International Business Strategy of Royal Dutch Shell

Royal Dutch Shell was created in February 1907, from a merger of Royal Dutch Petroleum Company of Netherlands (60%) and Shell Transport and Trading Company Ltd, United Kingdom (40%), for oil and gas explorations globally. The company currently operates in more than 90 countries, with approximately 101,000 employees, 44,000 Shell service stations, producing 2% of the world’s oil and 3% of world’s gas at 3.1 million barrels, and have sold over 145 billion litres of fuel.
In 2009, the company operated just under 35 refineries and chemical plants and were ranked 1 by fortune 500. The company posted Current Cost of Supplies (CCS) in the first quarter of 2010 at $4.8 billion compared to $3.0 billion 2009 first quarter. Operating activities in such as that in Nigeria generated a cash flow of $10.4 billion.
Since 1936 Shell had been active in Nigeria, exploring, producing, sales and distribution oil and gas onshore and offshore, discovering Oil in1956 at Oloibiri, Niger-Delta with BP, (a sole concession at the time). The corporation operates in Nigeria as Shell Petroleum Development of Nigeria Ltd (SPDC), operating in the country’s largest oil and gas joint venture with Nigerian government owning Nigerian National Petroleum Corporation (NNPC) (55%), Total Nigeria (10%) and NAOC (5%).Shell is the only international company, supplying industry customers with gas as Shell Nigeria Gas (SNG). The company operates in the country’s first deepwater oil discovery producing more than 200,000 barrels per under the Shell Nigeria Exploration and Production Company (SNEPCO). This is a report on Shell international strategy using their entry in the Nigerian Oil industry, as a benchmark for their international activities. Abide by Law and align all operations within it context Also releasing report to show the approach towards legal issues Positively affecting the Brand image. Read R oyal Dutch Shell PESTLE analysis
Civil law suits such as the case of the Ogoni 9 where the company had an out-off court settlement with the plaintiffs. Conclusion Despite the civil law cases brought against the company, Shell has endeavour to abide by the laws and policies, hence positively build their brand image in the international market Core Competences In reporting Shell capabilities which are critical to their success in the Nigeria Oil industry, the ideas of Hamel & Prahalad (1990)
Position
Provides potential access to a wide variety of markets Expertise in research and development has enabled the company to enter the renewable energy market, identify emerging technologies. Through their approach to social responsibilities in Nigeria, they have diversified towards other philanthropic industries which have positive affected their brand image Makes a significant contribution to the perceived customer benefits of the end product Upstream production predicted to reach 3.5 million barrels of oil equivalent per day in 2012, reflecting an 11% increase from 2009( Shell report, 2010)
Over 771 million in R&D investments Difficult for competitors to imitate Technological knowledge leading to development of their “Slimwell” designs New Patents innovations for cost reduction and improving efficiency and reliability Strategic Relations on a Global Scale, and worldwide operations. Conclusion The core competences central to Royal Dutch Shell’s operations, have resulted in the companies competitive advantage over rivals in the market.
Entry Mode Royal Dutch Shell entered the Nigeria Oil market through forming alliance and establishing strategic relationship with the country’s government and other oil companies. Whilst standardising the prices of export barrels of oil, in the global market, which aided economies of scale, resulting in increased returns, as observed in their annual/quarterly financial reports. Evaluation Royal Dutch Shell international business strategy has been a proven success as shown in their growth and reflected on their balance sheets, in generate extravagant rewards for the company’s share holders, whilst having an a positive approach to social responsibilities.
Bibliography Website
1. Shell. 2010: Shell Nigeria [Online] (Updated 2010)Available at: http://www.shell.com.ng/home/content/nga/environment_society/taking_an_integrated_approach/ [Accessed 19 August 2010]
2. BBC. 2009: Shell settles Nigeria deaths Case [Online] (Updated 2009) Available at: http://news.bbc.co.uk
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