Strategic Management Report: Analyzing Royal Dutch Shell's Business

This report provides a strategic management analysis of Royal Dutch Shell, examining its strategic direction over the past five years, including key developments and objectives. The report delves into a detailed industry analysis using PESTLE and Porter's Five Forces models to assess the external and internal environments, respectively, of the oil and gas sector. It explores the company's strategic capabilities, potential strategic drift, and the alignment of its mission and vision with market demands. The report also presents a business canvas model to illustrate the company's core logic and proposes strategies for its core services. Finally, it offers recommendations based on the analysis, providing a comprehensive overview of Royal Dutch Shell's strategic position and future prospects.

Strategic
Management

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Explaining the strategic direction of the company in past five years and their developments. . 3
TASK 2............................................................................................................................................5
Detailed analysis of the industry which company operating .................................................5
TASK 3............................................................................................................................................9
Strategic drift of Royal Dutch Shell.......................................................................................9
Explaining the reason and mission or vision of the company weather they aligned to the
demand of the market or not.................................................................................................10
The company strategic capabilities......................................................................................10
Business canvas model to show the company rational core logic........................................11
TASK 4..........................................................................................................................................11
Explaining the strategies which company could adopt for its core services. ......................11
TASK 5..........................................................................................................................................12
Recommendations................................................................................................................12
CONCLUSION..............................................................................................................................13

INTRODUCTION
Strategic management is the management of an organisation resources which helps to
adopt the effective working process. It is the most important and necessary part of the
organisation. Strategic management is the effective process in order to settings of objectives ,
analysing focusing on the competitors' environment. Strategic management is very helpful to
make the company strategic position among other competitors. Present report based on strategic
management, for presenting strategic management report Royal Dutch Shell company will taken
into action. Royal Dutch Shell is the oil gas the largest multinational company which
headquarter in the Netherlands which is incorporated in United Kingdom. Royal Dutch Shell is
the sixth largest company in the world. Further, in this report will discuss about the strategic
direction of the company through which company developed more thinking within the past 5
years. On the other hand it will also look upon the external or internal environment of the which
affects the company business plans or strategic position. It will explain the major driver forces
which impact on the opportunity growth.
TASK 1
Explaining the strategic direction of the company in past five years and their developments.
Royal Dutch Shell is the largest multinational oil gas company in UK, company aiming
and focusing on reinforce the position and become global leader in the oil and gas industry or
meet the global demand of the customers (Shell Delivering a competitive and innovative
strategy, 2013). The major projects of the company on which they established their goals and
objectives are technology and expertise in action. It is the major technique and strategic planning
to achieve the effective global response. According to the CEO of the company watch peter
voser, company is the most competitive and unique based. They delivering unique style of
services which other's can't easily repeat. Strategic direction of the Royal Dutch Shell is
innovative technology and innovative (Alizadeh and et.al., 2016). On the other side, market is
always challenging and dynamic but in terms of long term market growth in global energy will
remain unchanged. In according to meet the needs of demand growth with clean and affordable
energy is a formidable challenge for the industry. It is the major opportunity for the Royal Dutch
Shell according to the Voser. It is the competitive and challenging global leader. For 2012 there
strategic direction was to expand its pipeline of potentials energy projects. For that their strategic

direction was to increase the options for future, it gives us different opportunities to expand its
business into higher level (Shell Delivering a competitive and innovative strategy, 2013).
Strategic direction for 2010
 In 2010 Royal Dutch shell has outlined the progress of three year strategic plans. In order
to implement the plans company has to assure new attracting investors or attracting more
demand for energy (Barney, 2014).
 Company believes in the long term growth of energy will increase in future in OECD
countries. The demand will rapidly increase the long-term demand of hydrocarbons
despite the push for alternatives forms of energy.
 Te main strategic direction of this year helps to increasing the demand of the energy in
future times. It makes environment positive and enthusiastic.
Strategic direction for 2011
 In this 2011 year shell was in the midst of an ambitious phase of new growth. In which
their strategic direction towards growth. The focus of the company to attract more
demand or growth for all forms of energy.
 The main strategic direction of the company was to cost reduction and operating
efficiency growth among the company environment. It was the effective process for the
future development.
 In 2011 shell continues sell non-core positions to enhance capital efficiency.
 Another strategic direction of 2011 was to new wave of production growth. In according
to the statistics shell has delivered an organic reserve replacement ratio of 133% for
2010.
 Maturing next generation of project operations in north America.
Strategic direction for 2012
 We continued to focus on safe and reliable operations in all the activity (Bettis and et.al.,
2016).
 New start ups in 2010-2012 added $6 billion of cash flow and 600 thousand barrels of oil
equivalent.
Strategic directions for 2013
 As per the voser they more constantly upstream businesses within the ongoing selective
investments.

 In the 2012 company had 12.4 billion of resources on stream.
 In 2013 they had 30 new projects under construction which is the strategic direction of
the company which is necessary to adopt in order to meet the needs of customers and
accomplishing the organisation objectives. Along with that, the main strategic direction
of the company in 2013 was to make more investment in order to grab the more market
opportunity (Bettis and et.al., 2015).
Strategic direction for 2014
In 2014, the main focus of the company is to expand the future business expansion with
the help of new development or new demanding. Royal Dutch is the leading oil & gas company.
For 2014, its main strategic direction is to attract the market focus by providing more quality and
high profile energy products. On the other hand they also planning for prolonged downturn in
order to give tough competition in low oil prices as per the commitments of the company they
reduce their operating cost and capital spending to delivering high competition performance.
With the help of innovation strategic direction of 2014, they make tough market situation for
other competitors.
TASK 2
Detailed analysis of the industry which company operating
 PESTLE model to review the external environment of the company
PESTLE is the model through which company can easily measure the external
competitive environment and the market factors which affects overall industry or an organisation
(Bryce, 2017). It makes environment competitive and challenging. Royal Dutch Shell deals with
oil and gas industry. In order to adopt planning for strategic management, they need to research
macro factors which affects company planing decision making process. Macro factors includes
political, economical, legal, social, technological, legal environmental etc. besides, oil and gas
industry play a very significant for economic growth. It helps to reduce the negative impact for
the company. In order to grab the business opportunity company needs to measure the external
factors in order to grab the market opportunity.
Political (P): oil and gas industry companies needs to pay the taxes and other charges to
the government. Company needs to follow the all legal implications and taxation policy, labour
laws, trade restrictions in order to stable the political stability (Ethiraj, Gambardella and Helfat,
2016). Along with that, company effect all those changes. Good performance company take

advantages from the government. These industries are highly contributor in economic growth. In
order to that government provides some relaxation in order to promote economic growth. Also,
Company also needs to adopt all legal policies in order to safe the working environment. Along
with that, company government interference affect the company decision and strategic
management.
Economical (E): Searching petroleum has give heavy impact on the economies of the
country. It gives the negative impact on the business activities due to changes in market up and
downs. In terms of OPEC countries they gaining high profit from sell of oil and gases to other
countries because of high availability (Ginter, Duncan and Swayne, 2018). Economic effects
influence the supply and demand of the oil and gas. Along with that due to substitute or
exchange rate company face losses or profits.
Social factors (S): Social factor is the another significant factor which influence by
demographic, income, migration, religion, culture factors etc. it gives the negative impact on the
organisation strategic management and directions plans. Oil or petroleum industry gives adverse
effects on the people. Some thinks that it is the reason of high pollution which gives harmful
effect on environment. So these kinds of factor impact on the organisation growth factors.
Technological (T): This factor gives the positive and favourable impact on petroleum or
oil industry. This factor give opportunity to the company to adopt modern techniques and
development in operation activities. This helps to make better environment with less pollution
effects. These technological innovation techniques raise the scope of oil and gas industries. With
the help of this technology substitute industry introduce natural gas, nuclear gas, coal industry.
Due to which it gives negative impact on the oil and gas industry.
Environmental (E): this is the geographic position of the oil reserves and refinery has
great influence on the activity. Environment factor gives the high impact on the oil and gas
industry or an organisation (Hill, Jones and Schilling, 2014). This impact is direct connected
with the growth of the industry. Investors before investing on the companies they measure the
macro factors in order stable the profit conditions. This industry facing heavy risk factor in order
to stable the growth. It is the very necessary to use oil and gas, so in order to mitigate the risk
factors company needs to adopt strict regulations in order to safe the working environment.
Legal (L): legal factors introduce legal regulations, policies and code of conduct. In
order to take the contribution of all countries (Junior and et.al., 2017.). They exploit and

influence commercialization of oil products. This industry or organization should facing the
negative effects due to socila protection, legal concerns, international trade, consumer protection.
In order to make safe and secure environment company needs to adopt all effective policies.
 Company competitive advantage among its direct competitors.
It is the industry internal analysis in which company faces the opportunities, growth
threat growth and weaknesses (Porter's five forces for oil&gas, 2017). Before, making any
strategic direction company should measure the internal environment in order to generate the
future opportunity growth. In order to adopt the effective management skills company should
measure the internal analysis. Company adopt porter five forces model in order to make the
effective planning tool.
Competitive rivalry
The competitive of oil and gas industry is significantly intensive. There are many oil and
gas companies which creates competition level among other members (Lasserre, 2017). Along
with that, rivalry firms or organisation may create the heavy compensation in the overall
industry. Royal Dutch Shell company needs to measure and identify the competitors strategies in
order to make the effective work process. Royal Dutch Shell competitors are Exxon Mobil with
356.5 billion market share, Eni with 63 billion dollars market share, BP 118.3 billion market
share. These are the rivalry competitors which is the external threat for the company. Moreover,
in order to overcome from the effects company needs to adopt effective innovative project which
Illustration 1: Porter's five forces
Source: Porter's five forces for oil&gas, 2017

make company different. Along with that, In according to the 2016 revenue results company
control more than 90% of market of oil and gas reserves some of are Saudi Armco, Saudi Arabia,
Rosneft, Gazprom, Petroleaos de Venezuela. These are the company which affects organisation.
Threat of New Entrants
This is the another threat for the company which impact on the internal environment.
Company make sure that internal environment may affecting to the company atmosphere
(Morschett, Schramm-Klein and Zentes, 2015). On the other hand, in oil and gas industry entry
of new entrants are very less and minimum (Porter's five forces for oil&gas, 2017). Due to some
following reason may affects the new entrants companies in oil gas environment. Such as this
industry required huge capital investment on the business activities, existing heavy competition
in the market. Along with that, R&D department also require huge capital in order to make
innovative development. New legislations and national, international laws restrictions also affect
the new entrants of the organisation. Moreover, the main objective of the organisation is to set
the effective market position in among competitors. This helps to restrict the entries of new
businesses.
Threats of substitutes in oil and gas industry
This is the another internal factor which impact on the overall company. Due to product
substitute company having possibility to face competition in the market (Porter's five forces for
oil&gas, 2017). In heavy range. Some substitute products of oil and gas products is Nuclear
energy, coal, hydrogen, biofuels and other renewable sources such as solar and wind energy.
This substitute products or energy sources would replace the position of oil and gases from the
market. Along with that, due to high prices of products people may adopt the use of natural gases
instead of artificial gases or oils. In order to reduce the impact of substitute goods, Royal Dutch
Shell is necessary to invest big amount on research and development and producing innovative
ideas and scope for the company (Moutinho and Vargas-Sanchez, eds., 2018).
Bargaining power of buyers
This is the force of internal environment which impact on the business activities.
The main customers of Royal Dutch Shell is refineries, national oil companies, traders,
international oil and gas companies, distribution companies, countries such as Japan, USA,
China, etc. due to minimum supply demand is high (Porter's five forces for oil&gas, 2017.). This
impact positively in terms of bargaining power. Buyers buy the services at any prices. It means

the global oil benchmarks has right to decide the prices of products rather than buyers. It is the
opportunity for the company to adopt the effective environment in the company.
Bargaining power of suppliers
This is the last internal force which impact on the company atmosphere. Some big
suppliers have dominating the market and set the prices on its own level. This gives the negative
impact on the company atmosphere it gives the effecting work target. Chevron, shell, Exxon.
These some company which affects the price of oil and gases (Moutinho and Vargas-Sanchez,
eds., 2018).
 Oil and gas industry scenario facing the company existing domains market
Oil & gas industries has giving enormous growth to the development of economy, it is
the growth of the economy. Moreover, the main objective of the industry is to collect the position
of the organisation to make effective work of the organisation. Oil and gas industry plays a
transformational and mobility role in the economy. Royal Dutch Shell is in the oil and gas
industry where they dealing as a market leader. It is the sixth largest company in the world. It is
the makes challenging and competitive environment in the industry.
TASK 3
Strategic drift of Royal Dutch Shell
Royal Dutch Shell is the oil and gas company which is the most leading company.
Company also needs to adopt effective working environment in order to get to maintain the
strategic drift. Company facing the strategic drift due to changes in external environment such as
political, legal and technological changes (Moutinho and Vargas-Sanchez, eds., 2018). Company
facing the challenging situation when technological factors has been increasing. Along with that,
challenging situations may give force to the company environment. In order to overcome from
the strategic drift company needs to adopt effective strategic management planning and invest on
R&D department in order to fix the challenging situations. It must be proper planning in which
company facing the issues and adopt the effective way of working. Royal Dutch Shell aim is to
sell the electricity direct to industrial customers in a very effective manner where they can adopt
creative way. The main strategic drift is company can adopt all changes to making new services
or products. It gives the new opportunity and growth for the company enhancement. Another
strategic drift facing by the company is there is transition of lower carbon world. Company

facing the challenges' situation when company facing effects of substitute products of gas and oil
(Rothaermel, 2015).
Explaining the reason and mission or vision of the company weather they aligned to the demand
of the market or not.
Company main mission and vision is to increase the opportunity in energy sector and
grab innovative development to meet the needs of the customers. Company supply oil
manufacturing to the potential customers and satisfy the needs and wants of the customers. From
the brand equity company approaching the high global market nationally and internationally.
Mission: the main mission of the company is to provide constantly excellence services of
oil and gas. In order to get the best services to the customers. On the other hand, employing
having the another having the innovative and result orientation approach in order to give out the
best productive approach.
Vision: apart from the mission of the company its vision is to provide the better results to
shareholders, realizer the actual needs and wants of the customers. Make strategic management
planning in order to meet the requirement of the clients. Sustain the excellent opportunity for the
company (Slack, 2015).
These missions and vision perfectly aligned the business objectives and target plans. In
order to provides the effective environment. Company pays the effective role in order to meet the
needs of customers. Company focus on the main target planning and provides value to the
customers. They provide product portfolio to supply the expertise in gas, environmental products
along with that, company adding the value with product and services by delivering bespoke
solutions to energy retail companies, energy intensive evolving needs, powers producers. They
remove inconvenience of the buyers by give them the best possible solution. Company advertise
their product and services at global market. To become global leader and grab the best possible
customer satisfaction approach. It is the best possible approach to accomplish the customer needs
and wants. Apart from that, they also provide best experience to their customers.
The company strategic capabilities.
Company strategic capabilities are the effective and challenging. The company strategic
capabilities is to give the excellent effective product and services to the customers as per their
needs and wants. Along with that, strength of the company is they having 80 years of experience

in the chemical industry and brand loyalty in the international market. In order to approach the
market in effective manner (Wheelen and et.al., 2017). Company strategic strength are their
quality of products and services. Along with that, Royal Dutch Shell is the first company who
offers range of natural gas based fluids and solvents to the chemical industry. It is the among the
best companies who plays effective role in the market. Company main strength or capabilities
are strong research and development approach in order to adopt the new technology power by
reducing the carbon footprint and make large fuel under fewer efforts. Apart from that, company
having strong exploration capability to invest on the new development in order to expand the
business opportunities.
Business canvas model to show the company rational core logic.
Business canvas model is the visual presenting strategic management documents which
developing new or documenting. This document explains the company product and services,
infrastructure, customers and finances are mentioned. Business canvas model is the effective
process of working which helps to provide the company brief and product and services of the
company (Slack, 2015). With the help of business canvas model company attract product client
towards the company development. It is the most leading business model which briefly describe
company features to the customer. It helps to attract customers and increasing the company
value. The best business canvas model of the industry attract the best possible attraction of the
customers. It also helps to attract the best possible future growth of the company. The core
product and services of the company is fuel technical services, fuel advisor services, fuel expert
and gas. These are the services or products Royal Dutch Shell has provides to their clients. Its
values is to attract customers by giving the best possible outcomes and growth. It is upbringing
process which provides big opportunities to the company atmosphere (Junior and et.al., 2017.).
TASK 4
Explaining the strategies which company could adopt for its core services.
Strategic management is always plays a very important role in order to maintain the
sustainable environment in the market. In order to protect the business environment from the
uncertainties company needs to protect business product and services from uncertain activities.
Such as they need to adopt some strategies in order to protect the core product and services.

Adopt the best possible technology: technology helps to reduce the operating cost and
processing cost of the company. Technology helps to stable the product quality and growth.
Royal Dutch Shell should adopt the best possible techniques in order to grab the market
opportunities. This also helps to maintain the quality of product and services of gas and oil.
Company must need of the latest technologies which assist in reducing the operating cost and
stable core product (Hill, Jones and Schilling, 2014).
Adopt the best quality of resources: this is the another strategy in order to maintain the
effective management tools to protect the core product of the company. Oil and gas are the
products which is necessary to be effective and according to the control of services. Along with
that, Royal Dutch Shell needs high quality of resources to make effective product outcomes and
customer satisfaction.
Adopt high investment on production: Royal Dutch needs to invest heavy on
production process in order to get the best possible outcomes. Along with that, it is very
necessary for the company to adopt high profile production process in according to get best
output results.
Planning for expansion: Another strategy to protect the product and services of the
company is to make planning of further investment on new services in order to make the brand
popularity. Along with that, company make sure that, all new expansion plan helps to promote
core product and services (Junior and et.al., 2017).
Adopt the best possible distribution channel: due to having lack of proper distribution
of oil and gas buyers give less interest on those companies. In order to enhance the business sell
or core product company should adopt the best possible distribution channel in order to maintain
effective results.
TASK 5
Recommendations
As per the analysing the all section and study it can be concluded that company is dealing
on the very high level which provides their services at global level. Moreover, as per the
recommendation company needs to measure the position of market in order to ensure the new
entries or new changes in the external environment. Company needs to identify the competitors'
strength and weaknesses on which they make new plans and business strategies. On the behalf
external competitive market (Junior and et.al., 2017). Company needs to make new strategic