The Transformation of Shell - Case Study Example

Running Head: SHELL COMPANY The Transformation of Shell Shell Company's objective has been to engage efficiently, responsibly and profitably in the sale of gas, oil and chemicals in the petroleum industry .It has also been involved in the development and research of other forms of energy so that the demands of its customers can be met. The company ensures that it extracts and delivers all its products in a socially and environmentally acceptable environment to all their customers. The company has also been able to maintain a very strong relationship with their customers as well as maintaining a highly competitive edge against their competitors in the market. It has had a very good working relationship with the stakeholders in the industry and they include: partners, shareholders, suppliers, contractors and also their customers. The values that govern the company include respect for all, high sense of integrity and honesty at all levels within the organization. Mutual respect, openness, communication, team work, joint solving of problems and a high level of professionalism also govern the company. Relationship with Stakeholders The stakeholders in the industry include shareholders, customers, employees, business Partners, suppliers and the society at large. The company acknowledges that the success of its company largely depends on the contributions made by its employees. The company thus respects the basic rights of its employees by providing them with a good working environment so the employees can work comfortably .They provide them with clean and hygienic employment conditions for them to work in. Once they employ their staff, they tend to motivate them by making the best use of their talents through training them so that they get new skills (Post, Preston, and Sauter-Sachs, 2002). The environment in which the employees work is all-inclusive whereby all the employees regardless of their background are given equal opportunities to develop their skills and talent. The employees are also included in the decision making process by including them in the planning stages and also offering them the necessary support and guidance while they perform their duties. A feedback program has also been put into place whereby the employees are encouraged to raise any concerns that they may have and also give opinions on what they would want to see improved in the organization. The customers are also a very important aspect in their business. The company has come up with innovative ways that assists them to win and maintain their customers. They do so by providing goods and services that are very competitive in price, very high quality, safe and above all, environmentally friendly. For the company to be able to be competitive, a team of professionals in the environmental, commercial and information technology departments support them (Post, Preston, and Sauter-Sachs, 2002). Shell also seeks to have a mutually beneficial working relationship with all its business partners' .The partners include the suppliers, contractors, and any other parties that they could be having a joint venture with. They seek to promote the basic business principles that they possess. With their partners on board, it assists the company to make strategic decisions on whether to get into more partnerships or pull out of the existing partnerships. The company has been involved in the corporate social responsibilities whereby they try to do their business by complying with all the rules and regulations under the law, observing the basic human rights while at the same time providing proper guidelines on issues to do with the safety, health, security and the environment. Business Principles The Company believes in fairness, honesty and integrity while performing their duties and they expect to be treated the same by their partners and competitors. The company has come up with a policy against bribery, soliciting of money, and any other activities by the employees that would be with in conflict with the company affairs. The company also expects that all transactions done by the employees on behalf of the company must be reflected fairly and accurately in all their books in accordance to the set standards and procedures for disclosure and auditing purposes. With regard to competition, the company believes in fair competition in the market. They therefore seek to compete fairly with their competitors within the legal framework of the law. The company does not prevent others to compete with them by engaging in unfair practices but instead they seek to fight competition by improving on the quality of their goods and services. The economic principle is also a basic principle that the company believes in. The company believes that the profitability of the company is essential in assisting the company achieve its set goals and objectives and eventually lead to the growth and stability of the company. The economic factor is very important in measuring the efficiency and the value of the products and this ultimately affects the way the customers view their products. Thus, with good economic resources the company has been able to develop new products that they meet the needs and requirements of the customers. It must be noted that without sufficient economic resources the company cannot be in a position to meets its obligations to the customers. The company also acts in a responsible manner whereby it operates within the laws of the country they operate in. It restrains itself from giving money to politicians and political parties, high ranking individuals and neither do they give money to any organizations or their representatives. When dealing with Government officials, the company responsibly discloses any matters that may affect the company, members of staff, shareholders and the society at large to the Government. They also allow any members of staff who would wish to participate in politics to do so. Regarding communication, the company engages in regular communication and dialogue with all the stakeholders in their business. They empower their employees by sharing the relevant information with them and other interested parties but it is usually subject to the confidentiality consideration. They company has continuously been in the forefront in ensuring that they reduce the environmental damage caused by their products. They do so in a systematic way so that they can reduce the negative mitigating effects of their products. The issues that affect health, safety, security and the environment are treated as critical aspects of their busineess.Therefore, they have set standards which can be measured ,appraised and a feedback given to find out if they have deviated from the standards (Tilde, and van der Zwart, 2006). Organizational structure The company's organizational structures consist of four business units which have played in big role in achieving growth, stability and integration in the company. The four units are the business organization, the Corporate Centre, professional center and the operating unit .These units give the committee of Managing Directors the authority to carry and discharge out their duties efficiently as per the chain of command .The corporate center assists in setting the strategic decisions of the company and growing the company's investment portfolio. This unit also assists the management with issues such as taxation, management of the company's assets and also deals with the financial matters of the company. A committee of directors heads the business organization unit and the unit assists in strategizing for the specific areas of interest, appraising the performance of the units, and also availing the technical knowledge needed by the company. The professional unit provides all the professional support that is needed in the management of the company. The unit offers professional services in areas such as marketing, finance, security, purchasing, legal expertise, knowledge on intellectual property, medical services and other essential services. The operating unit helps in the primary role of running the company and a Chief Executive Officer usually heads it. His major duties and responsibilities include the setting of the company's strategic goals, providing direction and leadership, setting the targets and providing effective reporting on the company's affairs (Grant, and Neupert, 2003). Reporting Practices. The company has been generating various reports that assist the company in running of its affairs. For example, Shell Company in Canada has got the environment management system that reports on the management and the total loss management systems. They have the Suncor report gives a report on the intensity of energy consumed for every business unit. They also have a report that reports on any spills that may have occurred over a specified period of time. A Talsum report is a report that is generated to give the average content of oil for every pint of water that is discharged. The Syncrude report gives information on the level of sulphur dioxide that has been emitted while the compliance report indicates what rules and regulations have or have not been complied with as per the laws. Pressures facing Shell According to the Association of Business Insurer (ABI) which is a governance agency, the company faces a major revolt from its shareholder due to their executive pay package for the senior managers. The agency has notified the shareholders of the intention of the company to pay its senior managers bonuses despite the fact that the company never made it to meet its target for the financial year. ABI normally issues such notices if it believes that a company has deviated from its corporate duty of good governance practices. The Interdependent Governance Agency under the leadership of Sarah Wilson has also criticized the report of the pay packages for the top management (Thomson, 2009). Due to the economic meltdown, tough environmental standards and demand for energy the company has been forced to invest heavily in technology. The company acknowledges that for it to improve on its processes, meet the demands of their customers and increase production they have to be more innovative. The innovative solutions being implemented including processing of feedstock's and crude oils that are not convectional, processing of hygienic products and using the catalyst method to produce high quality goods. The company is also implementing the hydro processing solution with high quality catalysts to improve on the refining process. This means that the company has to invest more money into the projects so that the company meets its obligations. The government is also concerned about the carbon emission that has contributed to the erosion of the ozone layer and global warming thus affecting the natural habitats. Shell has often been accused of bad environmental behaviors of avoiding its environmental responsibilities .It has been accused of making empty promises of protecting the environment from its hazardous effects. For example in Canada, the company faces a major obstacle after environmental groups asked the Government to stop an expansion program of extraction of oil after it was accused of not taking steps to stop the emission of green house emissions. The company had made a commitment in writing that they would reduce the carbon dioxide emission by over 900,000 tons per year but they did not do that. Shell also faced various lawsuits against it by its consumers. For example, the residents of Florida sued the company because of selling contaminated gasoline that had excessive sulphur dioxide thus exposing them to harmful effects. Shell project Shell has a refining facility at Port Dickson which has undertaken a project in the regeneration of power from the energy generation. The refinery produces excess steam and power from flue gas in its Long Catalytic Cracker Unit (LCCU) and thus the excess steam is being used to regenerate power instead of wasting it. In return, this has led to increasing the revenues of the company as well as meeting the demands of the customers through alternative sources of energy that are safe. Another project that was initiated by Shell in Sabah was to try and eliminate the continuous emission of the gases by re-injecting the gas into their underground reservoirs thus reducing the harmful effects on the environment. Shell Global solutions and Criterion Catalysts Technologies completed a project for a refining company that had experienced a lot of problems of a deactivated hydro cracking treatment catalyst a few months after its operations. This deactivation led to the shortening of the catalyst life and eventually leading to very huge losses for the company. Shell gathered its team of experts to look into various areas of running the company such as operations, distillation, hydrocraking, hydrotreating, technology and consultancy. It did so by carrying out a Root Cause Analysis (RAC) so as to find out the problems affecting the refinery. The company also followed a very innovative strategy known as a Value Creation Activity (VCA). Based on the investigations the team of experts suggested a closer investigation into the operational activities of the vacuum distillators, hydrocracking unit, any misdistribution and leakages and the possibility of streamlining the operations of the company so that the company can meet its demands towards the customers. As per the company's economic principles, Shell was able to spend huge economic resources to assist the company find out the root cause of the problems. The company was able to inject professionalism in the company by hiring a team of experts to assist in providing professional knowledge. The reason why the Root Cause analysis was done using the Value Creation strategy was that because they wanted to improve the services to their employees while providing quality products to them (Grant, and Neupert, 2003). Conclusion Shell being a multinational company has assisted in the growth of economies around the world. It has also been involved in the creation of employment to many people while providing alternative sources which are clean and hygienic. References Gold, R. (2009) .Environmental groups to contest shell's oil sands projects Website available At: http://72.14.235.132/searchq=cache:OCQnhfSM6XIJ:online.wsj.com/article/SB123914719651798953.html+What+are+the+legal+problems+of+Shell+oil&cd=6&hl=en&ct=clnk&gl=keAcceseed (Accessed on May 18 2009). Grant, R.M. and Newport, K. E. (2003).Cases in contemporary strategy analysis. United States of America:Wiley-Blackwell. Post, J. E., Preston, L.E. and Sauter-Sachs, S. (2002).Redefining the corporation: stakeholder Management and organizational wealth. United States of America: Stanford University Press. Thomson, V. (2009). Shell facing possible revolt over payouts .Available at: http://74.125.77.132/searchq=cache:I9k7odbk3W8J:business.scotsman.com/energyutilities/Shell-facing-possible-revoltover.5237179.jp+what+are+problems+facing+Shell&cd=3&hl=en&ct=clnk&gl=ke&client=firefox-a.Accessed (Accessed on May 18 2009). Tulder, R. and van der Zwart, A. (2006). International business-society management: linking Corporate responsibility and globalization. United States of America: Routledge. Read More