RBP020L056A

Strategy in Practice
Done by: AKHIL PAUL
STUDENT ID: PAU21535624
 LIST OF TABLES

Table Number Table Name

1 PESTEL
2 Resources
3 Financial Anaylsis
4 Value Chain
5 VRIO
6 Reasoning
7 TOWS

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 STRATEGY IN PRACTICE
Company: Shell plc

Industry and context: Oil and Gas

Headquarter: London, United Kingdom

1. PESTEL

Political  Taxes and Fines (Threat): Recently, international, as well as the regional
organization declared their plan to impose charges, penalties, and taxes on
carbon emissions.
 Restrictions (Threat): Residents of the Niger Delta are antagonistic toward
foreign oil companies.

Economic  Rise in cost (Threat): The production costs has increased, driving up oil
prices around the world. One of the reasons for the increase in production
costs is the growth in governmental taxes.
 Demand (Opportunity): By 2030, it is expected that there will be an increase
in the demand for energy by 57%.

Socio-cultural  The negative public impression of the oil and gas sector (Threat): Shell was
accused of manipulating consumers and harming the environment.

Technological  Innovation (Opportunity): The upshot of technological advancement is the

creation of more efficient tools for drilling and extracting oil and gas.

Ecological  Climate (Threat): Climate-related issues that are causing increased concern

Legal  Regulations (Threat): Shell is subject to increased rules over carbon

emissions and environmental safety.
Table 1: PESTEL

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  Organization’s resources

2. RESOURCES

Resource Explanation
Tangible Assets There are about 25,000 gas stations in the US with the Shell brand. It is
strength (S) for them because they are Shell's most noticeable presence in
the public.
Human Resources 33% of the total employees are women. It is a strength (S) as well because
50% women are on the Board of Directors.
Strong Heritage It has a strong customer base which is a strength (S) because of their
experience spanning more than 85 years in the Chemicals sector.

Finance Over the past few years, Shell has been dealing with an increase in its debt
which is a weakness (W) and future financial obligations could grow as a
result.
Strong Research Shell has consistently invested in its R&D, and it also holds a large number
and Development of patents which is also a strength (S) because a strong R&D gives
businesses a competitive edge and lowers expenses.
Table 2: Resources

3. FINANCIAL RESOURCES

Ratio 2022 2021 Interpretation

ROCE (%) 15.03% 10.88% Better performance, 5% increase in
12.168 x 100% 33.436x100% ROCE.
437.358 – 133.506 404.4-128.448

Current 1.34 1.24 Should improve, the current ratio

ratio (times) 163.32 118.77 should come to 2 or above 2 to pay
118.67 95.55 off debts

Gearing (%) 20.5% 23.1% More financially stable when

247.12x100% 229.05x100% compared to the prior year
437.358-133.506 404.4-128.44

Interest 12.48 6.81 They have a greater capacity to cover

Cover a company's interest costs from
(times) operating profits.
Table 3: Financial analysis
(All figures are in billion dollar)

Financial Position:
Strength: In comparison to $17,827 million in 2021, cash capital expenditure in 2022 was $19,698
million. Operating costs went up from $34,790M in 2021 to $35,965M in 2022. Return on average
capital employed (ROACE) increased to 15.03% from 10.88% in 2022. Gearing decreased from 23.1%
at the end of 2021 to 20.5% at the end of 2022, mostly due to net debt reduction and increased
profitability.

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Weakness: Due to cash flow generation, net debt decreased to $52,556M in 2022, from $75,386M in
2021.

4. Organisations distinctive activities/competences

Infrastructure Effective Strong

infrastructure infrastructure
management management
helps
Positioning in
the market that
is competitive.
Human Effective HR Well educated
Resource management employees
Management
Technology Technical customer
Development production service
(R&D) integration backed by
technology
Procurement Logistics
management
services

Support Inbound Operations Outbound Marketing and Service

activities logistics IT systems used logistics sales Presales
Third part for Quality Shell Diverse CRM Software and post
logistics, testing Supplier such as Sales sales
Fourth party Management force, services
logistics, System, Ample Advertising,
Primary Logistics storage capacity Bidding and
activities management in 8 different building strong
services tanks relations with all
members

Table 4: Value Chain

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 5. VRIO

Competence / Valuable Rare Inimitable Supported by Implications (distinctive or Core

activity the competence)
(All Strengths) Organization
favourable   x  Competitive advantage for long
market standing term

Leadership crew     Effective competitive advantage

Brand     Sustainable or continuous

Recognition competitive advantage

Large customer   x  Sustainable and realized

base competitive advantage

Financial  x   Temporary competitive advantage

resources

Table 5: VRIO

 Select one of the competences listed in table 6 and discuss your reasoning behind V, R and I

Competence High customer base

Valuable 85% sales are asociated to 23% of the client.

Rare Company has made investments to ensure solid customer loyalty.

Inimitable Others companies have tried it, but neither of them has attained as much
success.

Table 6: Reasoning

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 6. TOWS
TOWS
Opportunities
1. Increased demand for fuel
2. Both family income and
consumer spending are
going up.
Threats
1. Governmental rules
2. Increased Competition
3. Environmental regulations
4. Economic instability
Table 7: TOWS
Being the second largest company in the world with strong brand equity and better financial
position, Shell should boost their marketing strategy to make the customers to spend more.
This can be done by providing discounts or products at reduced costs which helps in increasing sales.
Strengths Weaknesses
1. Second largest company in 1. The breach over the
energy sector. overstatement of oil
2. Strong brand equity. reserves
3. Increased growth in 2. Bad image issues related
finance area. to human and
4. Co brand with Ferrari environmental rights.
5. operations in over 90 3. Legal issues
countries, with 44,000
stations
6. Highly qualified skilled
labour.
7. Low-cost structure.
S-O W-O
 Boost marketing to
entice customers to
spend. S1, S3, S5, 02
 Offering products at
discount to promote
them at low costs. This
would help in
increasing sales
volumes and is
realistic. S7, O2
S-T W-T
 Take advantage of
their financial position
to acquire intellectual
property rights so that
they can fight against
the growing rivals. T2,
S3
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References:

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