Shell Strategy Essay Example

Shell Strategy Essay Example Shell Strategy Paper Shell Strategy Paper Shell uses a broad differentiation strategy. Their business model is built on quality and differentiation which they use to set the company apart from its competitors. Shell is viewed worldwide as one of the most successful oil and gas impasses, and is consistently ranked as a top-producer in each and every field in which they partake. Shell capitalizes on their successes by staying broad throughout their endeavors and allowing no opportunity, within their given fields, to pass them by. Shell integrates both horizontally and vertically, and as a result, they hold a formidable market share of each the oil and gas industry, the energy industry, and the chemical industry. Due to their interests in these fields, Shells products are used around the world, and they therefore have a hand in Just about every market, of every kind worldwide. How valid is this strategy? Shells overall group strategy of More Upstream and Profitable Downstream, is a broad differentiation strategy and is vital for accompany such as Shell, as they must strive to be one step ahead of the competition. The essence of a broad differentiation strategy is to be unique in ways that are valuable to a wide range of customers. One industry that Shell has recently entered is renewable energy, which is considered the future of energy, and a replacement for burning fossil fuels. If Shell chooses not to enter this market, Exxon would possible capture about 50% of his market in the United States. This would create a serious disadvantage for Shell in the very near future. Although Shell is predominantly an oil and gas company, they continue to innovate and reach out to new endeavors within markets that can be closely related to their own, or sometimes completely different. Why is this strategy good? Shells strategy is good because it allows the company to work vertically and horizontally throughout the oil and gas industry. They operate a global downstream market with its Lube Oil Blending and Manufacturing Plants, Chemical Plants, and Refineries. They have a strong brand preference in the retail market. Shell has supply and trading optimization of diesel, naphtha, gasoline and kerosene throughout the world. Their operational excellence in Technology has allowed them to use its knowledge of all aspects of their business to expand into areas that it previously was not participating. The broad differentiation strategy is vital for most multinational corporations as it forces management to grow and adapt to ever changing market demands. If Shell was not broadly differentiated, then companies who are now implementing wind power or other sources of renewable energy, would sibyl be capable of forcing oil companies like Shell to a small, weak corner of the energy sector. Who doesnt want cleaner, safer sources of renewable energy? The marketing department knows the answerer this is a question, and that is why they pursue alternative energy sources Walt Trolley A strategy of multinational diversification has more built-in potential for competitive advantage than any other diversification strategy. Therefore, companies that compete multinational can pursue competitive advantage in world markets by locating their value chain activities in whatever nations prove most advantageous. Why is this strategy bad? Playing devils advocate, Shells strategy can be viewed as negative because it could possibly create a massive drain on financial resources, due to their broad reach across the industry spectrum. However, in order to conduct business in areas around the globe, and research new ideas to stay competitive, Shell and other companies should utilize a broad differentiation strategy. How is the competition going to act? Unfortunately for Shell, the competition is going to continue to do exactly what Shell is doing. Shell, Exxon, Chevron, and all of the major oil and gas companies are always going to attempt to stay one step ahead of their competitors. All of them are searching for the best clean fuels, the best sources of renewable energy, and the next innovation in their fields. The competition in this sector is fierce. Each of these companies must spend billions of dollars each year Just to stay competitive. Research, surveying, recruiting, and acquisitions are all vital aspects of Shells business and the competitors are all fighting for the same information, talents, and technological advancements. On the other hand, Shell does compete well with energy companies who offer one f the four other competitive strategies. Those who offer a focused strategy fail, as companies such as Shell typical buy them out if the ideas they have become a threat to the top producers. Low cost and best-cost strategies fail in the energy sector as well, because as everyone knows, energy is a lucrative and expensive business made profitable by the enormous profit margins put on certain products. Health Safety Environment Sustainable Development Department We received feedback and information from the Health and Safety Environment Sustainable Development Department. Our contact, Anomaly Banned, is an advisor or this department. This department has the responsibility to support Shells Business strategy and its delivery. Mostly for environmental management that underlines Shells priorities. They mitigate and manage potential environmental impacts, and identify opportunities of Shells operations and projects. In addition, they have to follow the Finance, Governance and Management, and Social Performance, Information and Management, and People Standards; they create for the entire Shell groups. I en strategy AT teen satiety department Is Adult around People, Performance Ana Progress. Their goal is to develop people by creating and maintaining an environment where people can succeed, identify strengths and improvement areas where continuous performance can be delivered, and manage risks effectively whereby progress can be made with stakeholders. Their goal is to demonstrate world class performance in their area with the partnership of all the Shell businesses. Right now, this departments core competency is committed to creating an environment in Shell where Goal Zero can be achieved. In this environment there are zero safety incidents, zero environmental incidents, and zero delays due to ejaculatory or community challenge. They must cultivate the right mindset about incidents and about their responsibility for preventing them. Since, Shell works globally, the standards set by Shell are consistent for all of the Shell business across the globe. Goal Zero, the 12-Life saving rules, etc. Are all the same regardless to what country they are working in. Group standards are used which are rules on enterprise-wide risks that require common treatment across Shell companies. Shell maintains group HOSE Performance Data that is shared with the industry. They assure their success through the Goal Zero progress and performance against key HOSE parameters of fatalities, fatal accident rate, total recordable case frequency, lost time injury frequency, total recordable occupational injury frequency against exposure hours. In order for Shell to differentiate their service from competition and to provide unique value to customers they do the following: Every Shell Company has a systematic approach to HOSE SP management designed to ensure compliance with the law and to achieve continuous performance improvement; sets targets for improvement and measures, appraises and reports performance; requires annotators to manage HOSE SP in line with this policy; requires Joint ventures under its operational control to apply this policy, and uses its influence to promote it in its there ventures; engages effectively with neighbors and impacted communities; and includes HOSE SP performance in the appraisal of staff and rewards accordingly. The major problem for this department is the environmental management. This includes: global leadership, face time, and performance. This department has trouble working and completing assignments/tasks with their international departments due to lack of actual face to face conta ct. The tasks take longer to achieve because leadership is hard to keep intact globally. The managers/leaders all have common ways to do business, but sometimes do not have sufficient input. Also included is the departments performance for improvement. Recommendations: Based on SOOT analysis, one way to resolve Shells approach to environmental management is by focusing on its Environment Strategy and Action Plan. The department can comply Ana roller regulatory Ana Internal environmental compliance in all activities. Improve and deliver prioritize environmental performance improvements in support of business execution. Be prepared for significant business environmental challenges and opportunities of the future. With this recommendation Shell can focus on this plan and clearly follow steps to increase the departments performance. Employees work globally, including the leadership teams. These teams meet to ensure alignment is consistent across the globe. There must be constant communication globally between all of Shells arms. Shells generally centralized organization could potential limit the ability of rank-and-file employees, and based on SOOT, this is a weakness that Shell should address. Decentralization their organization in certain areas will give employees the ability to react quicker to market changes, as well as adverse situations. One way to control decentralized organizations is to provide training guides and manuals. This action increases potential leadership skills for the employees to rely on when global problems occur. A program that can be developed is to rotate graduate hires in the HOSE department within the first 5 years of their career at Shell. The expectation is that this rotation will increase their knowledge of HOSE environment, and give them an appreciation or this area of the business. Then by increasing their knowledge at the beginning of their career at Shell they can learn to better lead globally and learn environmental management. This includes the opportunity to work in the Health Safety Environment Sustainable Development and in a production are of the business which will increase challenges for them at such an early time. The benefit of developing better leaders definitely outweighs the cost of rotating these new hires. It will cause training to become a longer process because rather than training in one area; there would be raining in diverse areas in order to expand employees knowledge. The diverse training will make employees better rounded and the experience they gain will aid them when they encounter different situations. We highly recommend and encourage doing what is necessary to ensure Shell assignments are properly performed by investing in tools to create more face to face time. Visits to the sites, or adding venues/rooms to the locations where it can be possible to interact through the web. Shell employees are encouraged to do what is necessary to make certain Shell assignments are properly performed. Creating a time Ramee where the leader has to communicate with the international departments to assure things are correctly done. By increasing awareness of the leader more focus will be created to the assignment because it will be managed more. The manager presence will be known and can create a better working relationship. Shell should aim to have an HOSE SP performance they can be proud of, to earn the confidence of customers, shareholders and society at large, to be a good neighbor and to contribute to sustainable development globally. Shell should identify key environmental risks and opportunities and associated reputation exposures. This includes managing the risk of onshore and offshore spills across businesses through continuous Improvements to prevention Ana response Dye preparing or spell prevention in operational environments, which is in line with their commitment to pursue the goal of no harm to people; protect the environment; use material and energy efficiently to provide products and services; respect neighbors and contribute to the societies in which it operates; develop energy resources, products and services consistent with these aims; publicly report on performance; play a leading role in promoting best practice in the industries; manage HOSE and SP taters as any other critical business activity; and promote a culture in n which all n Shell employees share this commitment. The Health Safety Environment Sustainable Development Department has a fantastic way of ensuring the safety of all shell personnel. The department has high standards thus create Goal Zero, which are now used at all global offices. The pitfalls are the lack of leadership globally due to low face to face time and department performance. By generating more awareness towards leaders and increasing their leadership skills, this problem can be reduced slowly. As well as improving performance by creating a plan to be aware of regulatory improvements during business execution. In addition to commit to the goals that can create better The Supplier Management Department In the Supplier Management Department, they contract solutions and supply automated ways of coordinating key supplier relationships. Ms. Patricia Isaac was our interviewee, whose Job title is Cost Management Analyst, has been working for Shell for 8 years. Her responsibilities include Contracting Procurement to drive lower cost of supply through Enterprise Category Management. The Supplier Management Department delivers their services to all Shell business and their functions to drive lower supply cost through knowing their commercial suppliers with an execution of a focused mindset. They find automated ways of working (Contracts, Contractor HOSE, and Systems Processes), coordinate key supplier relationships across the Group and delivers SMS through the businesses and for the Functions and P Own Spend. In order to follow policy they receive guidance from the Supply Chain Model of Business Needs, Supply chain Cost Models, with this they comprehend the cost and value driver in Supply Management to identify opportunities so that the cost can be removed and have value added for Shell. They emphasize the guidelines of their contract management plan, in order to continue to define the expectation they need to fulfill with Shell in order to continue working with diverse segments. The overall strategy of the Supplier Management Department is to know the Business, know the Suppliers, be Commercial and execute Top Quartile performance to ensure they are a competitive differentiator for Shell. One area that is problematic in the Supplier Management Department is eliminating suppliers even Hough they meet selection criteria and not sustaining relationship with them. The current process of how the department in choosing their suppliers cuts down on the Innovation part AT Kennels strategy. I Nell procedure Is Toweling tongue teen companys market conditions and cost, and their requirements. They define and select contract type with appropriate reward and performance by tracking down mechanisms. In order to improve their performance, Supply Management needs to evaluate the suppliers proposal and continue to work with the supplier who will continue to work with them in order to pursue the optimization of distributing Hansel. The Supplier Management Department needs to consider logistical constraints and analyze the risks involved with each supplier. In order to maintain their competitive advantage, Shell must continue to assess which suppliers are keeping pace with the ever changing market. The broad differentiation strategy that Shell implements throughout the company stresses constant innovation in order to stay ahead of the imitative competitors. Shell knows that their competitors are always looking to imitate and progress before them, so it is vital that the supplier management department cut down on their potential suppliers. This will lead Shell to maintain their competitive advantage. It is our recommendation that Shell focus on their objective of ESSAY (Eliminate, Simplify, Standardize, Automate). Bringing focus in this area will assist them in interpreting which supplier can help them be more beneficial and will streamline the processes involved with getting the product to market. Failure to implement this strategy will continue to lead to inconsistent and ineffective approaches to knowing the supply side of the business and can have impact when dealing their international department. In order to increase the rive in, Shell executives must have an objective in which it they can enhance the companys competitive advantage. The set process of ESSAY is a key factor of the company to stay intact globally. Even though their process to eliminate company who do not meet Shells requirement, is already develop it needs to be strengthen in order for this area to be relevant to govern authority and be able to convert sourcing packages to Shell. The Supplier Management Department needs to have a clear contract management plan that segments and defines contract management expectations by area segments identified by Shell. In order to see the process of the effectiveness of the clear contract, receiving feedback from suppliers can improve future performance, fulfill contractual objectives, and fulfill mandatory HOSE (health, safety, security, and environment) requirements. In order to sustain the relationship with their supplier, they need to see how well established is their strategies, processes, and behaviors consistent with Shells diversity and inclusiveness. They need to work on the opportunity optimization of the suppliers relationship; the result from this is creating value in opportunities of generating more market segmentation. Ms. Isaac stated that they work to mature the supplier through the relationship stages of Proving; Performing; and Partnering with their suppliers globally. To continue the formality of the relationship they could also identify, engage, develop and sustain supplier inclusion efforts. Having both parties interest in mind can help them focus on the reduce effort of duplication and increase teen Arleen AT teen alma to enhance teen ell son s competitive advantage. At this moment, the Supplier Management Department is focusing on their Category Management and how to contract the process, improve the Global Framework Agreements and the Global Sustainable Sourcing. By improving these areas especially, the Category Management and the improvement of the agreement, can help them minimize the cost, using the effectiveness of the Cooperative Strategies will help them even the distribution of the responsibility in order to execute in the highest level of function. By supporting the strategic work of the Powering Progress Together with their suppliers it extends the enterprise by working across organizational boundaries. Continuing with their department core competencies, they delivers Project contracting solutions, sets global standard, liver benefits; attract sustain competitive advantage and benchmark top quartile performance with total quality behaviors and performance they set themselves apart from competitors. Shells HER processes, such as attraction, on boarding, retention, development of intellectual capital, and motivation can all increase Shells return on its investment in people. The HER function is responsible for putting these processes into practice in a way that delivers better business results. The HER role as a function is to provide the HER strategy and infrastructure, and to input to business strategy in a way that enables high performance and market attractiveness. The HER team contribute to the profitable and reputation of Shell. Shells HER function is aligned with Shells overall Group strategy of More Upstream and Profitable Downstream, and builds on their priority to deliver the short term imperatives of working with the businesses and functions, and ensuring delivery on identifying savings, developing the organization in a simpler and more accountable structure where there is greater speed for decision making and implementation, while building for long term impact and sustained improvement The four Shell HER Strategic Priorities are: I Strength I Weaknesses lopsidedness I Threats I I Talent Now a Sustainable Elf addressed, will meet the I Encompasses implementation IA promotion of diversity and I If left unaddressed, Shell I Future Supply I immediate talent demands of LIFO the resounding strategy I inclusiveness to help form allow not have an adequate I I I the business and address the land a focus on top quartile Score part of Shells People I pipeline of qualified recruitment I requirements I Standards. I long-term talent lymphocytes to succeed currently I I leaders. Strengthening Leadership I Reinforces the continued Shell has not developed an I Can drive the increase in Elf not reinforced, I I Deepening Professionalism I commitment to leadership I adequate succession I technical and professional I leadership will not be I I I development and deepening I pipeline. I capitally, I professional capability. I professional capability of I I I properly developed anon TN lamentations off global I and business-driven largenesss will be diminished I I I strategy. Over the long term. I Lampooning Individual I Continued emphasis on I Measured through the Shell I Continued support to I If simplification is not I laryngitiss Performance I simplifying the organization I People Survey which I business critical programs I integrated in the Tit better integrate I sometimes does not tell land strategies through laryngitis, Shell will be I I Capability on a Group wide Complete picture. I business partnering I unable to integrate Capability building. Structures work. I basis and focusing on makings Capability over its global I I I current logout, making it difficult I I LIFO current structures to I I I operate. Increased Efficiency I Released through continued I Shell struggles to Deliver Benefits Scale HER Twit global systems, it is I Effectiveness of HER Systems Standardization and I standardize and simplify I Services imperative that Shell 1 Processes Simplification of HER I most HER process globally. I I processes. Oral I become unbearable I I lover time. Continue to standardize and I I Simplify its HER processes I cost will Shells HER uses a broad differentiation strategy, which focuses on building the best talent pipeline in the industry and thereby ensuring the maintenance of its competitive edge as a technological leader. Shells HER Executive is accountable for legalizing the planned activity. Progress against the four key strategic activity areas are actively monitored and is reviewed formally on a quarterly basis by the HER Executive, and supplemented by tracking, reporting and assurance mechanisms put in place by the HER Strategy team. This focus is complemented by additional measures to ensure the management of talent, costs and headcount, assurance of Shells people standards, and continued performance in the top quartile. This strategy is valid because it is consistent with performance from previous years, and manages HER-related risks that impact individual businesses. Risk responses, in the past, have been updated to take account of plan activities to the extent they provide mitigating action to Group level and business specific HER risks. What makes this strategy work is that each key activity area owner is responsible for ensuring risks and mitigating actions are identified and maintained for their own projects. However, each HER business activity area owner must work to deliver on Talent Management, Diversity Inclusion, Leadership Development, Performance Management, Change Management and Global HER Process Execution individually. Recommendations: Talent Management The HER businesses must deliver on annual full time employment targets, ensuring they hire a more than adequate amount of graduates into the pipeline to ensure annual recruitment targets are met. Shell has a great Leadership Development Program, but in the past has had trouble with follow-up on employees who have gone through the program. Management must do better to continue the development of the employees who have completed this program by providing the opportunities/assignments needed for development to employees once identified. Shell HER must improve representation of females at the senior management level cross the globe, by ensuring a robust continued pipeline of female talent at the lower levels to draw upon. Shell HER must increase the number of diverse candidates in positions to ensure an effort to improve representation of people of color, and develop and implement appropriate plans to ensure there is a continued increase in diversity representation by targeting graduate hires at more diverse colleges when recruiting. Strengthening Leadership Developing Professionalism Shell HER should have annual talent reviews to ensure effective leadership coverage ratios exist across all the Shell regions, and develop adequate successions Lana for all management positions. This is an urgent issue for Shell because many of its top executives will be nearing retirement, and there is a major concern for adequate replacement. To assist with this issue, Shell HER should conduct annual learning reviews and develop learning strategy considerate of current/needed interventions. Shell HER must build a delivery culture by reinforcing individual accountability and active performance of its succession pipeline on a more rapid basis. Improving Individual Organizational Performance Shell HER has a new working model that it must continue to work to operational y driving the development and delivery of the HER organization and the Shell vision. To accomplish this goal, they must deliver effective HER organizational effectiveness support to newly formed leadership teams and business projects. Shell HER should also do a better Job on boarding new employees, and monitoring the consistency of the on boarding program; it appears to not have consistency in this program. Shell HER should drive a culture of accountability and performance management by ensuring a focus on safety, simplification, costs and adding value to the business. Shell HER must deliver on hiring the full time employee targets and monitoring