages of globalization
Increase in the level of inequality because of instability on political as well as social factors.
Opportunities
It helps manufacturers to get raw materials from suppliers at reduced rate.
Challenges
It affects on the performance of professionals and managers
LO3
P3) Evaluate influences of globalization on organisation governance and leadership
Influence of globalization on organisational governance and leadership
Globalization has major impact on organizational governance and leadership. Leaders
are one which are managing the work and employees in company (Damarwulan and Farida
2018). Leaders will spread knowledge among employees which are working in an organisation
regarding cultural differences and many more. There are large numbers of employees working
in shell and every employee is firm different culture and different areas or country.
Leaders have started looking after employees and solving the conflicts among
employees. These have increased organisational governance and many foreign companies are

investing in these companies which are providing large number of funds to company. Foreign
direct investment is having major impact on company because the com any is not able to enter
the market without funds and these funds will be collected by foreign market. Corporate
financier are investing in com any because they want to earn more interest on by investing on
these companies. Employees nee motivation and in case of company is entering global market
the employees are motivated, and they will give their best in their performance (Chasdi, 2017).
Influence of globalization on sustainability
Globalization has impacted overall sustainable development of organizations. Globalization
has helped organizations to access resources, goods and capital in a much easier manner. It has
made easier for organizations to sustain within the market because of easily availability of
resources, make wider use of market, strengthen their decision making process, enhanced their
access to latest and advance technology and managed to like to global economy.
Influence of globalization on structure
Organization structure will include organisational departments, functions and how
organization is accomplish goals. Organization will not develop its own structure by way of
organizing the work in effective way. Company structure is deciding the performance of
company in market. So the company will use these models for identifying the structure and
working of company in effective way.
McKinley model
The model has 7 s which are divided into soft skills and hard skills. Hard skill are
strategy, structure, systems while in soft skills will include skills, staff, style, shared values.
Strategy will include strategy of organization plan for building and maintaining competitive
advantage. Structure will focus on the structure of company which is organized. Systems will
include daily activities and procedures of staff used by employees while doing the job. Shared
values will include core values of company. These can be identified by employees by way of
general work ethics which need to be followed by employees. Style will include style of
leadership which is used by leader in managing employees of organization. Staff of company
will include general employees of company and their general skills and abilities which will
affect company in the future (Bedianashvili 2016). All of these soft and hard skills will help
the organizations to bring improvement within the overall structure of the organization and
accordingly it will also influence the type of leadership style that should be adopted by the

leaders as changes in restructuring, new processes, an organizational merger, new systems can
leverage changes within leaders.
Influence of globalization on culture and functions
globalization has its impact on company culture and functions. All employees of
company are working which will help company to survive in globalization. Organization is
under going major type of changes which will have impact on employee performance.
Organization culture will change behavior of employees and values of organization. Due to
these the employees will not be able to work in effective way. Employees will face problems
because of company polices are changing and conflicts will rise between employees.
Unethical behavior of employees will have negative impact on company performance.
The organization will imply culture model for overcoming these problems in
efficiently. In the Hofstede culture model there are five dimension which will help company to
mange culture and functions of employees. In power distance index it will state about extent to
which power will be given by the members of organizations and how much it has distributed
in organizations. Individualism and collectivism will state about degree to which people in
society are integrated. In uncertainty avoidance index it will state about accepting different
types of thoughts which will be used by employees in company. In masculinity vs femininity it
will state about gender discrimination which must not be done between employee which are
working in company. Indulgence vs restraint it will state abut dimension which will be
affecting employee performance (Beck 2018).
M3) Critically evaluate global market influences in application to theories and appropriate
models
Company will focus on the global market because company is planning to enter the
global market. So, organization is using hofstede models for improving the culture of
organization. Company can also implement McKinley structure models for improving the
structure of organization. Shell is not performing well in market which and also planning to
enter the global market which will change the culture and structure of company. So, company
can use these models and improve the performance of company and productivity as well. It
will increase sales of company and also company will be able to build brand image in market.
P 4 Influences of ethical and sustainable globalisation on organisational functions.

Sustainability have affected the organisational functions of Shell to a great extent
and thus have helped them to achieve their organisational goals.
Ethical code to guide sustainable business practices-
In order to increase their level of profit company cuts their cost and take the help of
those methods which leads to those practices which are not ethical and not sustainable. For
instance exploiting the labour, increasing the level of pollution and manipulate the local
government (Kozubikova and et.al., 2019).
Voluntary corporate initiatives-
Shell is loosing the trust of public which is influencing the shift in profit in a negative
manner. This industry deals with the factor of transparency which results in negative image
from public and lead on to maintain the level of difficulty between the public and the
company. This step will help the company to take an initiative which is more towards the side
of sustainable level and will lead the company to a right path. There are many factors which
breaks the trust between the employees of Shell and their consumers such as corruption or
violation of laws (Barr, and et.al., 2018). In this way, sustainability has helped Shell to
generate a great trust among the stakeholders and have also helped to develop the great level
of cooperation.
Promotion of unsustainable corporation-
Promotion of unsustainable resources were promoted by the companies and now they
are blamed for it. Companies such as Shell serves in the industry of providing energy which
considers profit as their aim. They focus on increasing their sales on a global level and find a
way to reach to a wider area.
Accountability of unsustainable consumption-
Shell operates on a wide level and they are under the scrutiny of violating the rights of
human which influences the regulations and agreement made by government. Company is
under a lot of pressure to support the approach of sustainable development in ethical manner.
Reaching the people-
Demand for the information of sustainable development is on a high level. Shell
presents the information in such way which captures the attention, interest of people. Shell
must communicate to people in such a way by which they can make them aware how they are
affected (Deasy and et.al., 2016). Sustainability has helped Shell to reach the great number of

people and have also helped the organization to establish the great channels of
communication.
Good governance-
In order to reflect the values, ethics and prioritize the company they need to maintain
the governance on national as well as international levels. By this way Shell can improve their
operations and participate in making it more transparent for the public so that they can serve
their operations with justice and make it more efficient. Sustainability has enabled this
organization to establish a great corporate governance as well as code of good practices and
thus has transformed the entire operations of Shell.
P5 Evaluate the different ways decision making can work effectively in a global context.
Define what decision is making
Royal Dutch Shell in order to successfully establish their market share globally, they
have made decision that to power progress together with more and cleaner energy solutions.
Company is engaged in making use of resources effectively so that sustainability aspects can
be addressed. They are involved in increasing quality of their services so that their operational
performance rises. Company has made the decision that they will enhance the safety
requirements, security and performance of their assets. This decision will assist company in
growing and achieving their goals and objectives.
briefly state the importance of decision making
This decision which is been taken by Royal Dutch shell is very important as this will help
them in increasing their operational efficiency. Providing safe and secure environment to
workers globally can assist them in creating employee’s loyalty, it will also reduce employee
turnover in firm. Also, effective utilization of resources can assist them in reducing the waste.
In order to establish globally Shell has also implemented various waste management strategy
so that their operational performance can be raised. Decision making is extremely important
for organizations as it helps the organizations to gain competitive advantage and retain their
skilled and valued employees.
Methods of effective decision-making
Delphi method
This is one of the most important decision-making method which Royal Dutch shell
can use in order to make the effective decisions regarding their operations. In this method, the