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    MASEco

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    MASEco

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    of 3

    Understanding Multinational Corporations (MNCs)

    SHELL

    Dela Fuente, Raven L. 11/25/2024


    BSA 3A

    Company Background
    Shell started out as an oriental seashell business that was in high demand in 1883.
    Marcus Samuel, the owner of the business, passed it down to his two sons, Marcus Jr. and
    Samuel, in which they became interested in the oil exporting business.and renamed it Shell
    Transport and Trading Company in 1897 launching its first refinery in Balikpapan, Dutch
    Borneo. However, due to the second World War, it had to be destroyed. In 1901 when oil
    was found in Texas, they grabbed this opportunity to acquire the transport and distribution
    rights away from its main competitor, Standard Oil. Then, in 1907 through the merger with
    Royal Dutch, they formed the Royal Dutch Shell Group which is the actual multinational
    corporation (MNC) that we know today. Due to the merger, Shell grew and expanded
    operations throughout Europe and in the majority of Asia. At the start of 1914 up to the end
    of the second world war, the company was a key fuel supplier of the Allies which made them
    grow even more. However, Shell struggled with problems that hindered their growth
    particularly the post-war years and instability in the Middle East which quadrupled the prices
    of oil, ending the era of cheap energy. With this, it launched an expansion in Africa and
    South America and focused their growth strategy in acquisitions. Now, its headquarters is
    located in London and is a key company in construction, chemicals, and raw materials.

    Global Presence
    According to its website, Shell operates in more than 70 countries and employs 103,000
    people. Moreover, in a research conducted by Statistica in 2023, Europe was the largest
    region where the company has significant operations with 118.14 billion dollars of revenue
    generated in this region alone. Additionally, revenue from Asia, Oceania, and Africa have a
    combined total of 99.97 billion dollars.

    Organizational Structure
    In an article by Digloria (2019), Shell uses a global matrix organizational structure in
    which it has four divisions which are propped up by seven executive branches. Due to their
    organizational structure being that way, it allowed these four divisions to be the top level of a
    reporting structure for the subsidiaries for Shell. Moreover, these subsidiary companies are
    utilized to satisfy the specific geographical and operational concerns that their customers
    and employees might have.

    Business Strategy
    Due to the global matrix organizational structure of Shell, it leveraged its subsidiary
    companies to satisfy the specific geographical and operational concerns that their customers
    and employees might have. In an article by Bhasin (2018), Shell gained a competitive
    advantage due to its funding on research on development, strategic partnerships and
    alliances, diversified product portfolio, and consistency and trust.
    Supply Chain and Operations
    The supply chain of Shell is divided into three parts, the upstream (explores and
    extracts crude oil, natural gasses, etc.), refinery, and downstream (sells the products in the
    market). In an article by , its supply chain consists of multi-tiered suppliers, contractors,
    original equipment manufacturers, and outsourced construction and facilities operations.

    Cultural Adaptation
    As was said before, the global matrix organizational structure of the company has
    been wanting to satisfy the specific geographical and operational concerns that their
    customers and employees might have. With this in mind, an article by Sheridan (n.d.) stated
    that Shell offers a wide variety of products that their customers might want. Products such as
    renewable energy, low-carbon fuels, petrochemicals, lubricants, and many more. Also, it has
    over 46,000 service stations globally that cater to the needs and wants of different regions.

    Corporate Social Responsibility


    It is not foreign that throughout the years Shell has had a lot of scandals that they
    should have been held accountable to. In an article by Friends of the Earth International,
    there are human rights violations and environmental abuses that the company is involved in.
    In contrast with what they signed in the Paris Agreement (a legally binding international
    treaty on climate change), Shell has spent $22 million in 2015 on lobbying activities against
    climate policies. Moreover, due to the oil extraction activities of the company in Niger Delta,
    the population are forced to live in oil polluted regions. Furthermore, Shell had been
    indirectly involved in human rights violation due to it requesting paramilitary support in
    Nigeria which was known for its heinous crimes consisting of murder, torture, etc. These are
    contrary to what Shell is committed to in their sustainability goals in which they want to have
    integrity in their business endeavors and respect the environment.

    Challenges and Opportunities


    According to the annual report of Shell, a problem that the company has faced is the
    impact of COVID-19 pandemic that affected the prices around the world. Additionally,
    societal risk which includes a deteriorating relationship with the public, other companies,
    litigations, etc. Moreover, the prices of crude oil, natural gas are affected with the supply and
    demand both internationally and domestically. Furthermore, discovering oil deposits are
    opportunities that Shell can grab as they can use it to make profit.

    Conclusion and Reflection


    Shell is one of the largest oil companies in the world that operates more than 70
    countries where its largest customer comes from Europe. It offers a variety of products
    ranging from renewable energy to petrochemicals and it uses a global matrix organizational
    structure which allows it to satisfy the specific geographical and operational concerns that
    their customers and employees might have. However, being involved in a lot of
    environmental and human rights violation have been a key weakness from them as it
    generates societal risk which could deteriorate their relationship with the public.
    References
    Friends of the Earth International. (2023, September 10). Eight Shell scandals and their

    contempt for the planet. https://www.foei.org/eight-shell-scandals/

    Bhasin, H. (2018, February 20). Marketing Strategy of SHELL – SHELL Marketing Strategy.

    Marketing91. https://www.marketing91.com/marketing-strategy-shell-shell/

    Digloria, N. (2019, October 3). Royal Dutch Shell organizational complexity. Organizational

    Theory.

    https://orgtheory.home.blog/2019/10/03/royal-dutch-shell-organizational-complexity/

    Haider, M. A., & Raees, O. B. (2018, August). Supply Chain Processes and Core

    Competencies at Shell Oil Company.

    https://www.slideshare.net/slideshow/shell-supply-chain-management/108807906

    Shell Global. (n.d.). Our Company History | Shell Global.

    https://www.shell.com/who-we-are/our-history/our-company-history.html

    Statista. (2024, May 22). Shell’s revenue 2011-2023, by region.

    https://www.statista.com/statistics/279424/royal-dutch-shells-revenue-by-region/

    Sheridan, N. (2024). Shell Marketing Strategy 2024: A Case Study.

    https://www.latterly.org/shell-marketing-strategy/

    Röthlisberger, S. (2005, May). EXCELLENT SUPPLY CHAINS IN THE OIL INDUSTRY:

    ROYAL DUTCH/SHELL.

    https://ctl.mit.edu/sites/ctl.mit.edu/files/SC2020%20Thesis%20Shell.pdf

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