Sample Essay on Shell’s PESTEL Analysis

Shell Company offers energy and petroleum services to various customers across the world. The company’s headquarter is situated in Hague, but its largest subsidiary is in the U.S. In 2012, Shell was the largest oil producer in Europe, as well as the most profitable corporate worldwide with regard to its revenue.Shell’s PESTEL analysis incorporates an external macro-environment under which the company carries out its operations. The company has succeeded in managing business risks in all its subsidiaries through its financial and strategic center.

Shell’s Macro-economic Environment

Macro-economic environment enables Shell to recognize challenges, in addition to take advantage of opportunities that would enhance its operations. In political perspective, Shell has been coerced to collaborate with the declarations by the European Union and the United Nations concerning carbon emissions. However, the high demand of oil in the U.S. has made the government to become a bit lenient to attract foreign investors, even though matters of environmental impacts still demand Shell and other oil companies to meet the demands.

Economic analysis of Shell indicates that the company is in the process of investing in new projects that would enable it to meet the growing demand of oil products as well as to maintain its market share globally. The company’s strong market position enables it to enjoy a bargaining power within the global oil industry (“Royal Dutch Shell,” 2016). Social forces that determine the operations of Shell Company reveal that despite the company’s advertisements as an environmental conscious company, the company’s image has been destroyed due to its heavy involvement in carbon emission. The company has been accused of being a threat to human life, as well as misleading the consumers.

Technological factors that demonstrate Shell’s operations include the acquisition of heavy equipment that utilizes the current technology to extract oil. Investment in smart technology has enabled Shell to enhance its operations in its oil and gas reserves.The environmental forces indicate that Shell has been involved in the environmental degradation as it endeavors to find new oil reserves to replace the declining ones. Extraction of oil from unconventional reserves has made Shell become a leader in carbon emission. Legal factors are essential in Shell’s Company operations because they assist the company to comply with the environmental safety regulations, in addition to preventing global warming. Shell has incurred cost through penalties, owing to lack of appropriate employee safety measures and health regulations.

Shell’s Strengths and Weaknesses

The company is in strong market position with steady financial performance, which enables it to maintain its competitive edge in the international market. The company has a robustsales and operations planning procedure that is supported by experts to sell its products, which include Shell Lubricants (Hancock, 2016). Strong exploration technological capacity places the company above others in similar operations. However, some of the weaknesses of Shell Company include a declining hydrocarbon production, as well as legal proceedings. In 2013, Shell was accused of polluting water in the Niger Delta, where the Hague court found the company’s subsidiary in Nigeria liable of neglecting its responsibility of preventing any sabotage within its establishments (Hennchen, 2015).

Shell’s Opportunities for Growth

The rising demand for energy globally gives Shell an upper hand in expanding its operations, owing to its financial strength. Shell is contemplating to implement three advanced technology applications in collaboration with its partners who are in Oman to create enhanced oil recovery (EOR), which can assist in increasing oil recovery figures (“Royal Dutch Shell,” 2016). Although conventional oil and gas remain the steady cash generators for Shell, the company is anticipating that shale and other clean energy sources that include wind, solar, and hydrogen, would provide substantial opportunities for its growth.

 

References

Hancock, A. (2016). Forecast Process Improvement at Shell Lubricants. Foresight: The International Journal of Applied Forecasting, (43), 12-18.

Hennchen, E. (2015). Royal Dutch Shell in Nigeria: Where Do Responsibilities End?.Journal Of Business Ethics, 129(1), 1-25. doi:10.1007/s10551-014-2142-7

Royal Dutch Shell plc SWOT Analysis. (2016). Royal Dutch Shell PLC SWOT Analysis. Retrieved from Ebscohost Database http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=bd80d517-719d-411e-815c-dfdb07f7fda6%40sessionmgr103&vid=0&hid=125