Analysis of Shell Oil Company

Analysis of chew up c everywhere friendshipShannon DavisonAbstractCompanies face a issuing of opportunities and challenges in as far as their increment is concerned. An compend of the knock down inunct fraternity reveals a second and therefore a consideration of the same in their strategies is necessary. This paper looks at a number of issues surrounding this attach to in as far as its accomplishment as a craft is concerned.The Analysis of tap out inunct color societyOne of the household names across some(prenominal) countries of the word when it comes to inunct and anele products is the take to task inunct Company. Undeniably, outsmart Oil Company is mavin of the full-sizest crude embrocate color multinational companies controlling huge market place shargon not only in the join States of America, besides the sphere as soft. The reprimand Oil Company which is a subsidiary of the majestic Dutch origins is headquartered in Houston, Texas (Pirog, 20 07). oppress Oil Company together with its consolidated and equity companies is arguably the Americas pear-shapedst producer of inseparable throttle valve and inunct. Besides occupation, Shell Oil Company markets natural gas and petrol as well as petrochemicals. In the United States of America, Shell Oil Company importantly contributes to economical growth and development not only due to the large market spectrum and t c everyplace, but job creation as well. This is because the company has indifferent approximately 22, 000 employees in the U.S America be approximately 22, 000 Shell Oil Company employees in the U.S. of America (Pirog, 2007). This paper provides a descriptive epitome of Shell Oil Company in relation to take, merchandise battle and challenges happen uponing the qualification vault of heaven.Roles of the FirmApart from its normal business of merchandising crude and embrocate products, Shell Oil Company and its subsidiaries participate in various com munity development initiatives, environmental mitigation initiatives both in the United States of America and the subsidiary countries. This acts in their favour in ground of making their comportment within the communities they work to a greater extent signifi preemptt and rele caravant. Furthermore, they are able to hear their moral obligation of ensuring that the communities they work with are at home doing business with them. For instance, Shell initiates environmental conservation programs in indefensible oil producing nations including but not limited to Niger Delta and Nigeria (Pirog, 2007). The programs facilitate the restoration of disruptive environmental ecosystems. This is in tune with what is going around across many former(a) organizations and individuals who are out to ensure that the environment is kept gum elastic from degradation in order to hike up human life. The initiatives therefore promote environmental conservation stewardships and biodiversity through sensitization, research activities and reduction of pollutants.On the new(prenominal) hand, the company provides competitive worldwide transport fuel to 10 bingle thousand million customers daily. The customers are served through the 44,000 fuel stations spread in everywhere 70 countries of operations. Equally, Shells products and serve are designed to run into various business needs, encompassing chemicals to shipping and construction to aviation industries among separates. Overall, Shell is a globularised group of heftiness and petrochemicals companies producing, trade and enhancing sustainable environmental conservations. Globally, the company has employed approximately 92, 000 people in more than 70 subscribing countries and territories (Rexler, 2010). Moreover, Shell Oil Company has importantly capitalized on the technological advancements in offer to foster innovative approaches for sustainable heftiness production and trade. However, the Shell Oil Company has w ithal experienced challenges in equal measure in bid to accomplish the outlined goals and objectives. thitherfore, the newly appointed CEO Ben van Beurden in together with the companys top management police squad brainstorm on potential solutions to the problems affecting the company and its subsidiaries. Among the challenges that they gift to pervert with include the stiff competition that is mounting up day afterwards day, suppressive environmental and other policies given the nature of the problems that the company is dealings in, availableness of alternative sources of energy such as solar and hint which is a threat to the marketability of its products, political and legal challenges within the countries they work in and cultural challenges, among others.Shells Recent Past Supply and contend ImpactsAlthough Shell Oil Company has greatly influenced worldwide Oil production and marketing as well as transport, construction and aviation industries, but the last four decade-s cenarios technically put the giant company in jeopardy. Hennchen (2011) attributes this to emerging issues in global oil trends as far as production, competitive product sales and marketing (136). Shell Oil Company and its subsidiaries use these scenarios in projecting future trends in relation afoot(predicate) and emerging challenges. The projections underpin insightful outlines of the companys future growth and development strategies. The scenarios have actually been into nobble since the early 1970s aimed at forecasting the future necessity of refinery empyreans. Ideally, Shell Oil Company among other players has been largely affect by the inevitable changing global trends in economic status, population, geopolitics, climatic departs and resource stressors. The World over, there is a global economic liberation taking shape thusly the increasing occupy of energy. Increasing number of developing countries is an implication of growing deal of Oil and oil products. To thi s effect, dwindling common oil threadbares in the producing countries has significantly affected global supply of the commodity. Moreover, the situation was fanned by the intrigues emanating from Oil oil color Exporting Countries (OPEC) union.On the other hand, global climatic change has negatively affected oil production and refinery exhibites. Climatic changes eventually leads to global heating plant caused by significant rise in temperatures as well industrial gasses emission into the atmosphere (Rexler, 2010). Many oil producing countries are greatly predispose to environmental degradation owing to poor harvesting methods and greenhouse gas emissions among other factors. For instance the Nigerian based Shell has been accused of folly into fraudulent and corruptible deals thereby negatively affecting the performance. Major stakeholders in the vital commodity have therefore been compelled into adopting strategic development analysis.Therefore, stakeholders have prompted all the stakeholders concerned with the vital commodity into making strategic proviso and development for a favorable business environment. The External Review commission proposed various strategies to revive the economically vital sector (Uytrecht, 2013). Two energy scenarios are apparently at the foreplay namely the scramble and turmoil in oil producing countries hence less attention to better policies, likely until the supply would have tightened. Secondly, there is likelihood of outlined blueprints to address economic challenges in relation to energy, security and environmental pollutions. Basically, this could easily be facilitated by clean energy development technologies, carbon dioxide sequestration and trade and pecuniary incentives to player countries thus reduced environmental degradation. Such initiatives would definitely raise sustainable growth and development both in energy sector and industrial expansion. The strategies would assist in tackling the Worlds dwindlin g oil stocks which eventually might affect the Shells production levels. Today, Saudi-Arabian Arabia is apparently unwilling to disclose to the world the total value of her exploitable crude oil despite having prior insinuation that it has the largest industrious oil fields. Definitely, Shell Oil Company depends on a seemingly depleted stock from Mexico, Cantrell and the U. S of American oil reserves among others (Sperling and Gordon, 2009). Poor cooperation amongst the oil producing countries bring together with high greet of extraction and high hire from developing nations prove into global oil disaster. In addition to these, adverse policies among countries involved and reproachful political atmospheres are also a great hindrance.Shell marketplace Share and the Price shot of DemandPrice ginger snap of affect (PED) is defined as the economic responsiveness of how the quantity of goods or service demanded changes in relation to the outlays. The scathe elasticity of dema nd is usually affected by several factors, including time, availability of substitute, nature of commodity, uses of goods/services among others (Pirog, 2007). Similarly, the price elasticity of Shell Oil company products and services are dependent on the aforementioned factors. Given the structural changes in the world oil markets in the last ten years, the competitiveness of oil and its products have significantly influenced the counterpoise between supply and demand. There is an apparent increase in oil supply emanating from unconventional oil reserves hence less elasticity of Shell Oil products. The price elasticity of Oil and oil products get going elastic when a small change in prices produces a large change in demand. Shell Oil Company, one of the major players of oil and petrochemical products in not only the United States of America, but in the world greatly influences the price elasticity of demand of the vital commodity. The Shells profit margins are affected by the pri ce elasticity of demand since costs usually change with the sales. At elastic price, the demanded shell products and services can be obtained by reducing price thereby gentility sales. The company would therefore make remarkable returns through the economies of scales. The global change in oil production over the last four decades has significantly affected the price elasticity of demand.The price elasticity of commodities tends to fall over prolonged time duration. The price inelasticity of oil and oil products over a short period of time could be attributed to high prices (Sperling and Gordon, 2009). However, the elasticity would gradually become elastic in the long run following strategic think and regulative mechanisms. To that effect, sustainable global oil production could easily be achieved by adopting modern technological advancements in refining and marketing crude oil as proposed by the ERC. On the other hand, highly competitive products are usually less affected by the price elasticity of demand. This is because the products would remain in high demand despite the presence of substitute goods and services from other companies. Additionally, the price elasticity of oil products can easily be affected by a reduction in the consumption of such goods and services, perhaps owing to economic downtown and outrage of jobs. To that effect, the price elasticity of Shell Oil company products and services has been significantly affected by the economic meltdown in the Euro zone and the U.S. of American economic recession.The presence of OPEC in the market could also influence the price elasticity of demand owing to stringent measures. Although oil and oil products are usually less elastic due to relatively marginalized choices, but there are sometimes when the price elasticity of demand become insecure owing to global economic situation and trends in the production (Rexler, 2010). However, natural gas is rarely affected by the price elasticity of demand be cause it barely has alternatives. Petrol and other oil products that many consumers use are also least affected by the price elasticity of demand.The cost of productionToday, the worlds increasing demand in oil is attributed to fast developing economies as occasioned in China and India. Industrialization process basically implies increased consumption of energy thus oil products. Pirog (2007) argues that create countries are yet to change their oil consumption habits despite the global changing trends in oil supply (14). Therefore, several factors come into play to affect the cost of producing oil in different countries. For instance, varying cost of extracting crude oil in different counties greatly influences companies capacity to expeditiously produce high quality and cheap oil products.In the United States of America, the federal government usually provides production patents to major players in the oil industry. Ultimately, Oil companies with production patents greatly influen ce the prices of oil hence the production costs. The price of oil products in some parts of the U.S. of America has been a function of domestic crude oil production, for instance in join and South Cushing. Consequently, the median(a) cost of one barrel of crude oil basically fluctuates at around $101.50 thus the prevailing situations in Cushing. In fact, this is a measure of local production in relation to average pipeline inflow capacity per day.On the other hand, the updated crude oil cost in Oklahoma depicts a tightening regional demand thereby outstripping the supply. However, the cost of crude oil is likely to remain maverick until the completion of the American-Canadian Keystone XL pipeline project in 2016 or 2017 (Rexler, 2010). The global demand in oil and technological advancements also affect the cost of producing oil. The OPECs strategic planning and policies predetermine the global oil production costs hence the prevailing prices. Although the counties subscribing to OPEC control about 80% of the worlds oil reserves, but they only produce a third owing to high cost of extraction. The unprecedented failure of OPEC to efficaciously strategized oil production cost has significantly impacted on global oil prices. The cost of oil production is also influenced by the availability and cost of water.Competitive Advantage and Entry BarriersShell Oil Company and its subsidiaries enjoy remarkable portion of the worlds oil market owing to its competitive advantage over other oil producing companies. The juvenile ERC report describes Shells strategic plans in addressing production and marketing issues currently facing the energy sector (Sperling and Gordon, 2009). Shells active involvement in environmental conservation, community development initiatives and strategic planning basically give the company a cutting edge over other oil producing companies.According to ERC, Shells production and sales has significantly increased owing to the competitive brands of oil products released into the market. In addition, Shells top management embraces quislingism thus business integration. Shell closely works with research institutions, NGOs and other companies to plan and strategize for a sustainable oil production and marketing across the world. The sustainable oil production requires technologically innovative ways of extracting and processing crude oil to partake markets growing demand for oil and oil products. Alternatively, business patent apparently enjoyed by the Shell Oil Company puts it on a better position than other oil producing companies. This is because politics usually take center stage in influencing business laws and policies. In addition, business patents usually bar new business ventures from getting into the market thereby hindering free and fair business completion. There are other business barriers controlling the restricting competitive venture into energy sector (Uytrecht, 2013). For instance, large startup capital as well as resource ownership usually limit the number of businesses in the vital energy sector.The federal government of the United States of America issue patents, copy ownership and restriction waivers only after the fulfillment prerequisite terms and conditions arrange up in laws and regulations. The market segment exposed at the oil production and marketing could thus be described by the monopolistic structure (Uytrecht, 2013). This is owed to the barriers imposed by the major oil payers in collaboration with federal government of the U.S. of America. Therefore, Shell Oil Company apparently enjoys oil business patents thus the exclusive right to use, sell, develop and explore more energy resources, preferably through research.Shell Product SubstitutesAccording to the character study, the majority of clients usually find no difference in move oils hence minimal alternatives. However, critical analysis reveals various differences in push oils based on the manufacturers standard s and performances (Hennchen, 2011). Informed customers may therefore prefer one oil product to another based on the combustion rate, bilinear content and uses. Oil and oil products have fewer substitutes despite significant variations in customers distinctive preferred properties. For example, propane has been extensively used in just about 200,000 vehicles in the United States of America. However, propane is not considered a good substitute for gasoline since it is harvested as a byproduct when refining natural gas and petroleum (Uytrecht, 2013). Alternatively, hydrogen has been proposed as a possible replacement for gasoline thus alleviates the already strained energy sector. Similarly, ethanol has been proposed for use in brazil and the United States of America to provide alternative fuel energy source.In conclusion, Shell Oil Company plays a significant role in the production and marketing of oil and oil products not only in the U.S. of America, but also globally. Being pres ent in a number of countries across the world, its business is of high value and is therefore expected to meet different opportunities and challenges at the same time. As such, both the opportunities and challenges need to be met with a number of heightened strategies in order to deal continue racetrack a profitable business. Apart from the core business, Shell Oil throne actively participates in making strategic planning and development programs. The strategies would help in solving various challenges currently impacting on the vital energy sector. Eventually, the sector would register an effective, efficient and sustainable global oil production, marketing and environmental health. As has been seen in the analysis, corporate social responsibility is also a key consideration that this company needs to keep to make haste with as it is happening given the numerous advantages that it is bound to reap from the same. There are different challenges that this company is facing and thes e can be label on both external and internal factors.ReferencesHennchen, E. (2011). The role of oil mayors in supporting sustainable peace and development in Nigeria the case of Royal Dutch Shell. Barcelona School for a Culture of Peace (UAB) Institute for kindly Innovation (ESADE), 1(2), 133-145.Pirog, R. (2007). The Role of National Oil Companies in the International Oil Market. CRS Report for Congress, 1-20.Rexler J. (2010). Beyond the oil curse Shell, State power, and environmental regulations in the Niger Delta. Stanford Journal of International Relations, 12 (1), 1-6.Sperling, D. Gordon, D. (2009). Two billion cars Driving toward sustainability. Oxford Oxford University Press.Uytrecht, M. U. (Ed). (2013). Transforming refinery economic science technology and catalysts to maximize margins. Shell Global Solutions, 1 (3), 1-16.