International Business: Royal Dutch Shell - Essay Example

?Running Head: International Business: Royal Dutch Shell International Business: Royal Dutch Shell [Institute’s Table of Contents Table of Contents 2 Introduction to Royal Dutch Shell 3 Royal Dutch Shell’s Operations on an overall basis 4 Royal Dutch Shell’s International Activities 6 Geographic and Product Markets of Royal Dutch Shell 6 Historical Development of the Royal Dutch Shell’s International Business Operations 8 Interpretation of Royal Dutch Shell’s Behavior 9 Principal goals of Royal Dutch Shell for international business 9 Royal Dutch Shell’s adjustments to challenges of internationalization 10 Royal Dutch Shell’s approach to ‘organization and control’ of its international operations 12 Conclusion 13 References 15 Introduction to Royal Dutch Shell Oil and gas has been one of the most vital and indispensable natural resources since world came into existence. However, several organizations have engaged themselves in the process of not only exploring, extracting, and reserving oil and gas chemicals but also in the manufacturing, distribution and marketing of oil products and chemicals. Amongst those various giants in the oil and gas industry, Royal Dutch Shell is one of the world recognized and renowned name for the oil and gas company that have existed since decades and is commonly termed or known as Shell (Miller-Jones, 2010, pp. 1-5). According to one of the famous magazines, Royal Dutch Shell comes under world recognition in the industry of oil and gas. Numerous sources of information also provides with the fact that Royal Dutch Shell has been involved in the production of oil and gas in more than twenty-five countries, spread all over the globe and have its operations in over ninety countries. In addition, manufacturing, distribution and marketing of oil products and chemicals are the primary processes that Royal Dutch Shell is involved in and produces over three million barrels of oil on a daily basis. Studies also reveal the piece of knowledge that more than ninety five thousand workers and laborers comes under association to this giant multinational (Tzuu-Yau Yeh and Yeh, 2004, pp. 66-67). On an international platform, Royal Dutch Shell entails itself in the process of exploration and extraction of crude oil and natural gas. As an outcome of such processes, gas, power and petroleum products then comes under production, refining, marketing and trading procedures. Besides, the company endow with cleaner-burning fuels by producing liquids from the conversion process of the natural gas. Furthermore, Royal Dutch Shell also generates the wind power to generate electricity, which is originated from the conversion of synthetic crude oil (Miller-Jones, 2010, pp. 1-5). Royal Dutch Shell’s Operations on an overall basis While having a glance at the Annual Report of Royal Dutch Shell, it has come under consideration that Royal Dutch Shell has become one of the biggest multinational corporations, when calculated in its returns, profits, and revenues. According to Royal Dutch Shell, they are a giant corporation that works in collaboration with its partners, communities and governments so that they can meet the rising demands and needs of the energies for their customers in a much more sustainable manner. Consequently, they are able to function more conscientiously in the sectors of economic, environment and social (Shell, 2010). Royal Dutch Shell is a corporation that operates its business processes in more than ninety countries. Extensive studies expose the fact that at this time three prime business segment alliances comes under Royal Dutch Shell: Upstream, Downstream and Corporate. The first grouping of Royal Dutch Shell that is upstream is an amalgamation of Upstream International, which administers and deals with the business that is external to the region of United States and Upstream Americas that manages and runs run business operations in the geographic location of North and South of America (Reuters, 2012). Searching, and recovering the natural gas and the crude oil encompasses the principal responsibility of this upstream international grouping. In fact, this group also transports the gas after the process of gas liquefaction. It also controls and drives the upstream and midstream infrastructure that is essential and crucial in the delivery of the oil and gas to the marketplace. Apart from these activities, the segment of Upstream also comes under engagement in the process of converting the oil sands that is the result of the hauling out of bitumen into synthetic crude oil. Additionally, Upstream Americas also operates the infrastructure that is vital for the delivery of oil and gas to the market (Reuters, 2012). The second grouping of Royal Dutch Shell that is Downstream administers and governs the processes and activities related to manufacturing, distribution and marketing of oil products and chemicals. Refinery, supply and shipping of crude oil also comes under the manufacturing course of actions. However, the principal support functions that take account of holdings and treasury, fundamental functions of headquarter, and activities related to self-insurance are the pivotal responsibilities of the last grouping, Corporate on which it stands (Reuters, 2012). Moreover, this group is also accountable to look after the chief and leading projects. Indeed, this grouping produces and design technology solutions through prompt research and innovation and provides technical services. Providing practical and useful leadership throughout the corporation globally, predominantly in the areas of health, safety and environment, and contracting and procurement comes under their prime responsibility as well (Reuters, 2012). While managing the entire process of business operations, Royal Dutch shell encounters scores of issues and problems. Change in climate, different and diverse types of pollutions, increasing pressure on land for bio-fuels, biodiversity, and extinct and endangered species are few of the grave concerns from a wide range of sustainability issues that Royal Dutch Shell come across while operating its business operations on a worldwide basis. However, working conditions, native people’s rights, livelihood and well-being of neighborhood areas or close by societies, health related problems, corruption, interfering with politics, safety, taxes and scores of subject matters also add to the sustainability issues that Royal Dutch Shell runs into (Kiernan, 2009, pp. 240-243). Royal Dutch Shell’s International Activities According to one of the recent sustainability report of Royal Dutch Shell, the concerns regarding the environmental protection is becoming more challenging with the passage of time, due to the reason that these challenges develop and enlarge with the increase in need of energies. As an outcome, it is grabbing the core focus of the corporation that leads to improved actions and measures through the facilitation of leading experts. Royal Dutch Shell is completely aware and values the impact that projects lead on water, land, and air, and thus, they have more focus towards the environmentally sensitive areas that include spills, flaring, water, CO2, and others. Biodiversity plans are one of the approaches and resolutions that Royal Dutch Shell considers that can ensure the protection of rich ecosystems (Webster, 2000, pp. 212-214). Another noteworthy example of Royal Dutch Shell representing the approach to international activities is the hiring and purchasing on local basis that can promote and sustain development in every country it operates. According to Royal Dutch Shell, they believe that the entire group and every person associated with this corporation is a part of their community, hence, they deem in sharing a wide range of benefits with them. This includes local employment, training, contracts for goods or services, investments, and various others (Allsopp, 1995, pp. 188-189). Geographic and Product Markets of Royal Dutch Shell The records of Royal Dutch Shell expose the fact that they correlate and link a huge number of suppliers and above forty thousand contractor staff with them. However, training, particularly in global tendering and contract management process is one of the core business strategies that they apply for the local suppliers that can help and ensure those local suppliers to be competitive for contracts. Such trainings even maintain and advocate Royal Dutch Shell in accomplishing their quality standards on an international basis (Mullerat and Brennan, 2010, pp. 531-535). While looking at the example of Nigeria, it can come under elucidation that Royal Dutch Shell has been in a continuous process to assist and facilitate the local businesses and entrepreneurs to succeed in getting their contracts through the deployment of a dedicated full time team since many years. As an outcome of such a dedicated team, Royal Dutch Shell has been successful in providing training to a huge quantity of service providers in the contract management. In fact, considerable amounts of people have come under training in a wide range of expertise and skills that incorporate entrepreneurship, project management, catering, scaffolding, and welding (Mullerat and Brennan, 2010, pp. 531-535). Royal Dutch Shell company information also provides with the verity that since the last couple of years they have been in a practice of investing and spending a significant amount of money and resources for programmes on community levels that can function on a much more effective manner. Society and community betterment and promotion in substantial ways has always been a paramount objective for Royal Dutch Shell, for which they have made investments in the social projects (Arena, 2004, pp. 33-34). Due to this aim, records and evidences provide with the knowledge that Royal Dutch Shell has recently updated their strategies with respect to global investments. These restructured and efficient strategies do not only come under designing to endorse the societal benefits but it also integrate and create a connection to a number of their business activities for instance road safety, local enterprise development and many others (Arena, 2004, pp. 33-34). Royal Dutch Shell also discloses the fact that they support and fortify a huge number of entrepreneurs in initiating, starting up, and constituting business. For this support, Royal Dutch Shell has also launched an active programme that is and running in more than twenty countries (Mullerat and Brennan, 2010, pp. 531-535). Historical Development of the Royal Dutch Shell’s International Business Operations With respect to the climatic change, that has been a serious sustainable issue for Royal Dutch Shell, this company instituted and pioneered the process of injection of CO2 as an approach of improvisation in recovery to the problem of change in climatic conditions. This process has now become and treated as a trademark for the solution to the issue of climate change (Kerr and International Energy Agency, 2007, pp. 21-22). In the decade of 1990, Shell launched and opened a learning center that came under designing to encourage and promote freethinking and made it a field where new ideas can come under practice and application (Shell, 2012). Process safety is another leading concern for Royal Dutch Shell, for which they have employed themselves in the investment of a multi billion programme in the recent years. This investment makes certain that the improvisation in the safety of their wells, pipelines and other upstream facilities come under proper measures. Furthermore, their aim of maintaining permanent process safety also goes with their downstream business. Royal Dutch Shell has invested a huge sum of amount to make sure that their processes of refineries, chemical plants, and distribution facilities are secured and reliable (Reuters, 2012). Royal Dutch Shell has constantly and repeatedly revised and renewed the programme for more than three decades that has gained an international recognition. According to this programme, the drilling engineers employed at Shell comes under obligation to undergo a precise and meticulous field training, course work and mandatory examinations. This rigorous programme has come under development not only to certify that the employees are well trained and competent but also that deep-water safety measurements are acquired (Shell, 2012). Interpretation of Royal Dutch Shell’s Behavior Principal goals of Royal Dutch Shell for international business Royal Dutch Shell is one of the acclaimed oil and gas corporations that have aimed and objected on an international platform and its operations and income are contingent on competition, economic conditions, political affairs, legal matters and regulatory procedures, social concerns, businesses and financial risks (Shell, 2010). With respect to the aims and objectives for international business, Royal Dutch Shell introduced and launched an entirely new concept and approach of packaging of motor oil termed as Ecobox™. In comparison to the conventional plastic bottles, cardboard played the role of protector and shelter that contained oil in a flexible plastic liner. This packaging is even safer and uncomplicated in terms of its storage and transportation, as it not only leaves less remaining oil behind in the container but also reduces the wastes and minimizes spills. Furthermore, when weighing against the conventional plastic bottles, Ecobox™ produces lesser quantity of landfill waste and the carbon produced is completely recyclable and ecological (Janeiro, 2010). Extensive studies demonstrate that the popularity of Ecobox™ escalated so much that it is now widely used in a considerable amount of vehicle service centres in the region of United States and Canada. Shell lubricants have also come under recognition and in the ranking of sustainability and Ecobox™ has termed as the key factor of success (Janeiro, 2010). Records exhibit the piece of information that the utilization of consumer goods is rising with the increase in population, and thus giving rise to the demands of consumer goods, chiefly in the developing countries, including the foams, mattresses, and seating. It has been an observation that in order to meet the consumer demands various producers are adding high quantities of toxic and harmful chemicals to the foam mix. These chemicals are highly unsafe for the workers involved in the process of making it (Aftalion, 2001, pp. 276-277). However, Royal Dutch Shell makes the key ingredient at the chemical plants in the Asian and European region under the supervision of highly trained employees. Moreover, with the help of the technological teams, Shell is able to develop a new type of old ingredient that has the capability to make low-density foams in a more safe and secure manner to meet the demands of the customers in the developing nations. Consequently, Royal Dutch Shell now makes higher quality foams that are more reliable and safe, and thus, alleviating and reducing the risk of releasing toxic vapors during production (Aftalion, 2001, pp. 276-277). Royal Dutch Shell’s adjustments to challenges of internationalization Intense and powerful competition has always subsisted in the marketplace with regard to the oil and gas industry and the demands have been growing at a constant pace. Nevertheless, for Royal Dutch Shell, their technology, potentials with project delivery and operational excellence have always been the principal and leading factors that have created a difference for them as they have always had confidence and trust in these key distinct factors (Eliasson, Riemer and Wokaun, 1999, pp. 17-20). Royal Dutch Shell was a corporation who initiated with few enterprises that was the result of mergers, and operated its business in less than five countries. Nonetheless, with the passage of time, it grew its business operations, and entered and functioning its operations in more than ninety countries, according to the current statistics (Eliasson, Riemer and Wokaun, 1999, pp. 17-20). According to Royal Dutch Shell, all of their foremost and leading business opportunities follow the standard set of processes and operations in contrast to the processes in home country that facilitates them in their planning and delivery of their project. This process has its foundation stone on six major process (please refer the below diagram). (Shell, 2012 – Operating Responsibly) The process initiates with the assessment of regulatory, environmental and social impacts in conjunction with the commercial and technical considerations takes place before the commencement of any significant or considerable work on major projects or even on existing facilities. The ecological, social and health evaluation and assessment comes under practice that can create a substantial level of understanding in order to have measurements to manage the risk and opportunities (Shell, 2012 – Operating Responsibly). Emissions and release of carbon dioxide is an eminent factor that also comes under consideration and thus, the potential cost of emissions of CO2 in major of the investments decisions becomes a prime aspect. Royal Dutch Shell in order to develop their plans and approach on the standards seeks advice from and confers to governments, communities, environmental experts, and even non-profit organizations. This early involvement and participation helps Royal Dutch Shell in various sorts of activities for instance regulating the calendar of seismic activities, re-routing the pipelines, increasing contracting locally and several others (Webster, 2000, pp. 212-214). Royal Dutch Shell’s approach to ‘organization and control’ of its international operations Respect for human rights, environmental protection and safe working environment are few of the business principles that are rooted in the original culture of Royal Dutch Shell since the time it came into existence. In addition, the technological advancement and the employment and investment in technology and innovation that can help deliver the energies with respect to its ever-growing demands have been another pivotal principle of Royal Dutch Shell (Lawrence and Weber, pp. 537-538, 2010). This can come under well understanding from the example of BP Blue Water Horizon explosion, which was one of the shocking and drastic incidents of the history that lead to the oil spill. People’s livelihood, ecological systems, marine lives and all the plants came under damage and suffering. Royal Dutch Shell was one of the biggest supporters and provided its support and assistance in the form of providing technical expertise, facilities, and equipment to BP. With the indelible imprints that this incident left on the entire surroundings, it made Shell take actions on immediate basis that can authenticate and underpin the safety of their operational projects around the world. The reviews of procedures and drilling validated that their approach towards the delivery of the project is entirely healthy and vigorous (Shell, 2012). Safety has been and continued to be on top of the priority list for Royal Dutch Shell. This is because it is one of their objectives to secure the lives of their employees, contractors and neighbors and no incidents of harm must be at risk. Safety from at all times has been an essential part of their culture. However, Royal Dutch Shell entails and obliges each individual to follow three principal behaviors: conform to or abide by the rules; intervene or mediate in unsafe situations or conditions; and have respect for the people and the environment (Oshionebo, 2009, pp. 82-85). Royal Dutch Shell has been playing a vital role in the management of fresh water use. Fresh water consumption and utilization is increasing to meet the demand of energy with resources that can lead to the development of gas, oil sands, and bio-fuels. However, the records disclose the information that Shell has always designed an approach, technique, and operational facilities that aids in the reduction of the fresh water utilization. Water management plant has come under formulation for the operations and projects in the water-confined areas. These Water management plants are especially prepared to analyze and distinguish not only the ways of water reprocessing and recycling, but also by what ways less amount of fresh water can come under utilization (Oshionebo, 2009, pp. 90-92). Conclusion The evidences summarized in this paper undoubtedly states that over the years passed by, the progressions of Royal Dutch Shell have proved that Royal Dutch Shell is one of the most accelerating and emergent multinational corporations that the oil and gas industry has ever witnessed. The core competencies of Royal Dutch Shell initiates from the exploration and the search of oil that pass through the process of harvesting and production, which then comes under the transportation for refining and ends up in trading into the market. Natural gas has also become one of the core competencies of Royal Dutch Shell relies on, as it has become a significant contributor to the profitability and progression of the corporation. Royal Dutch Shell believes that with the mounting needs of energy for the economic development, gas and oil plays an integral role in fulfilling the needs and demands. However, Royal Dutch Shell deems that it is their role to ensure that they must extract and deliver these needs of energies in a more lucrative and cost-effective manner, and even in environmentally and socially responsible means. Royal Dutch Shell in comparison to others, endeavor a higher standard of performance in their working operations and continue, sustain and uphold positions in the competitive surroundings that are strong, enduring and ever increasing. In fact, customers, partners, and policymakers are the key people that Royal Dutch Shell aims and intends to work with that can lead to precede utilization of energy and natural resources in more efficient, effective, and sustainable manner. References Aftalion, Fred. 2001. A history of the international chemical industry. Chemical Heritage Foundation. Allsopp, Vickey. 1995. Understanding economics. Routledge. Arena, Christine. 2004. Cause for success: 10 companies that put profits second and came in first: how solving the world's problems improve corporate health, growth, and competitive edge. New World Library. Eliasson, B., Riemer, P., and Wokaun, Alexander. 1999. 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