Oil Companies – Royal Dutch Shell
I- Organizational Direction: Mission, Goals, Objectives
The objectives of Royal Dutch Shell are to achieve efficiency, responsibility and profitability in oil, gas and other related businesses and to take part in research activities and developments of new sources of energy to meet the world’s demand for energy. They believe oil and gas will be important to meet that demand for energy for years to come, and most of their investments are directed to oil and gas technology research; investing in ways to increase productivity. Their main objective is to deliver oil and gas products profitably, while maintaining a strong position in the world market for oil and gas, a very competitive environment in which a small number of players compete for the diminishing supply of these key commodities.
II. Relative Industry Position – Including financial analysis and firm-level strategy
Royal Dutch Shell is a global company involved in all the key aspects of the oil and gas industry and also to some degree involved with other energy related businesses, such as green energy. The company principal focus inside the oil industry is in three different segments: Upstream, Downstream and Corporate. Upstream are those activities that have to do with the search and recover of oil and natural gas, the transformation and transportation of those and other commodities, such as energy produce from wind mills. Downstream are those activities related to the manufacturing, distribution and marketing of energy products, and Corporate includes supportive roles within the organization, such as accounting, finance, human resources. Shell is a major player inside the oil industry; they are a close second to Exxon Mobil, the biggest private owned oil company in the world. Shell has proved reserves in the amount of 13.9 billion barrels of oil equivalent, and most of that oil is produced in the US, UK, Oman and Nigeria, which gives us a glimpse on how global the company is. The company invested a lot of resources in the Athabasca Oil Sand Project in Canada, and they are currently expanding their operations there, a place regarded as the new frontier in oil and gas, and that offers good prospects for companies that have the financial backing to invest in such expensive projects. Shell owns 42,000 gas stations globally, which makes it the largest retail-fuel network in the world, which helped the company to achieve revenues of $405,158 million for financial year ended December 2011, an increase of 15.2% over the fiscal year 2010. The operating profit of the company was $46,296 million during fiscal year 2011, an increase of 48.3% over fiscal year 2010. The net profit was $26,258 million in fiscal year 2011, an increase of 58.3% over fiscal year 2010.
III. Company Strengths and Weaknesses
As one of the oldest and most successful oil companies in the world, Shell has a extensive amount of investments in oil and gas exploration, which will help secure the company’s position as a global leader in that area for decades to come. By diversifying their energy portfolio into alternative forms of energy like solar, bio-fuels and hydrogen, Shell is protecting itself from changes in market dynamics by being less dependable in fossil fuel resources. Another benefit of this alternative energy strategy is that as “green” initiatives become of increasing concern for the general public, Shell can capitalize on that for marketing purposes. As the company is expanding their worldwide operation to include fuel cards, credit cards, full service convenient stores, and partnership programs like the one implemented in the Netherlands to assist local tomato farmers with CO2 supply, Shell is building a wide portfolio of products and services from which to launch a more risk-averse global strategy. Shell is a pioneer in forecasting activities, and the company is well known for their planning...
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