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Shell

In: Business and Management

Submitted By bia1987
Words 4804
Pages 20
DEDICATION 4 ACKNOWLEDGEMENT 5 Synopsis of Development and Growth of Shell Pakistan 6 Shell Pakistan’s History 6 Vision 6 Values 6 Main objectives 6 Products and services 7 FINANCIAL ANALYSIS 8 Ratio Analysis 8 Short Term Debt Paying Ability 8 Profitability Ratios 15 Ratios for Investors 18 Long Term Debt Paying Ability 19 Overall Financial Performance 21 PESTEL ANALYSIS 22 Political Factors 22 Economic Factors 22 Social Factors 23 Technological Factors 23 Ecological Factors 23 Legal Factors 23 SWOT ANALYSIS 24 Strengths 24 Weaknesses 24 Opportunities 25 Threats 25 REFERENCES 26

Synopsis of Development and Growth of Shell Pakistan

Shell Pakistan’s History

The Shell brand name enjoys a 100-year history in the subcontinent region, dating back to 1899 when Asiatic Petroleum, the far eastern marketing arm of two companies: Shell Transport Company and Royal Dutch Petroleum Company began importing kerosene oil from Azerbaijan into the subcontinent.
The documented history of Royal Dutch Shell plc in Indo_Pakistan subcontinent dates back to 1903 when partnership was struck between The Shell Transport & Trading Company and the Royal Dutch Petroleum Company to supply petroleum to Asia.
In 1928, to enhance their distribution capabilities, the marketing interest of Royal Dutch Shell plc and the Burmah Oil Company Limited in India were merged and Burmah Shell Oil Storage & Distribution Company of India was born. After the independence of Pakistan in 1947, the name was changed to the Burmah Shell Oil Distribution Company of Pakistan. In 1970, when 51% of the shareholding was transferred to Pakistani investors, the name of changed to Pakistan Burmah Shell (PBS) Limited.
The Shell and the Burmah Groups retained the remaining 49% in equal proportions. In February of 1993, as economic liberalization began to take root and the Burmah divested from PBS, Shell Petroleum stepped into raise its stake to 51%. The years 2001-2 have seen the Shell Petroleum Company successively increasing its share, with the Group now having a 76% stake in Shell Pakistan Ltd (SPL). [1]

Vision

“To be a top performer of first choice” [2]

Values

Shell Pakistan Ltd. employees share a set of core values – honesty, integrity and respect for people. They firmly believe in the fundamental importance of trust, openness, teamwork and professionalism, and pride in what they do.

Main objectives

* Are to engage efficiently, responsibly and profitably in oil, gas, chemicals and other selected businesses * To participate in the search for and development of other sources of energy to meet evolving customer needs and the world’s growing demand for energy. [3]

Products and services

The categories of Products and services offered by shell Pakistan include: * Shell retail * Shell Lubricants * Shell commercial fuels * Shell aviation [4]

Corporate Level Strategy
Corporate level strategy of any company is the business the company is competing in. This strategy answers two main questions; what business areas should a company participate in so as to maximize its long-run profitability? And what strategies should it use to enter into and exit from business areas?
In 1928, Royal Dutch Shell plc and the Burmah Oil Company Limited in India were merged and Burmah Shell Oil Storage & Distribution company of India was born. After the independence of Pakistan in 1947, the name was changed to the Burmah Shell Oil Distribution Company of Pakistan. In 1970, when 51% of the shareholding was transferred to Pakistani investors, the name of company changed to Pakistan Burmah Shell Limited (PBS). (1)

(1) http://en.wikipedia.org/wiki/Shell_Pakistan

Shell Pakistan has ventured into various businesses which are as follows:

* Shell Retail
They have introduced a number of initiatives to bring customers an unrivalled fuelling experience. Previous years saw the launch of initiatives such as the New Shell Petrol Shell Card and Under Ground Tank (UGT) seals. Following the successful launch of Better Mileage petrol in 2005, they introduced Diesel Fuel Economy in 2006. * Shell Lubricants
Shell lubricants are global market leaders with a 13% global market share. The three major Lubricant brands Shell Helix, Shell Rimula, and Shell Advance, have all earned the super brand status not just globally but also in Pakistan- and are currently market leaders across Passenger cars, heavy duty vehicles and bikes. Shell was the first company to launch its CNG variant for CNG cars to service the ever-increasing CNG motorists. This year Shell has launched Shell Helix Ultra for passenger car motor oils. * Shell Commercial Fuels
Shell provides world-class domestic heating oils, commercial road transport and industrial and wholesale products to business customers.

* Shell Aviation
Shell Aviation business has positioned itself as the supplier of first choice for all major foreign airlines visiting Pakistan. They have been serving all the major domestic & international airlines and aviators visiting major airfields of Pakistan since independence. One of the main developments in infrastructure was the completion of the Jet A1 pipeline from Chaklala depot to the Islamabad Airport. (2) (2) http://www.shell.com.pk/home/content/pak/aboutshell/shell_businesses/pakistan_business_structure/

There are three types of strategies which can be adopted by a company to enter any business.

* Vertical Integration: means that company is producing it’s own inputs (backward or upstream integration) or it is disposing of its own outputs (forward or downstream integration) * Diversification: * Strategic Alliance

Shell Pakistan has not vertically forward integrated, meaning that the forecourts are not owned by Shell Pakistan but franchised to individuals (1)
Shell Pakistan is not involved in the upstream business or midstream business hence we can say that it’s not vertically backward integrated even.

Shell Pakistan is a diversified company in terms of products. Its product portfolio includes products ranging from lubricants and gas. It’s pursuing a related diversification strategy since its limited its portfolio to only energy products.

Lastly, Shell Pakistan has not yet exited from any business, therefore there is no known exit strategy perused by Shell Pakistan.

(1) www.petroplaza.com

Business Level Strategy:-

Shell Pakistan, being the second largest oil company in the country, has effectively positioned itself as the preferred oil and Gas Company in Pakistan. It leads the field in its loyalty to customer service, quality of products, safety and environmental protection. Shell strives to meet and exceed customer expectations by delivering the best fuels and service to our customers at every site, every visit, everyday. The dynamic portfolio and fast growing retail network of Shell Pakistan has made it the most preferred brand among motorists across Pakistan.1

In general, companies pursue a business-level strategy to achieve above average returns and to outperform rivals by gaining a competitive edge over its competitors. The three generic approaches or strategies that are available for companies to choose from are Cost Leadership, Differentiation and Focus. Whatever the strategy adopted by a company, consistent strategic choices need to be made on product/service, market and distinctive competencies that a business acquires.

Cost Leadership: By producing goods or services at the cost lower than that of the competitors, the company attempts to outperform its competitors.

Differentiation: The objective of this strategy is to achieve a competitive advantage by producing a good or service to which customers place a higher value in terms of its competitors. The company adopting a differentiation strategy has a competitive edge over it rivals that they cannot imitate.

Focus: This is when a company focuses on serving a particular customer group, segment or market niche which may be defined geographically, by type of customer, or by segment of product line.

We believe shell Pakistan is currently pursuing Differentiation strategy to achieve a competitive advantage that is perceived by its customers to be unique in several ways. A company that pursues a differentiation strategy strives to differentiate itself along as many dimensions as possible. Shell Pakistan achieves Differentiation in all three principal ways- Quality, innovation and customer responsiveness.

Shell is a superior brand name with a 100-year history in this region. Shell Pakistan has maintained a consistent and superior quality throughout its operations in Pakistan. Shell’s Fuel Oil Quality Assurance System (FOQAS) ensures consistency and trust upon the quality of fuels through its tight specifications and strict procedures. The laboratories are regularly monitored and quality assurance measures are taken till the last stage.

Shell Pakistan, in lieu of its corporate social responsibility, is finding ways to provide cleaner products to customers, such as removing sulphur, enabling the cleaner use of coal, and taking out polluting particles from fuels.

Shell Pakistan differentiates itself from its rivals on the basis of innovation and technological competency depending on the R&D function. Shell has contributed the most in Research and development as compared to other major oil firms. It spent nearly $1.3 billion on the research and development in 2008 to excel in technologies that will be needed to produce more and cleaner energy, and more efficient fuels and products for their customers.

In 2009, Shell Pakistan launched the Quality, Quantity and Service (QQS) campaign to highlight it’s commitment and pursuit of excellence in customer relations to ensure more consumers trust Shell as their fuelling destination. Shell Pakistan annually participates in the Global Mystery Motorist Programme (MMP) to ensure highest performance at its forecourts. Independent bodies conduct service check at various forecourts and evaluate. This year, Shell Pakistan exceeded its industry targets.

Shell Pakistan is at its maturity stage of lifecycle. The market growth has slowed down and its investment strategy depends on the level of competition in the industry and the source of Shell’s competitive advantage. Shell is operating in an environment where barriers to entry are high due to high investment and capital costs. Being a differentiator, Shell adopts a hold-and-maintain strategy to support its business level strategy, where it utilizes its resources to develop distinctive competency so as to continue to achieve high market share. Lastly, Shell’s huge capital costs might be expensive for the company; however revenues that will accrue would warrant a strong competitive position in the industry.

References:-

* http://www.shell.com.pk/home/content/pak/aboutshell/shell_businesses/pakistan_business_structure/ * http://www.shell.com.pk/home/content/pak/innovation/meeting_demand/ * Chapter 6 – Business Level Strategy * www.wikipedia.com * http://www.shell.com.pk/home/content/pak/aboutshell/at_a_glance/ * http://www.shell.com.pk/home/content/pak/products_services/on_the_road/shell_station_locator/

SHELL PAKISTAN ORGANIZATIONAL HIREARCHY STRUCTURE
The organizational structure at Shell Pakistan is a very simple one. At the top, is the Cluster Manager, who heads the entire cluster of Pakistan. This cluster is defined on the basis of size of the market. Two National Sales Managers report to Cluster Manager, whereas, five Regional managers are accountable to National Sales Managers. Lastly twenty Territory Managers report to the Regional Managers respectively.
Exhibit below shows the hierarchy of Shell Pakistan.

The national manager heads all the dealings of the organization in Pakistan. The regional managers however manage five zones respectively into which the firm is split. These zones consist of; Peshawar & Islamabad, Sindh & Baluchistan, Lahore, Faisalabad and Multan. He reports about all the developments of the organization to the National manager.
Currently in Pakistan, shell has 5 regional managers working in different zones; each functional department under each zone is lead by a territory manager, who reports to the regional manager.
As discussed earlier, Shell Pakistan follows a business level strategy where they compete through differentiation.
Shell Pakistan achieves Differentiation in all three principal ways- Quality, innovation and customer responsiveness. The supporting departments help the territory managers by conveying the consumer demand and their perspective of need. This has created a trust among the customers of Shell, every time they come to the forecourt, they are confident about the superior quality fuel, which can only be achieved through constant consumer response and the flow of that information within the company. The business level strategy of differentiation through resource that aims to meet human needs while preserving the environment, thus ensuring efficient use of inputs.

FINANCIAL ANALYSIS

In the financial Analysis of Shell Pakistan we have decided to focus on those elements which are considered important for oil industry in Pakistan. Since profit margins are fixed, companies seeking to make higher profits can do so by efficiently managing inventory, hence we have calculated Inventory Turnover and Inventory Turnover in Day’s Ratio. Circular debt is causing oil companies in Pakistan to have high receivables and liquidity problems; as a result we have calculated Receivable Turnover Ratio, Current Ratio and Acid Test Ratio.
To measure profitability, we have calculated Total Asset Turnover Ratio, Return on Assets and Return and Equity Ratio.
To measure how attractive Shell Pakistan is in the eyes of the investors, we have calculated Earning per Share and Price Earning Ratio.
Due to the problem of circular debt oil companies has to obtain large amounts of loans from banks so in order to measure their long term debt paying ability we would be calculating Debt to Equity Ratio and Times Interest Earned Ratio for Shell Pakistan. Ratio Analysis

Short Term Debt Paying Ability

1. Inventory Turnover

Years | Cost Of Goods Sold | Average Inventory | Inventory Turnover | 2007 | 108,664,932,000 | 9111970000 | 11.92551468 | 2008 | 156,699,426,000 | 8624179500 | 18.16977789 | 2009 | 143,097,916,000 | 11355511500 | 12.60162662 |

The inventory turnover, which measures the number of times inventory is cleared per year, increased significantly in 2008 indicating that inventory was being managed efficiently. However, it has decreased from 18 to 12 in the year 2009, which shows Shell Pakistan is facing problems in this area due to large accumulation of inventory. 2. Inventory Turnover in days

Years | Inventory Turnover in Years | Number of Days in a Year | Inventory Turnover in Days | 2007 | 11.92551468 | 365 | 30.60664548 | 2008 | 18.16977789 | 365 | 20.0883028 | 2009 | 12.60162662 | 365 | 28.96451474 |

A similar trend can be seen through the inventory turnover in days, which measures the number of days it takes for the company to clear its inventory. This ratio decreased in 2008 which was a positive sign since it took Shell Pakistan fewer days to clear its inventory. However, it increased in 2009 from 20 to 28 days showing again that Shell Pakistan might be facing inventory management problems.

3. Receivable Turnover

Years | Net Sales | Average Account Receivables | Receivable Turnover | 2007 | 115,045,425,000 | 9871791500 | 11.65395612 | 2008 | 163,150,920,000 | 10600330500 | 15.39111634 | 2009 | 156,000,098,000 | 8870601500 | 17.58619165 |

Despite the problem of circular debt, Shell Pakistan has successfully managed to control its Receivable Ratio through growing sales volume. As a result, Receivable Turnover Ratio of Shell Pakistan has increased over the three years showing efficient receivable management.

4. Receivable Turnover in Days

Years | Receivable Turnover | Number of Days in a Year | Receivable Turnover in Days | 2007 | 11.65395612 | 365 | 31.31983647 | 2008 | 15.39111634 | 365 | 23.71497894 | 2009 | 17.58619165 | 365 | 20.75491996 |

The Receivable Turnover in Days Ratio, which shows the number of days it takes to collect the receivables, has decreased over the three years. It again shows efficient receivable management since it now takes Shell Pakistan fewer days to make the collections.

5. Current Ratio

Years | Current Assets | Current Liabilities | Current Ratio | 2007 | 19713632000 | 19612115000 | 1.005176239 | 2008 | 26546737000 | 30333233000 | 0.875170049 | 2009 | 21363250000 | 25169302000 | 0.848781981 |

Due to the problem of circular debt, oil companies like shell Pakistan had to acquire short term loans in order to carry on operations. This caused them to have liquidity problems; this can be seen through Shell Pakistan’s current ratio which decreased below 1 in the years 2008 and 2009.

6. Acid Test Ratio

Years | Current Assets – Inventory | Current Liabilities | Acid Test Ratio | 2007 | 11469578000 | 19612115000 | 0.584821066 | 2008 | 17542432000 | 30333233000 | 0.578323847 | 2009 | 7656532000 | 25169302000 | 0.304201205 |

Acid Test Ratio, which is a stricter measure of the company’s liquidity, has also decreased for Shell Pakistan over the three years indicating again that they are having liquidity problems which need to be addressed.

7. Operating Cycle

Years | Receivable Turnover in Days | Inventory Turnover in Days | Operating Cycle | 2007 | 15.56392545 | 30.60664548 | 46.17057093 | 2008 | 8.395405692 | 20.0883028 | 28.48370849 | 2009 | 4.872473189 | 28.96451474 | 33.83698793 |

The operating cycle is the period of time elapsing between the acquisition of goods and the final cash realization from sales and subsequent collections. For Shell Pakistan the period decreased significantly in 2008 and in 2009 it increased slightly, however still the operating cycle of Shell Pakistan is favourable.

Profitability Ratios

1. Total Asset Turnover

Years | Net Sales | Average Total Assets | Total Asset Turnover | 2007 | 115,045,425,000 | 28752163000 | 4.001278965 | 2008 | 163,150,920,000 | 34242028500 | 4.764639455 | 2009 | 156,000,098,000 | 36462931500 | 4.278320244 |

Total Asset Turnover, shows the ability of the firm to generate sales through the use of assets, increased in 2008 due to the sharp increase in sales. However, in 2009 the ratio decreased due to a fall in sales despite the fact that total assets had increased.

2. Return on Assets

Years | Net Income | Average Total Assets | Return on Assets | 2007 | 706,659,000 | 28752163000 | 2.457759439 | 2008 | -1,725,590,000 | 34242028500 | -5.039391869 | 2009 | 2,562,948,000 | 36462931500 | 7.028913734 |

Return on Assets, which measures the firm’s ability to utilize its assets to create profits, was negative in 2008 due to the large net loss incurred by Shell Pakistan in that year. However, in 2009 due to a sharp increase in net income as well as the total assets, the Return on Assets for Shell Pakistan in 2009 was at a healthy 7%.

3. Return on Equity

Years | Net Income | Average Total Equity | Return on Equity | 2007 | 706,659,000 | 9808758500 | 7.204367403 | 2008 | -1,725,590,000 | 7858164500 | -21.95919925 | 2009 | 2,562,948,000 | 7263080500 | 35.28734123 |

Return on Equity, which measures the return to both common and preferred shareholders, was negative in 2008 due to the net loss incurred by Shell Pakistan in that year. However, in 2009 this ratio increased to 35% due to high net income earned in that year.

Ratios for Investors

1. Price Earning Ratio

Years | Market Price | Earning Per Share | Price Earning Ratio | 2007 | 410.05 | 12.9 | 31.78682171 | 2008 | 417 | -25.2 | -16.54761905 | 2009 | 250.36 | 37.42 | 6.690539818 |

Price Earning Ratio, which expresses the relationship between the market price of a share of common stock and the stock’s current earnings per share, was negative for Shell Pakistan in 2008 due to the net loss incurred in that year. However, in 2009 it increased to 6.7 showing that the share of Shell Pakistan had been selling for 6.9 times earnings in that year. Generally the higher this ratio the better it is since the companies with high price to earnings ratio are perceived to have high growth opportunities. Therefore, the investors currently perceive Shell Pakistan to be a growing company.

2. Earning Per Share

Earning per Share, which shows the amount of income earned on a share of common stock during an accounting period, remained healthy in 2007. However, in 2008 in decreased to negative 25.2 due to the large net loss incurred that year. In 2009 it due to the large net income earned the ratio rose sharply indicating a positive sign.

Long Term Debt Paying Ability

1. Debt to Equity

Years | Total Liabilities | Total Equity | Debt to Equity Ratio | 2007 | 19751156000 | 9460771000 | 2.087689893 | 2008 | 33016572000 | 6255558000 | 5.277957938 | 2009 | 25383130000 | 8270603000 | 3.069078518 |

Debt to Equity Ratio, which compares the total debt with the total shareholder’s equity, remained unstable and really high over the three years. This shows that a high amount of funds came from outsiders than from shareholders equity which is considered a negative sign.

2. Times Interest Earned

Years | EBIT | Interest Expense | Times Interest Earned | 2007 | 1134584000 | 878098000 | 1.292092682 | 2008 | -1643316000 | 1522123000 | -1.079621029 | 2009 | 4886635000 | 1401211000 | 3.487436938 |

Times Interest Earned measures the ability of the firm to meet its interest obligations. This ratio remained high and sufficient in 2007 and 2009 due to high net income earned in those years. However, in 2008 it decreased to a negative level which was an alarming sign. [5]

Overall Financial Performance
Based on this ratio analysis we can conclude that Shell Pakistan is performing fairly well financially with a few problem areas that need to be addressed. It has efficiently managed its inventory and receivables over the three years. Its profitability ratios were low only in the year 2008; however the company has been able to improve these ratios fairly well in 2009. From the investors point of view shell Pakistan remains a strong company with high earning per share and price earning ratio.
The problem areas are the liquidity position and the debt to equity ratio. Due to the problem of circular debt shell Pakistan like other companies in the oil sector of Pakistan had to obtain large amount of short term and long term loans in order to continue its operations. As a result, its liquidity position has worsened over the three years. Since interest rates have been increased by the State Bank of Pakistan increasing the cost of debt, serious efforts have to be made by shell Pakistan to reduce their liabilities in order to avoid further problems.

PESTEL ANALYSIS

Political Factors * Poor law and order situation leads to delay of delivery of oil to the forecourts and high streets hence, leading to increasing transportation costs * Stable government resulting in consistent policies for the oil sector of Pakistan * The energy sector of Pakistan faces the problem of circular debt which has negatively affected the liquidity position of oil marketing company’s like Shell Pakistan. Circular debt occurs when one entity facing problems in its cash inflows and holds back payments to its suppliers and creditors. Thus, problems in the cash inflow of one entity cascade down to other segments of the payment chain. In Pakistan, the energy sector has faced this issue for several years.The circular debt in the energy sector is closely related to cash flow problems in Pakistan Electric Power Company (PEPCO). [6] | Economic Factors * Generally, the transactions in international market are done in dollars. As Shell Pakistan is not involved in the upstream business, they have to import the crude oil from international market. This has resulted in rise in the cost of production due to appreciation in dollar with respect to rupee. * Due to unforeseen events like the floods, our economy is no more conducive for capital investment which would have led to economic growth and increase in the demand for oil. However, since this has not happened it can be concluded that the oil industry has been negatively affected. * Rate of inflation in Pakistan is expected to be more than 15%. In order to control this rising inflation rate the State Bank of Pakistan is expected to increase its benchmark interest rate for the third time in four months to 14%. This would increase the cost and availability of borrowing for the private sector, including the oil industry. [7] | Social Factors * Income disparities have further increased due the recent flood in Pakistan, causing people to lose their livelihood. Thus, the demand in oil industry has decreased. * In Pakistan, there is not much public transportation available hence when ever possible people prefer owning their own cars or vehicle. The culture of using public transportation has still not developed in Pakistan like it has in the west. This can be seen as a positive sign for oil industry since it would increase the demand for oil. | Technological Factors * No well recognized technological advancements are currently taking place in the oil sector in Pakistan. | Ecological Factors * Currently the major ecological crisis that Pakistan is facing is the on going floods. It has badly affected the infrastructure, hence, affecting the supplies in oil industry. | Legal Factors * The regulatory authority for the oil industry in Pakistan is Oil and Gas Regulatory Authority (OGRA). Hence OGRA would be responsible for regulating shell Pakistan. Shell would have to abide by the rules, regulations and standards that have been set by OGRA. * The Economic Coordination Committee (ECC) of the cabinet approved the deregulation of oil pricing. The oil marketing companies (OMCs) will not be able to charge inland freight equalisation margin (IFEM) to consumers higher than fixed by Ogra but free to compete with each other if they wanted to charge lower transportation cost through efficient means or bulk transportation. [8] |

SWOT ANALYSIS

Strengths * One of Pakistan’s main strength is that shell Pakistan has successfully beaten one of the previous leaders, Pakistan state oil in high street business. I.e. selling lubricants and oil to workshops. * Another strength of shell Pakistan is that shell has successfully reached the maturity stage in Pakistan hence it can gain benefits like low marketing costs, well established distribution network, high brand awareness. * Strength of Shell Pakistan is the brand name shell. Shell has successfully established its brand name as a household name which obviously helps shell Pakistan while competing with other firms in the oil industry. * Shell Pakistan has a global reach. It can take advantage of innovations and technological advancements made by Shell Group. Shell Pakistan is backed by unique technological expertise and decades of research and development by some of the best scientists from around the world. Shell Pakistan is whole-heartedly committed to benefiting from this global pool of expertise, and providing its customers with differentiated fuels. [9] * Shell forecourt’s “select” shops are renowned around the country, which can act as an advantage for shell Pakistan since it can act as an added incentive to prefer shell forecourts over other brands. * Shell Pakistan efficiently managed its receivables through higher sales despite the problem of circular debt faced by OMC’s in the oil sector. | Weaknesses * Shell Pakistan is not in the upstream business (exploration). The reason according to the shell Pakistan representatives, is that it is not profitable as the costs that would be incurred in extraction are very high hence the costs outweigh the benefits. * Another weakness of shell Pakistan is that due to the high market share and well established brand name shell can be complacent at times when it comes to marketing and dealing with their competitors. And that can be a serious problem for shell Pakistan as because of their complacency the small competitors can slowly take away chunks of their market share. * Poor liquidity position with decreasing current and quick ratio. | Opportunities * Another opportunity for shell Pakistan is expanding their product portfolio, providing a wider range of products * The latest Pakistan Oil & Gas Report forecasts that the country will account for 1.51% of Asia Pacific regional oil demand by 2014, while providing 0.77% of its supply. Regional oil use of 21.42mn barrels per day (b/d) in 2001 is set to reach a forecast 27.15mn b/d in 2010, then to rise to around 30.21mn b/d by 2014. Regional oil production was around 8.35mn b/d in 2001 and is forecast to average 8.82mn b/d in 2010. It is set to increase only slightly to 8.89mn b/d by 2014. Meeting these increases in oil demand acts as an opportunity for Shell Pakistan [10] | Threats * The major threat for shell Pakistan is the security situation that is prevailing in the country currently. * Shell Pakistan faces threat of new small oil companies entering in market which might take away shell’s market share in small quantities. The list includes momin oil, ENOG and other small companies. * Another threat that can have a negative effect on the operations of shell Pakistan is the current electricity crisis which has increased shell’s cost as they have to invest in installing generators in order to keep their operations running. * In Pakistan, Shell has not vertically integrated (backward), meaning it hasn’t integrated with the supplies (i.e. oil refinery). The drawback of this is that the bargaining power of the suppliers (oil refinery) is high which leads to high dependency. |

REFERENCES

[1] http://www.shell.com.pk/home/content/pak/aboutshell/who_we_are/history/country/
[2] http://www-static.shell.com/static/pak/downloads/annual_report_2007.pdf
[3]http://www.shell.com.pk/home/content/pak/aboutshell/who_we_are/our_values_and_principles/shell_pakistan_general_business_principles/
[4] http://www.shell.com.pk/home/content/pak/products_services/
[5] http://www-static.shell.com/static/pak/downloads/annual_report_09_accounts.pdf, http://www-static.shell.com/static/pak/downloads/annual_report_2008.pdf, http://www-static.shell.com/static/pak/downloads/annual_report_2007.pdf
[6]http://www.lahoreschoolofeconomics.edu.pk/JOURNAL/LJE%2015,%20SE/04%20Syed%20Sajid%20EDITED%20TTC%2011-10-10.pdf
[7] http://pakobserver.net/detailnews.asp?id=64096
[8] http://news.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-newspaper/front-page/deregulation-of-oil-pricing,-gas-loadshedding-on-ecc-agenda-400
[9]http://www.shell.com.pk/home/content/pak/aboutshell/shell_businesses/pakistan_business_structure/
[10]http://www.youroilandgasnews.com/pakistan+oil+and+gas+report+q4+2010_56754.html…...

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...Shell is a global group of energy and petrochemical companies, operating in more than 145 countries and employing nearly 120,000 people. Shell produces circa 3% of the world's oil and circa 3.5% of the world's gas. Most people know the company for its retail outlets and its oil and natural gas exploration and production activity. Other Shell activities include: * marketing, transporting and trading oil and gas * providing oil products for industrial uses, including fuel and lubricant for ships and aircraft * generating electricity, including wind power and producing solar panels * producing petrochemicals used for plastics, coatings and detergents * developing technology for hydrogen vehicles. Shell considers it a business priority to diversify its business portfolio to include more unconventional fuels in order to meet the worlds increasing demand for energy whilst minimising the impact on the environment. Hence the need for the development of 'future fuels'. At the present time, any company seeking merely to exploit resources for immediate gain and at the expense of the environment or customers' best long-term interests is likely to generate government scrutiny, public hostility, customer resistance and, possibly, prosecution. Like any well-run business, Shell takes a long term view of what constitutes 'best possible use' of the resources available to it. One key challenge facing Shell is how to use its profits and accumulated reserves to promote......

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...seem like unethical, and Royal Dutch Shell Public Limited Company is one of the example. As being a large and profitable company, Shell has started a new Athabasca Oil Sand Project in Alberta. World’s scientific community together with independent non-profit organization believe that this project will make the environment pollution in Alberta being more serious and adversely impact the ecosystem. They are disappointed to the unethical decision of Shell. Therefore, based on this case, the purpose of this research is to discuss the ethics issue that Shell cause and the company performance under its Code of Conduct in this regard. Solutions will be given, including the cost and benefit for the different shareholders. 2. THE CASE 2.1 THE SITUATION AND KEY FACTS Alberta is a province of Canada which is the largest producer of crude oil, natural gas and other gas products. It is active in every area of the oil and gas industry, including exploration, production and refining. Athabasca oil sand is the world largest receptacle of crude bitumen which locates in north eastern of Alberta. This oil sand stores a high quantity of unconventional petroleum which consists of a mixture of bitumen, clay minerals, water together with sand. 2.2 THE KEYSTAKEHOLDERS AND THEIR INVOLVEMENT Stakeholders refer to a person, group, organization or system that can affect and be affected by company decision. Government is one of the key stakeholders for Shell. They are the system by which......

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...Mercier Corporate Report Shell Introduction The reason for this report is to determine rather the company I chose is a good investment for the business. The company I chose is Shell. Shell Refining Company is incorporated in Malaysia. Shell’s fiscal year is from January to December. The stock exchange is reported in financial reporting to review appropriateness of management’s selection of accounting principles. The ticker symbol is expressed as RDS.A. Shell Malaysia places importance in ensuring its cost competitiveness in the industry and to the world. Analysis Name of corporation is Shell Malaysia. The headquarters are located in Malaysia. Shell is a global group of energy and petrochemicals companies around 9000 employees in more than 80 countries and territories. Shell’s fiscal year ended December 31, 2012. The stock exchange associated with Shell is the main board of Bursa Malaysia Securities Berhad. Stock name is SHELL and its stock code is 4324. There was no symbol included in the annual report. The primary source of revenue is primarily millions of barrels sold with products. Shell sold 40 million barrels of products with a yield of 8 per cent. Shell had a 29 per cent increase in sales volume which resulted in a year-on-year revenue growth of 15 billion. 4,170 RM billion is the total assets that were reported in 2012 that Shell produced. Cash was reported as 74 RM million in 2012. In 2011, cash was reported as 114 RM million so last year Shell had......

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...vast majority of vehicles and as the base of many industrial chemicals makes it one of the world's most important commodities. Access to it was a major factor in several military conflicts, including World War II and the Persian Gulf War. About 80% of the world's readily accessible reserves are located in the Middle East, with 62.5% coming from the Arab 5: Saudi Arabia (12.5%), UAE, Iraq, Qatar and Kuwait. The USA has less than 3% 1.3: Major players 6 The oil industry is often described as having an oligopolistic market structure that is, it is dominated by a small number of big major players, which include Exxon, Mobil, Chevron, BP, and Shell. A slump in oil prices in the late 1990’s resulted in heavy cut backs in staff and operating costs in 1998-99 and merges between BP and Amoco and Exxon and Mobil. 1.4: PEST ANALYSIS OF SHELL COMPANY PEST Analysis is a simple but important and widely-used tool that helps you understand the big picture of the Political, Economic, Socio-Cultural and Technological environment you are operating in. PEST is used by business leaders worldwide to build their vision of the future. OR PEST analysis is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organization's marketing environment is made up from: 1. The internal environment e.g. staff (or internal customers), office technology, wages and......

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...Shell is an Anglo–Dutch multinational oil and gas company incorporated in the United Kingdom and headquartered in the Netherlands. Created by the merger of Royal Dutch Petroleum and UK-based Shell Transport & Trading in 1907. By 2011, they became the second largest company in relation to revenue, growth and profitability in the oil and gas sector (Bruijn et al, 2002). The company operates in all areas of oil and gas industry, these areas include exploration of oil and gas, supplies and distribution, marketing, production, refinery, petrochemical development and power generation (McIntosh, 2001). The company is also concerned about environmental conservation, and it has invested heavily on the production, and distribution of renewable energy (Carroll, 1999). It supports initiatives of developing and distribution bio-fuel energy, wind and solar power, and hydrogen energy. The oil boom of the early 1920s, particularly at Shell’s Signal Hill, California site, provided the company with an opportunity to penetrate the Los Angeles area with sales of Shell gasoline and petroleum products manufactured in its new refineries nearby. In 1922, Shell Company of California and Roxana Petroleum merged with Union Oil Company of Delaware to form a holding company called Shell Union Oil Corporation. Approximately 65 percent of the holding company’s shares was held by Royal Dutch/Shell Group. Upon developing the ability to synthesize 100-octane gasoline, Shell began supplying this fuel to the U...

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...Holland’s biggest profitable organization Evaluative Report Preface In front of you lies an evaluation report about the biggest profitable Dutch company, Shell. Via this report we want to show you how Shell is performing at this moment and how they stay at the top of their segment. The reason for writing this report is to give an insight into what Shell does, we all know them from their gas stations but Shell does much more and tries to be innovative by looking for new and improved energy sources all around the world. Besides that we choose Shell because of its Dutch background and the fact that they are recognized all over the world. Briefly said, Shell is the biggest company in The Netherlands and via this report we´ll try to unfold how they manage to perform this well and what the secret is to their success. Bergen op Zoom, Noord – Brabant May 31st , 2011 Table of Contents 1. Introduction 1 2. General description of Shell 2 2.1 History of the organization 2 2.2 Products and Services 3 2.3 Operations 3 2.4 Financial Situation 4 2.5 Legal Aspects 4 2.6 Corporate Governance and Social Responsibility 5 2.6.1 Corporate Governance 5 2.6.2 Social Responsibility 5 3. Organization Environment 6 3.1 Relevant market 6 3.2 Supply chain 6 3.3 Shareholders 6 3.4 Relevant Macro Factors and Business Trends 7 3.5 Competition in Particular 7 4. Organization Goals and Strategies 9 4.1 Mission and Vision 9 4.1.1 Mission 9 4.1.2 Vision 9 4.2...

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