Transformation of Shell - 4 - Essay Example

Transformation of Shell International Transformation of Shell International Shell international is a global petrochemical company having employees in more than 90 countries. The shell management had commenced a process of restructuring company’s internal organization in early 1994 in order to improve Shell’s financial position and to vie with its competitors. In 1995 Shell was restructured into five global business units by replacing the matrix form of organization structure which the company had been following since 1950.

Each of this business unit has separate superior authorities to watch over various matters associated with the concerned units. From the results of a series of exercises conducted by several private management consultants, the company began to shift from their strict business attitude to social and environmental performance. As a result, the leadership attitude of the officials also changed; they geared up for taking more responsibilities. Similarly the Shell revised ‘General business Principles’ with regard to the results obtained from the integrity works.

In addition to this, the company developed its own Web Site facilities in order to get timely feedback and suggestions from the public. Likewise, the shell international conducted ‘written and face to face’ conversations with stakeholders to remove their dissatisfaction. These changes were necessary for the Shell international since they had suffered a lot of internal as well as external problems such as Brent Spar issue, Nigerian human rights, and Shareholder campaigns.

The resistance of Greenpeace to the disposal of Brent Spar at sea attained media coverage which reduced the company’s reputation among the public. The Shell also faced a consumer boycott which caused the decline of their sales volume to a large extent. Similarly “Shell’s return on average capital employed (ROACE), a common measure of performance in the petroleum industry, showed that the company lagged behind many of its competitors” (Lawrence, 2000, p.533). In addition to this the Shell executives had to compete with discount retailers at retail level which led them to reduce their efficiency in business operations.

At the earlier stages the company had followed a matrix form of organization which resulted in red tapism and delayed decision making. The close analysis would make us think about the essential changes Shell required for taking advantage of maximum opportunities from the business. The Shell international had forgotten the basic principle that customers are the crucial part of a business without whom a business can little survive. For instance, they proceeded with their disposal mission of Brent Spar without the support of the public and failed.

Moreover the company has to be more vigilant in dealing with the public sensitive issues. Similarly, it is not suggestible for the company to seek help from private management consultants in order to formulate business policies because they may not be reliable and efficient. The company must give importance for market forecasting in addition to ‘diagnosis of the current reality’. Similarly, the reformation of organizational structure will have no use if it is done without the support of the employees.

So the reformation process must start from the employees since they are the central part of an organization. The managers and other top executives should be encouraged to develop innovative ideas which would help the organization to confront with the competitive market conditions. It is better for the Shell international to form some specific system within the organization in order to congregate the company as a whole.ReferencesLawrence, A. T. (2000). The transformation of Shell. The Council on Ethics in Economics. 531-540.