Royal Dutch Shell in Nigeria: Operating in a Fragile State - Case Study Example

The merger between the two giant companies have also received backlashes from several quarters of what has been termed as unethical practices in their day to day oparaions.Challenges faced by the company therefore is not only restricted to management but also inclined to politics. For example, shell has been accused on using unethical underground practices to outsmart their competitors in the oil industry. This is as far as getting into deals with governments of respective states to offer them advantage over their competitors though disguised to public knowledge.

Political challenges have hurt investment and management strategies for the company in a number of volatile states. Political situation in Nigeria is one good example. Tackling the challenges in terms of accurate information to the general public calls for accountability among the management. Management should ensure that accurate information is given on true status of the company in their quest to win over investors.Secondly; the company should keep a safe distance in political matters in countries they operate in such as in Nigeria.

This is because this dents its image and counter accusations destabilizes investment environments (Cullen, 2011). Political situation in Nigeria has puts Shells operations at a great risk especially the volatile situation witnessed constantly from time to time. For example, tension emerged between the company and the locals from Ogoni around Niger Delta. The community asserted that they least benefited from the companies operation and their land was over exploited by the investors. They also lamented that the company’s operations was a threat to the environment.

However,the Company boasts as a major revenue contributor to the Nigeria government which is a valuable asset for the successful running of any state. At the same time, the company has strived within their capacity to hire local population and this has created jobs for the natives. Nigeria economic system largely depend on the extraction industry for its sustainance.The locals take the oil reserves as their property a factor that complicates matters even for good-willed investors. This puts the country in a limbo since it lacks the capacity to undertake some of the tasks yet the local population is resentful to foreign investors.

Shell continues to face a number of political risks in Nigeria ranging from incitement of the locals by politicians to ethnic clashes among native clans, which scuttle investment plans. Despite environmental challenges in their operation being a factor to consider, shell has attempted to minimize degradation as much as possible.However, politicians have hijacked such opportunities to make environmental issues be an emotive subject, and this has complicated operations for shell (Cullen, 2011).

The government has a major role to play in influencing shell’s operation in the country. It is the responsibility of the government to protect investor interests and to maintain stability of the country. This if not addressed on time is likely to hurt future prospects and may even lead to termination or closure of foreign company’s in that particular country. The government should put in place regulations guiding the relationship between foreign investors and locals. After this has been done, sensitization programs should be rolled out in the communities where investors are carrying out activities such as extraction (Cullen, 2011). T