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Royal Dutch Shell

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by

Roman Victor

on 1 May 2014

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Transcript of Royal Dutch Shell

Differentiation Business Model
- Commitment to Technology and Innovation
- Requires benchmarking and controlled costs
Product Differentiation
- 'One the Road' Products and Services
Fuels
- Shell FuelSave Regular Unleaded,
Shell V-Power Diesel, and Nitrogen
Enriched Gasolines
- Solutions for Business
- Shell Motorsport
Structure: 1950s - 1994
- Matrix structure
Designed by McKinsey & Company management
Reporting structure
- Head of each operating companies reported
to 2 bosses
Business division/sector
Geographical region
Issues with the structure
- Slowed down decision-making
process
Still executed large-scale initiatives

New Shell CEO, Ben Van Beurden, announces corporate-level strategy adjustment
- 3 priorities:
Improved financial performance, including restructuring in some areas of the company
Enhancing capital efficiency, with hard choices on new projects, reduced growth investment, and more asset sales
Continued strong delivery of new projects, and integration of recent acquisitions
Shell Background
Shell
SWOT
Shell
- "To reinforce our position as a leader in
the oil and gas industry while helping
to meet global energy demand in a
responsible way"
BP
- "Setting clear priorities, actively
managing a quality portfolio, and
employing our distinctive capabilities"
Roman Adduru | Katy Andrews | Brandon Cory
Melissa Olson | Lauren Sroka

STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
Corporate-Level Strategies
Corporate-Level Strategies
Corporate-Level Strategies
Business-Level Strategies
Organizational Structure
Control Systems
Recommendations
Competitors
Strategies
Competencies
A global group of energy and petrochemical companies
Headquarters in The Hague, the Netherlands
A subsidiary of parent company - Royal Dutch Shell plc, which is incorporated in England and Wales
Purpose:
"Our aim is to meet the energy needs of society, in ways that are economically, socially, and environmentally viable, now and in the future."
Shell Global 'At a Glance'
2013
Revenue: $451.2 billion
Income: $16.5 billion
Net Capital Investment: $44 billion
Investment in R&D: $1.3 billion
#1 Global 500 List
Vertical Integration
Backward
-
Upstream
explores for and extracts crude oil
and natural gas
Forward
-
Downstream
refines, supplies, trades and
ships crude oil worldwide, manufactures and
markets a range of products, and produces
petrochemicals for industrial customers
-
Projects & Technology
manages delivery of
Shell's major projects and drives the
research innovation to create technology
solutions
Horizontal Integration
Mergers
- 1907 Shell Transport and Royal Dutch Petroleum
Company merged
- 2005 Shell was given a major structural re-
organization and a new company created, Royal
Dutch Shell
Acquisitions
- 2010 Arrow Energy Limited
- 2012 Repsol
- 2014 Gasnor
Strategic Alliance with Ferrari
Development and application of technology
- 3 major technology centers
- Breakthrough discoveries (GTL, LNG,
FLNG)
Financial and Project-Management skills
- Leading investor in R&D in 2012
Management of integrated value chains
- Upstream/Downstream business
model
Nigeria Controversy
- Hundreds of oil spills every year
- Reputation damaged
- May cost Shell millions
Arctic
- Lack of preparation
- Many accidents and fines
- Very costly with no positive results

Enhance financial performance
Improve operational discipline
Reduce captial spending
Improve public relations
Resolve issues with Nigeria
Increase amount of cleanup measures
Continue to be innovative
Raizen & lower-carbon biofuels
Organizational Structure
Structure: 1995 and on
- Functional structure
Lower operating cost
Decision-making process
more efficient
Head of operations directly
reports to Global Division
Responsibilities of top-level managers reduced
Global relationships grew
Personal Control
- Opportunities to speak their ideas
- Feedback processes and objectives
- Conduct surveys for work experience environment

Output Control
- Compensation for high performance

Behavior Control
- Code of Conduct
Environmental
- Brazilian sugar cane

Demographic Forces
- Shell LiveWIRE program

Technological Forces
- Giant Floating Liquefied Natural
Gas Facility
Nigerian sabotage
- Caused $12 billion loss

Replacement costs for oil
- Paying 200% more than competitors

Drill in the Arctic?
- Risky and in all probability terminal
Shell
Vertical Integration
- Upstream
- Downstream
- Projects & Technology
Horizontal Integration
- Mergers
- Acquisitions
- Strategic Alliance
Strategy Adjustments
BP
Clear Priorities
- Run safe, reliable, and
compliant operations -
leading to better
operational efficiency and
safety performance
Quality Portfolio
- Focused where we can
generate the most value,
and not necessarily the
most volume
Distinctive Capabilities
Shell
Advanced Technology
- Upstream Engine
- Downstream Engine
Sustainability
- Shell General Business
Priciples
Strict health, safety, and environment guidelines
BP
Advanced Technology
- More Discovery
- More Recovery
- More Efficiency
Strong Relationships
- Goverments, Customers,
Partners, Suppliers, and
Communities
Proven Expertise
QUESTIONS?
Recent Performance
Full transcript