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Business research task

Last updated on 25.07.2020

Background of shell petrol station

Shell grew from a family shop selling seashells in 1833 to the royal dutch shell group in 1907. Marcus Samuel the owner of shell decided to expand his business to London. He sold many antiques but he when into selling shells aiming to capitalize on the fashion for using them in interior design.

In the early beginnings of the market for oil remained confined to lighting and lubricants until in 1886 the internal combustion engine and demand for petrol arrived with Karl Benz and the first Mercedes. It was during a trip to Japan that Marcus became interested in the oil-exporting. His interest in shipping oil is what pioneered the company Shell which is now commonly known for selling for fuel every day for your cars.

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Challenges shell experiences

Challenge 1: Getting talented young people into the industry

Innovation is needed from a young mind so that shell can maintain their record of high caliber students who create new sustainable methods of making energy.

Challenge 2: Technical innovation

Shell need to find more efficient methods to drill and reach their oil reservoirs. Traditional methods of drilling have become outdated.

Challenge 3: Use of supply chain

The supply chain for shell has to be improved by implementing an electronic tracking system on all materials and components so that time and money can be saved.

Challenge 4: Unlocking oil and gas

The different wells were shell drills to find oil/gas , the environment to find these resources are becoming located in more complex areas. They need to locate the fields, drill well and produce energy safely and efficiently will little impact on the environment.

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Challenge 5: Digital innovation

Shell needs to use their funds to further develop digital innovation and digital innovation is basically the robots use to drill holes underground and underwater. This digital innovation can help with also help with finding new energy sources.

Solutions shell must implement in the company

Shell uses tubing around the well/hole when drilling into the ground to get oil shell uses that method to make the area safer and easier for expansion and accessible for all employees. Pilots have been implemented to conduct the initial logistics such as management assessments, supporting supplier selection and driving the co-creation of the solution design.

The company must host many events and offer scholarship so they can find young mind who are passionate about working will oil and have the talent and skill to help develop new technological advances for the shell.

The supply chain can be improved by adding tracking devices to all packages and products belonging to shell this will reduce cost in terms of employment and it will make the shipping process for the company much more efficient.

The implementation of digital innovation will vastly improve the company in terms of discovering new forms of energy and even using 3D printing to rapidly develop new prototypes at a low cost.

Extra information on solutions

Shell has been producing fuel by converting fats this process was made to convert fat into biofuel which then can be directly pumped into and petrol or Diesel engine.

Shells business strategy

Their strategy is to strengthen their position as a leading energy company by providing oil”, gas and low carbon energy as the world’s energy system changes. One of the most important things about Shell is safety and social responsibility. In February 2016 the acquisition of BG group added significantly to their activities in Liquefied natural gas worldwide as well as deepwater oil and gas production in Brazil.

Shell is also centered on creating a simpler company that delivers higher and more predictable returns and growing free cash flow per share. Shell is in transition to a lower carbon, multi-energy source system with increasing customer choice. Shells three ambitions are to thrive in the energy transition, provide world-class investment cases and sustain a strong societal license to operate and contribute to society.

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Shells energy transition and climate change

In 2016 government officials came together in Paris to form an agreement to tackle climate change. Shell has been actively involved in the process of finding and developing methods to reduce their net carbon footprint on the earth. Their aim is to have products with as little as possible carbon footprint. The world is moving and growing with its needs for more energy sources and the falling GHG emissions at the same time this will mean that Shell will have a big challenge on their hands to create more products because of growing demand but they have to be more eco friendly and sustainable.

Shells SWOT analysis

Strengths of Shell

Excellent performance in New Markets – Shell has built expertise in entering new markets and making a success of them. The expansion has helped the organization to build new revenue streams which makes the in the markets it operates in.

High level of customer satisfaction – the company with its dedicated customer relationship management department has able to achieve a high level of customer satisfaction among present customers and good brand equity among the potential customers.

Good Returns on Capital Expenditure – Shell is relatively successful at the execution of new projects and generated good returns on capital expenditure.

Highly successful at Go To Market strategies for its products. Successful track record of developing new products e.g product innovation. Company to expand into new projects.

Weaknesses for Shell

Shell needs more investment in new technologies. Shell needs to put more money in technology to integrate the processes across the board. Currently, he investment in technologies is not up to standard to what the vision of the company.

There are gaps in the product range sold by shell. This lack of choice can give new competitors an opportunity in the market.

Investment in Research and Development is below the fastest growing players in the industry. Even though Shell is spending above the industry average on Research and Development, it has not been able to compete with the leading players in the industry in terms of innovation.

Shell has a higher reliability and work rate and that is evident as they have spent a lot more money compared to its competitors on the training and development of its employees.

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Opportunities for Shell

Economic growth and increase in customer spending, after years of recession and slow growth rate in the industry, that could be an opportunity for Shell to capture new customers and increase its market share.

Decreasing the cost of transportation because of lower shipping prices can also bring down the cost of Shell’s products thus providing an opportunity for the to company either boost its profitability or pass on the benefits to the customers to gain market share.

New environmental policies can open up new opportunities for shell to create a level playing field for all the players in the industry. It also represents a great opportunity for Shell to use its advantage in new technology and gain market share in the new product category.

The new taxation policy can impact the way of doing business and can open new opportunities for Shell to increase its profitability.

Threats Shell is facing

New technologies developed by the competitors of shell could be a serious threat to the industry in medium to long term future. Shell does not offer a regular supply of innovative products this has led to other companies having a better competitive advantage. The supply of new products is not regular and that leads to high and low swings in the sales number over a period of time.

The popularity of counterfeit and low-quality products apparently made by the shell is a threat to Shell’s product especially in the emerging markets and low-income markets. The company is operating in numerous countries it is exposed to currency fluctuations and this can affect Shell’s profitability of markets across the world.

Shells financial graphs

Glossary

  1. Competitor: Any person or entity which is a rival against another. In business, a company in the same industry or a similar industry which offers a similar product or service.
  2. Counterfeit: made in exact imitation of something valuable with the intention to deceive or defraud.
  3. Capital: wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.
  4. Expenditure: Payment of cash or cash-equivalent for goods or services.

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