PAMANTASAN NG LUNGSOD NG MAYNILA

(University of the City of Manila)

Gen. Luna cor. Muralla St., Intramuros, Manila, Philippines

SHELL PILIPINAS CORPORATION

In Partial Fulfillment of the Requirements in Strategic Management for the Degree of

Bachelor of Science in Business Administration Major in Business Economics

Submitted by:

GROUP 8

Delos Santos, Xyleen Mae O.

Dizon, Christien Jay S.
Gatuz, Adrian Q.
Osio, Ma. Olivia Francia
Raborar, Niña Paolyn F.

Submitted to:

Dr. Juan M. Reyes Jr.

2023
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TABLE OF CONTENTS
Title Page…………………………………………………………………………………………i
Table of Contents….…………………………………………………………………………...ii
I. Company
Background………………………………………………………………….1
II. Company
Profile………………………………………………………………………...2
III. Mission and
Vision……………………………………………………………………...2
a. Mission…………………………………………………………………
…………2
b. Vision………………………………………………………………..
……………3
IV. Products and
Services………………………………………………………………….4
a. Fuels……………………………………………………………………
………...4
b. Lubricants……………………………………………………………
…………..6
c. Non-Fuels
Offering………………………………………………………………9
V. External Environment Analysis
a. PESTLE Analysis
b. External Factor Evaluation Matrix
c. Competitive Profile Matrix
VI. Internal Environment Analysis
a. Financial Ratios
b. Internal Factor Evaluation Matrix
VII. Porters Five
VIII. Strategy Analysis
a. SWOT Matrix
 ii

b. SPACE Matrix
c. Boston Consulting Group Matrix
d. Internal-External Matrix
e. Quantitative Strategy Planning Matrix (QSPM)
IX. Sustainability Report
X. Financial Statements

LIST OF TABLE
Table 1. Evaluation Matrix for Shell Pilipinas Mission Statement
Table 2. Evaluation Matrix for Shell Pilipinas Vision Statement
Table 3. Shell Pilipinas Vision Fuels Products
Table 4. Shell Pilipinas Vision Lubricants Products
Table 5. Shell Pilipinas Vision Non-Fuel Products
 I. COMPANY BACKGROUND

Pilipinas Shell can trace its origins back to the Asiatic Petroleum Company
(Philippine Islands), Ltd., which commenced operations in the Philippines in 1914,
importing and selling motor gasoline and kerosene. Later, in the 1940s, it was renamed
The Shell Company of the Philippine Islands, Ltd.

In 1959, the company was established as The Shell Refining Company

(Philippines), Inc. to meet the 25% Filipino ownership requirement in major industrial
ventures. By 1970, it was renamed Shell Pilipinas, Inc.; in 1973, it became Pilipinas
Shell Petroleum Corporation. In 1976, Meralco Securities Corporation acquired a 25%
stake, making the company 50% owned. However, in February 1987, Filipino ownership
decreased to 33.33% due to a share buyback from Meralco Securities Corporation.
Then, in August 2015, Filipino ownership further decreased to 31.82% following the
issuance of additional shares through a stock rights offering.

The Securities and Exchange Commission granted approval for the company to
change its name on March 16, 2023. The transition involved changing from Pilipinas
Shell Petroleum Corporation to Shell Pilipinas Corporation (SPC). This change
symbolizes SPC's broader emphasis that extends beyond petroleum, aiming to provide
the country with more eco-friendly and cleaner energy solutions.
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II. COMPANY PROFILE

Shell stands as a leading player in the fuel retail sector within the country,
committed to consistently delivering high-quality products and trusted services to a
broader range of Filipino drivers throughout the archipelago. Its extensive network of
mobility stations across the nation offers Filipino customers access to their premium
performance fuels, including Shell V-Power Racing, Shell V-Power Gasoline, and Shell
V-Power Diesel, as well as their primary-grade options of Shell FuelSave Gasoline and
Shell FuelSave Diesel.

Shell Pilipinas mobility network continues to expand, boasting around 1,100

mobility sites catering to motorists nationwide. Shell Select convenience stores, deli2go
outlets nationwide, and a fast-growing network of service centers provide non-fuel retail
offerings. Shell Pilipinas maintains an integrated supply chain of 24 fuel terminals and
supply points, ten lubricant warehouses, two specialty facilities, and three import
facilities.

Being at the forefront of innovation, Shell continues to revolutionize to provide

quality products for the changing needs of motorists and redefine the experience in a
fuel retail station. The rise of mobility stations as one-stop community destinations also
optimizes operations with sustainability features such as solar panels, eco-bricks,
rainwater catchments, and many more. Shell views its retailers as strategic partners and
provides them with innovative tools that will help bring out the entrepreneurial spirit to
grow the business together. The primary line of operation of Pilipinas Shell Petroleum
Corporation (PSPC, Pilipinas Shell, or the Company) is the importation and distribution
of petroleum products such as fuel oil, bitumen, jet fuel, gasoline, and diesel.
 3

Shell Pilipinas are among the top retailers of petroleum in the nation. It wants to
give more Filipino drivers around the archipelago dependable products and services.
Shell V-Power Racing, Shell V-Power Gasoline, and Shell V-Power Diesel, together
with primary grade Shell FuelSave Gasoline and Shell FuelSave Diesel, can be found in
mobility stations around the Philippines.

Being at the forefront of innovation, Shell Pilipinas continuously innovates to

redefine the experience at a fuel retail station to supply high-quality items for changing
consumer demands. As mobility stations become one-stop community attractions, Shell
Pilipinas also improves operations by including sustainable elements like solar panels,
eco-bricks, and rainwater collection. Shell Pilipinas merchants are our strategic
partners, and Shell Pilipinas supports their entrepreneurial spirit by offering cutting-edge
solutions that will help our businesses thrive together. Today's more than a thousand
mobility stations, forecourt attendants—our unsung heroes—deliver devoted service to
every patron. Every time a consumer comes to one of our mobility stations, Shell
Pilipinas has the chance to make their stop worthwhile.

III. MISSION AND VISION

A. MISSION

The company is committed to contributing to the world's goal of making

progressive yet sustainable and cleaner energy solutions and to providing a better life
for the generations to come, to progress, and to move towards a better and brighter
distribution of Power through clean and sustainable means and to be a catalyst of
change in the industry of Petroleum. In the ever-changing world, the initiative of the
company conceives a new and better solution to the Petroleum Industry.
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Component Yes/No Evaluation

Shell Pilipinas mission statement aims

Customer Yes to provide a better life for the
generation to come.

Shell Pilipinas mission statements aim

Product/ Services Yes to contribute a progressive yet
sustainable and cleaner energy
solutions.

Shell Pilipinas mission statement aims

to move toward a better and brighter
Markets Yes distribution of Power through clean
and sustainable means and to be a
catalyst of change in the industry of
Petroleum.

Shell Pilipinas invests in new

Technology No technologies however in their mission
statement the company does not
mention anything about
transformative technology.

Shell Pilipinas aims to grow

Concern for Survival, No
Growth, and Profitability
profitability with 15% annual growth
and continues to power progress for
the Filipinos however in their mission
statement the company does not
mention anything about Concern for
Survival, Growth, and Profitability

Shell Pilipinas mission statement

Philosophy Yes reflects to a energy company that
aims to lead a sustainable and
people-centered future with their
interactive microsite
 5

Shell Pilipinas mission statement

reflects the company’s self-concept as
a company is committed to
contributing to the world's goal of
making progressive yet sustainable
Self-Concept Yes and cleaner energy solutions and to
providing a better life for the
generations to come, to progress, and
to move towards a better and brighter
distribution of Power through clean
and sustainable means and to be a
catalyst of change in the industry of
Petroleum

Shell Pilipinas mission statement

Concern for Public Image
reflects the company’s concern for
Yes public image as its goal is making
progressive yet sustainable and
cleaner energy solutions to provide a
better life.

Shell PIlipinas believes that its

success lies in its people. Providing
opportunities for employees to nurture
Concern for Employees No their talents boost the company’s
competitiveness and business
excellence. however in their mission
statement the company does not
mention anything about Concern for
Employees
Table 1. Evaluation Matrix for Shell Pilipinas Mission Statement

B. VISION

The company is committed to contributing to the world's goal of making

progressive yet sustainable and cleaner energy solutions and to providing a better life
for the generations to come, to progress, and to move towards a better and brighter
distribution of Power through clean and sustainable means and to be a catalyst of
change in the industry of Petroleum. The company's initiative conceives a new and
better solution to the Petroleum Industry in the ever-changing world.
 6

The company displays its dedication to convenience and sustainability and

demonstrates a forward-thinking attitude to its business and the requirements of its
consumers and the environment. It implies a business that strives to lead innovation in
the fuel sector, addressing the changing demands of communities while embracing
environmentally responsible techniques. It highlights the company's commitment to eco-
friendly energy options and its part in fostering development for a better future. It
communicates a dedication to creativity, environmental stewardship, and the
advancement of cleaner, more effective fuel technologies to benefit people and the
environment.

Parameter Yes/No Evaluation

Shell Pilipinas vision statements

Does it answer the question:
What do we want to become?
displays its dedication to
Yes convenience and sustainability
and demonstrates a forward-
thinking attitude to its business
and the requirements of its
consumers and the environment

Shell Pilipinas vision states that

their business strives to lead
innovation in the fuel sector,
Is it concise? Yes addressing the changing
demands of communities while
embracing environmentally
responsible techniques.

Shell Pilipinas vision states that

the company's commitment to
eco-friendly energy options and
its part in fostering development
for a better future. It
Is it aspirational? Yes communicates a dedication to
creativity, environmental
stewardship, and the
advancement of cleaner, more
effective fuel technologies to
benefit people and the
environment.
 7

Does it indicate when its No Shell Pilipinas vision does not

vision should be attained? state when the vision should be
attained.
Table 2. Evaluation Matrix for Shell Pilipinas Vision Statement

IV. PRODUCTS AND SERVICES

Over the years, Pilipinas Shell Retail has taken pleasure in offering Filipino
drivers high-quality products and exceptional customer service. Its customer-focused
network provides a variety of high-quality Shell Fuels and Lubricants, auto repair
facilities, and convenience stores as one of the major gasoline retail companies in the
nation.

Since January 2016, all Shell grade fuels in the Philippines have become Euro IV
(PH) compliant, giving Filipino drivers the most recent technical advancements that
satisfy the stricter emission criteria. By providing smarter products and cleaner energy,
smarter infrastructure, encouraging smarter use, and developing new energy sources
while addressing the impact on the environment, all Shell quality fuels were developed
to address the challenges of rising energy demand and supply. This was done through
cleaner burning natural gas and advanced fuels and lubricants technology.

Fuels
Shell offers high-quality fuels that meet your changing demands and those of
your vehicle thanks to its more than a century of experience in the creation of fuels.
When you fill up with Shell grade fuels, created by some of the top scientists in the
world, you can enjoy every drive.

Product Price

P65.30 - P 69.85
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P75.35 - 78.55

P62.10 - P65.45

P72.15 - P73.85

P76.80 - P81.20

Table 3. Shell Pilipinas Vision Fuels Products

Lubricants

Basic auto maintenance is made simple with the Shell Helix Oil Change+
experience. Customers may enjoy top-notch servicing without breaking the budget
thanks to a variety of Shell Helix motor oils that are ideal for the various demands of
both old and new automobile engines and outstanding service provided by skilled
professionals.

Product Price

P459 liter
 9

P649 liter

P624 liter

P899 liter

P700 liter

P899 liter
 10

P269 liter

P288 liter

P314 liter

P559 liter

P314 liter
 11

P256 liter

P569 liter

Table 4. Shell Pilipinas Vision Lubricants Products

Non-Fuels Offering

A gas station ought to be more than just a place to stop; it ought to be a haven
for our customers. A variety of snacks, beverages, groceries, newspapers, magazines,
and hot meals are available at Shell Select.

Product Price

Price Varies

Table 5. Shell Pilipinas Vision Non-Fuel Products

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V. EXTERNAL ASSESSMENT (CRITICAL ISSUES)

A. PESTLE Analysis

PESTLE Analysis examines different possibilities that could arise in different

forces namely; Political Forces, Economic Forces, Social Forces, Technological Forces,
Environmental Forces, and Legal Forces. SHELL Philippines belongs to the product and
services sector and is widely known for quality and efficient products around the globe,
and in the Philippines, SHELL has been one of the leading petroleum products that
competes with local and international petroleum products.

A.1 POLITICAL FORCES

Shell Pilipinas commits itself to a wide-ranging political field. Shell Pilipinas
cooperates with the government and helps the government to craft policies that will
enhance and boost the petroleum industry in the Philippines. As a basic commodity, the
Corporation plays a pivotal role in making an inclusive and progressive economic
development through PPP or Public Private Partnership programs.

Shell Pilipinas must bind laws influenced by political leaders in the Philippines.
According to Leognardo (2022), the Philippines are about to face huge problems in
petroleum or oil because of the insufficiency from the MALAMPAYA Gas Field. The
government is exerting its effort to drill and survey the Reed Bank in the West Philippine
Sea and in order for the Philippines to successfully survey and drill, political will and
power must be used in order to influence other nations to conduct joint patrols in the
West Philippine Sea. Scientists from UP Diliman fears the possibility of a rotational
brownout and importation of LNG in the Philippines, this could affect the petroleum
industry like SHELL Philippines and other competitors. One more point in the political
forces is the Government Stability, in this, the corporation will look into the economic
pressures that the Philippine Government is facing and with that hazards and risks, the
company can immediately strategize and assess the situation in order to prevent
economic hazards driven by political forces.
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A.2 ECONOMIC FORCES

Shell Pilipinas evaluates macroeconomic factors affecting its performance, such
as inflation, interest rates, and consumer spending patterns. The company aims to
generate shareholder value by ensuring strong cash generation, disciplined capital
expansion, and cost management.

Shell Pilipinas is providing means to cope with the inflationary pressures in the
market. Shell Pilipinas is providing discounts from the cardholders or loyal customers
that avail its product. There are many ways that they consider to ease the burden of
high oil prices. In September 2023, the inflation rate increased to 6.1 percent and
expected to increase in the next months, this economic pressures will lead to alternative
solutions by consumers that will affect the income of SHELL Philippines. According to
the IBON Foundation the inflation shows that the current economic strategy by the
Marcos Administration failed to effectively address the soaring prices of basic
commodities. These pressures from the economy impacted the standing of SHELL
Philippines in the market and its fate is based on how these economic forces will be
managed by the strategist of the Philippine Government.

A.3 SOCIAL FORCES

Shell Pilipinas aims to make a positive impact on Philippine society by
contributing to local communities, championing inclusion, and providing vital energy
through its products and services. The company supports various social programs and
initiatives focused on education, health and safety, environment, energy, and nutrition
and food security.
 14

Additionally, Shell Pilipinas has been active in connecting the public to their
advertisements and other strategic plans. SHELL is providing perks to the customers
and provides a meaningful SCR. SHELL Philippines help consumers and people of the
Philippines to be connected through the fuel and services that they provide. The
industry has been helping the society in its development because of the programs and
partnerships that transpired throughout their services and operation. Based on the
strategy made and constructed by SHELL Pilipinas, the benefited from all the services
and products that they provide, the contribution of SHELL Pilipinas to the economy is
massive that the Philippines is now appreciating through the government services and
infrastructure project funded by the taxpayers to contribute to the development of the
society that will soon impact and help the business as well and the petroleum industry.

A.4 TECHNOLOGICAL FORCES

Shell Pilipinas recognizes the impact of technological advancements on the
industry. The company aims to offer low-carbon products and shift to low-carbon
operations in response to the Philippines' transition to a lower-carbon economy. Shell
Pilipinas embraces innovation and invests in technology to meet evolving customer
needs and industry trends.

Shell Pilipinas is leveling the playing field in the industry of petroleum products.
Shell has been making its way to connect to the consumer through means of
technology. All consumers can pay through e-wallet and all services that they could
offer and its products can easily be accessed with the help of technology. In the 20th
Century, the world has been adapting modern technology to pave the way to an easier
and more convenient way of serving the people. SHELL Pilipinas has been adapting the
modern technology since its first time of operation in the Philippines that impacted and
affected the operation of other petroleum industries in the Philippines. According to their
sustainability report, SHELL Pilipinas exerted their effort in unleashing their full potential
in making an improved technological operation throughout the country and this is one of
the main reasons why consumers still patronize products of SHELL Pilipinas aside from
 15

their high-quality petroleum products.

A.5 ENVIRONMENTAL FORCES
Shell Pilipinas is committed to providing environmentally-friendly products for the
consumers. Shell Pilipinas introduced Bioethanol to reduce gas emission of greenhouse
gasses. Bioethanol l is a liquid biofuel that is produced through ABE fermentation of
several different types of feedstock such as corn, soybeans, wheat straw, woodchips,
and more recently microalgae. Bioethanol is a renewable biofuel that is also oxygenated
(35% oxygen), thus providing the potential to reduce automobile emissions.

According to SHELL Pilipinas, Shell Pilipinas operates within the Philippine

Securities and Exchange Commission (SEC) regulatory framework. The company
complies with the SEC's Sustainability Reporting Guidelines for Listed Companies. It
also adheres to regulations and laws related to environmental protection, health and
safety, and business integrity. Shell Pilipinas complies and abides by the rules and laws
in the land. In making its operations possible, Shell Pilipinas makes sure that all the
legal requirements have been settled. Shell Pilipinas is bound to abide by the rules and
implementing laws of the land. The law will still prevail above any big corporation that
can influence government officials. The reduction was achieved by divestments in 2021
and 2022 (including the Deer Park and Puget Sound refineries in the USA); the
handover of operations in OML 11 in Nigeria in 2022; the shutdown or conversion of
existing assets, including the shutdown of some units at the Shell Energy and
Chemicals Park Singapore; and greenhouse gas abatement projects and the purchase
of renewable electricity. These decreases were partly offset by the commissioning of
Shell Polymers Monaca, our new polyethylene production facility, in the USA. These
efforts from SHELL Pilipinas have been commended and followed by other companies
that offer the same products.
 16

A.6 LEGAL FORCES

Shell Pilipinas operates within the Philippine Securities and Exchange
Commission (SEC) regulatory framework. The company complies with the SEC's
Sustainability Reporting Guidelines for Listed Companies. It also adheres to regulations
and laws related to environmental protection, health and safety, and business integrity.

Shell Pilipinas complies and abides by the rules and laws in the land. In making
its operations possible, Shell Pilipinas makes sure that all the legal requirements have
been settled. Shell Pilipinas is bound to abide by the rules and implementing laws of the
land. The law will still prevail above any big corporation that can influence government
officials. SHELL Pilipinas must abide by the law that hazards to the environment if not
prohibited, lessened. The company has been legally compliant with the governing rules
and regulations in the Philippine Environmental Laws that could also affect the entirety
of their business if violated.
 17

B. External Factor Evaluation Matrix

 18

Key External Weight Rating Weighted Score

Factors
OPPORTUNITIES
Expansion of 0.05 3 0.15
Renewable
Energy Offerings
Investment in 0.15 3 0.45
Electric Vehicle
Infrastructure
Economic Growth 0.10 4 0.40

Partnership, 0.10 4 0.40

Merger and
Acquisition
New Discoveries 0.10 4 0.40

Regulatory 0.10 4 0.40

Changes and
Policy Shifts
THREATS
Intensifying 0.07 3 0.21
competition
Regulatory 0.08 3 0.24
changes and
policy shifts

Macroeconomic 0.10 4 0.40

Uncertainty and
Price Volatility

Shift toward 0.15 3 0.45

sustainable
energy
TOTAL 1.00 3.5

Rating: 1- Poor Response 2- Average Response 3- Above Average Response 4-

Superior Response

After identifying the opportunities and threats of Shell Pilipinas, all factors are
 19

weighed in accordance with its impact to the business. Also, the ratings are from 1-4, 1
being the Poor Response, 2 as the Average Response, 3 as the Above Average
Response, and lastly, 4 as the Superior Response.

OPPORTUNITIES

Shell Pilipinas' External Factor Evaluation (EFE) Matrix highlights several

significant opportunities that can positively impact the company's strategic positioning in
the dynamic energy sector. The analysis assigns weights, ratings, and calculates
weighted scores for each identified opportunity, providing valuable insights into the
external factors influencing Shell Pilipinas. One notable opportunity is the potential for
the expansion of renewable energy offerings, assigned a weight of 0.05 and a rating of
3, resulting in a weighted score of 0.15. This suggests that by capitalizing on the
growing demand for sustainable energy solutions, Shell Pilipinas can enhance its
market position and contribute to the transition toward cleaner energy sources.

Moreover, investment in electric vehicle (EV) infrastructure is identified as a

substantial opportunity, with a weight of 0.15 and a rating of 3, leading to a high
weighted score of 0.45. Recognizing the increasing global emphasis on electric
vehicles, Shell Pilipinas has the chance to invest strategically in EV infrastructure,
aligning with the evolving preferences of consumers and contributing to the
development of a sustainable transportation ecosystem. Additionally, economic growth,
with a weight of 0.10 and an excellent rating of 4, results in a significant weighted score
of 0.40. This opportunity signifies the potential for Shell Pilipinas to leverage favorable
economic conditions, expanding its operations and services amid a growing market,
 20

which can enhance revenue streams and overall business performance.

Furthermore, the prospect of partnerships, mergers, and acquisitions is identified

as another significant opportunity, with a weight of 0.10 and a rating of 4, leading to a
weighted score of 0.40. This indicates that Shell Pilipinas can explore collaborative
ventures to strengthen its market presence, foster innovation, and capitalize on
synergies in the competitive landscape. Also, new discoveries, assigned a weight of
0.10 and a rating of 4, result in a weighted score of 0.40. This opportunity suggests that
Shell Pilipinas has the potential to capitalize on technological advancements and
exploration efforts to uncover new energy resources, enhancing its competitive edge
and securing future reserves. Lastly, regulatory changes and policy shifts, with a weight
of 0.10 and a high rating of 4, result in a substantial weighted score of 0.40. This
opportunity highlights the importance of staying attuned to evolving regulatory
landscapes, allowing Shell Pilipinas to adapt its strategies in alignment with changing
policies and leverage favorable regulations to its advantage.

THREAT

Shell Pilipinas faces a set of formidable threats according to the External Factor
Evaluation (EFE) Matrix, each carrying specific implications for the company's strategic
landscape. One pressing challenge is the intensification of competition, denoted by a
weight of 0.07 and a rating of 3, resulting in a weighted score of 0.21. This suggests a
competitive environment in the energy sector that demands Shell Pilipinas' continuous
focus on innovation, efficiency, and differentiation to safeguard its market position and
sustain growth. Navigating this landscape requires a strategic approach that anticipates
 21

market trends, customer demands, and the actions of competitors.

Another threat identified in the EFE Matrix is the impact of regulatory changes
and policy shifts, signified by a weight of 0.08 and a rating of 3, resulting in a weighted
score of 0.24. This underscores the vulnerability of Shell Pilipinas to shifts in regulatory
frameworks and policy dynamics. The company must remain agile and adaptable,
proactively adjusting its strategies to align with evolving regulations. Ensuring
compliance and actively participating in industry advocacy efforts become crucial
elements in mitigating the potential adverse effects of regulatory changes on business
operations.

Macroeconomic uncertainty and price volatility emerge as a substantial threat,

assigned a weight of 0.10 and an elevated rating of 4, leading to a high weighted score
of 0.40. This highlights the company's exposure to broader economic conditions and
the volatility of energy prices. To effectively navigate these uncertainties, Shell Pilipinas
must implement robust risk management strategies, ensuring financial resilience and
operational flexibility in the face of economic fluctuations and unpredictable price
movements. The company's ability to weather economic storms will be essential for
maintaining stability and sustaining its long-term growth trajectory.

Finally, the EFE Matrix points out a significant threat in the form of a shift toward
sustainable energy, with a weight of 0.15 and a rating of 3, resulting in a high weighted
score of 0.45. This highlights the global trend toward environmentally friendly practices
and renewable energy sources. Shell Pilipinas must strategically position itself to
respond to this shift, exploring opportunities in sustainable energy solutions and
aligning its business model with the increasing emphasis on environmental
responsibility. This threat, while challenging, also presents an avenue for innovation and
market leadership in the emerging sustainable energy landscape. To conclude, the total
weighted score is 3.5 that summarized all the External Factors affecting the business.
The rating of Shell Pilipinas implies that the company is responsive in terms of its
 22

opportunities and threats.

C. Competitive Profile Matrix

The benchmark of success by a business influences the corporate environment.

One valuable tool for assessing the company’s strengths and weaknesses is the CPM
or the Competitive Profile Matrix, this tool is used to better understand the strategy that
must be used in order to have a still and balanced business standing. Competitive
Profile Matrix helps us define the business strategy. A company’s overall score
indicates its level of competition compared to other businesses.

SHELL Pilipinas’ main competitors can be compared using the Competitive

Profile Matrix, these are PETRON and CALTEX. These two companies were described
below and will be tested using Competitive Profile Matrix (CPM)

Based on the data gathered from the website of CALTEX, this company
distributes petroleum products and provides perks and advantages for loyal customers.
The partnership or collaboration between the Philippines and Caltex began in 1917 and
these bonds have been made stronger that comes to the peak of developing the
petroleum industry in the Philippines through the services and bonds made throughout
the years. From geothermal explorations to cutting edge facilities to launching cleaner
fuels, it’s been a partnership that has always been about giving you a better driving
experience.

SHELL Pilipinas PETRON CALTEX

 23

Critical Weight Rating Weighted Rating Weighted Rating Weighted

Success Score Score Score
Factor

Positive Cash 0.15 3 0.45 4 0.60 2 0.30

Flow

Market Share 0.15 3 0.45 3 0.45 3 0.45

Quality 0.08 4 0.32 4 0.32 3 0.24

Control
Price 0.15 3 0.45 4 0.45 3 0.45
Competitiveness

Sustainability 0.07 4 0.28 4 0.28 4 0.28

Workforce 0.15 3 0.45 4 0.60 3 0.45
E-Commerce 0.10 3 0.30 3 0.30 3 0.30
Service Quality 0.15 4 0.60 4 0.60 4 0.60
TOTAL 1.00 3.30 3.60 3.07

Positive Cash Flow is a good indicator for corporations or businesses. The key
impacts of a positive cash flow are, Financial Stability, Debt Reduction, Investment
Opportunities, Business Expansion, and etc. These key impacts are vital in order to
sustain the needs of the company and to conclude that a company is doing well
financially. It is very important to note that a positive cash flow is generally desirable, it’s
not the only metric to consider. The quality of cash flow and the sustainability of positive
cash flow over the long term are also critical factors in assessing an entity’s financial
condition. SHELL Pilipinas experienced a very good financial condition through the
stability of trend that they have for years that they stay in the Philippines alongside with
the main competitors of SHELL Pilipinas.
 24

Market Share is a crucial measure in the Petroleum Industry because this influences all
the factors that affect the income generators of the company or business. If the market
share of the business has a positive effect in the market, there will be a sustainability
and consistency with regard to the income generative investments of the company, this
will also leave the company free of filling the gaps of the deficiencies of a certain fiscal
year.

Quality Control in the Petroleum Industry also plays a crucial role in sustaining and
boosting a company’s overall cash flow. The quality of petroleum or products that a
petroleum company releases to the market will consequently tell the fate of a company
regarding its reputation.

Price Competitiveness
This is one factor that customers and other clients look at before patronizing a
specific petroleum product, this is the last factor that a client seeks after looking for the
quality and service that a petroleum industry provides to the massive number of clients.

The Competitive Profile Matrix (CPM) is essential in formulating a strategic model of a

company. This tool has been used in order to assess the company alongside its two
main competitors.

Sustainability
Is one of the factors that consumers consider in buying petroleum products. Also,
consumers look into how the company responds to the calling of the environment.
People around the globe is switching to a more sustainable and more environmental-
friendly modes of transportation and in the new millennium, the petroleum industry did
not have a skyrocket-high income yet sustaining the trend and being consistent in
earning huge amount of money because of the need to use petroleum products in
almost all transport vehicles around the globe.

Workforce
 25

This can be considered as the backbone of the business.The workforce is a

critical and valuable asset for any company. Its value goes beyond just the number of
employees; it encompasses the skills, knowledge, experience, and collective efforts of
individuals working towards common goals. There are plenty of ways on how the
workforce continues to feed the company by the skills and roles that they play in a
company.

E-Commerce
This will help the company to boost and widen its range and reach when it comes
to getting clients. E-Commerce helped the economy to boost by having convenient and
reliable transactions around the globe. SHELL Pilipinas obtained a good score or
response to this factor. The two competitors and SHELL Pilipinas obtained a good score
regarding the responsiveness in the E-Commerce factor. E-Commerce is the playing
field or battlefield of business around the globe and the development of E-Commerce
will contribute to the company’s overall growth.

Service Quality
In all businesses around the globe, the quality of service is one of the major
considerations that a business is about to think of. The score regarding the quality of
service of the leading petroleum companies is evidently high which concludes that the
business or the company is providing good services for all the Filipinos. The quality of
service can be the reputation that will never be tainted in a company and securing the
reputation and image of a company will sustain and develop its overall growth
 26

VI. INTERNAL ENVIRONMENT ANALYSIS

A. Financial Ratios
2018 2019 2020 2021 2022

Current Ratio 1.4 1.2 0.9 1.1 0.8

Debt to Equity Ratio 0.2 0.4 0.7 0.8 1.1

Debt Ratio 0.1 0.1 0.2 0.2 0.3

Return on Assets 6.3% 5.5% (18.7%) 4.1% 3.5%

Return on Equity 13.2% 14.3% (70.3%) 15.1% 14.6%

Return on Average 14.8% 16.3% (40.0%) 18.0% 14.0%

Capital Employed

The current ratio is also referred to as the working capital ratio. The current ratio
is a liquidity ratio that indicates a company's capacity to repay short-term loans due
within the next year. Shell Pilipinas current ratios are 1.4, 1.2, 0.9, 1.1, and 0.8 from the
year 2018 to 2022. This means that Fruchies will have no problem paying its short-term
debt for the projected period as it is more significant than or equal to 2 but not more
than 2.5 from 2018 to 2022.

The debt-to-equity (D/E) ratio, determined by dividing a company's total

liabilities by its shareholder equity, assesses financial leverage. It measures how much
a firm borrows to fund its operations rather than using its funds. Shell Pilipinas debt-to-
equity ratio is 0.2, 0.4, 0.7, 0.8, and 1.1 from the year 2018 to 2022.

The debt ratio is the decimal or percentage ratio of total debt to total assets. It is
the percentage of a company's assets funded by debt. Shell Pilipinas debt ratios are
0.1, 0.1. 0.2, 0.2, and 0.3 from the year 2018 to 2022. A ratio below 1 means that a
greater portion of a company's assets is funded by equity.
 27

Return on assets is a measure that shows how profitable a firm is in comparison

to its total assets. It demonstrates how effective a corporation is at generating revenue
from its assets. The ratio is computed by dividing a company's net income by its total
assets. Shell Pilipinas ROA are 6.3%, 5.5%, (18.7%), 4.1%, and 3.5% from the year
2018 to 2022.

Return on Equity measures a company's profitability and efficiency in

generating profits. The greater the ROE, the more effective management is in
generating revenue and growth from equity financing. Shell Pilipinas ROE are 13.2%,
14.3%, (70.3%), 15.1%, and 14.6% from the year 2018 to 2022.

The Return on Average Capital Employed contributes to determining how

profitable a firm is in relation to the capital that has been put in it. Higher profits from
their investments have a higher return on capital. Shell Pilipinas ROACE are 14.8%,
16.3%, (40.0%), 18.0%, and 14.0%.

B. Internal Factor Evaluation Matrix

Key External Factors Weight Rating Weighted Score

STRENGTHS

Strong stakeholder 0.07 3 0.21

engagement:

Commitment to sustainability 0.10 4 0.40

Strong financial framework 0.07 4 0.28

 28

Size and Financial Resources 0.10 4 0.40

Vertical Integration 0.05 3 0.15

Research and Development 0.08 4 0.24

Strategic Partnership 0.06 3 0.18

Wide Product Portfolio 0.06 3 0.18

Exploration Capabilities 0.05 3 0.15

WEAKNESS

Reliance on traditional fuel 0.05 2 0.10

sources

Vulnerability to price 0.06 2 0.12

fluctuations

Dropping Reserves 0.08 1 0.08

Depending on Oil Prices 0.07 1 0.07

Low Presence on Renewable 0.10 1 0.12

Energy

TOTAL 1 - 2.68
Rating: weakness (rating = 1), a minor weakness (rating = 2), a minor strength
(rating = 3), or a major strength (rating = 4)

After identifying the strengths and weaknesses of Shell Pilipinas, all factors are
weighed in accordance with its impact to the business. Also, the ratings are from 1-4, a
rating of 1 is indicative of a significant weakness. On the other hand, a rating of 2
implies a minor weakness, and a rating of 3 designates a minor strength. Lastly, a rating
of 4 signifies a major strength.

STRENGTH
 29

Shell Pilipinas, encompassing various entities operating in downstream business,

business operations, and new energies in the Philippines, demonstrates a strong
internal strategic position, as evidenced by its Internal Factor Evaluation (IFE) Matrix.
Notably, the company's commitment to sustainability is a standout strength, with a
substantial weight of 0.10 and a high rating of 4, resulting in a significant weighted
score of 0.40. This underscores Shell Pilipinas' leadership in sustainable practices,
aligning with global efforts towards cleaner energy. Financially, the company exhibits
strength, with a solid financial framework (weighted score: 0.28) and considerable size
and financial resources (weighted score: 0.40), both earning a rating of 4. These factors
highlight Shell Pilipinas' financial stability and capacity for sustained growth.
Additionally, the company places a strong emphasis on research and development,
reflected in a high rating of 4 and a weighted score of 0.24, emphasizing its
commitment to innovation and technological advancement.

While Shell Pilipinas excels in several areas, the IFE Matrix also identifies
opportunities for improvement. Areas such as strong stakeholder engagement, vertical
integration, strategic partnerships, wide product portfolio, and exploration capabilities,
while contributing moderately to the internal strategic position, have room for
enhancement. For instance, stakeholder engagement, with a weighted score of 0.21,
suggests potential for strengthening relationships further. Vertical integration, with a
weighted score of 0.15, indicates an average performance, signaling an opportunity for
optimization in this strategic dimension.

In conclusion, Shell Pilipinas is positioned as a major player in the country's

energy landscape. Its commitment to sustainability, financial strength, and focus on
innovation serve as pillars for future growth. As the company continues to deliver
 30

smarter products and cleaner energy, addressing areas with average performance will
further solidify its internal strategic foundation, ensuring a sustainable and competitive
future in the dynamic energy sector of the Philippines.

WEAKNESSES

Shell Pilipinas' Internal Factor Evaluation (IFE) Matrix also includes significant
weaknesses that demand strategic attention and management. One prominent concern
is the company's reliance on traditional fuel sources, receiving a weight of 0.05 and a
rating of 2, resulting in a low weighted score of 0.10. This highlights the potential risks
associated with a heavy dependence on conventional energy, emphasizing the critical
need for diversification and adaptability in response to dynamic market conditions.

Another weakness highlighted is the vulnerability to price fluctuations, with a

weight of 0.06 and a rating of 2, leading to a weighted score of 0.12. This susceptibility
implies that Shell Pilipinas may encounter challenges in navigating the volatile nature of
global energy prices, underscoring the importance of implementing robust risk
management strategies to mitigate adverse impacts. The IFE Matrix further points out
weaknesses such as dropping reserves (weight: 0.08, rating: 1, weighted score: 0.08),
indicating concerns about declining reserves that could potentially affect the company's
long-term sustainability. Additionally, the dependence on oil prices (weight: 0.07, rating:
1, weighted score: 0.07) and the low presence in renewable energy (weight: 0.10,
rating: 1, weighted score: 0.12) suggest vulnerabilities to external market forces and a
potential lag in transitioning to more sustainable energy sources.
 31

In summary, Shell Pilipinas faces critical weaknesses according to the IFE

Matrix, including overreliance on traditional fuels, susceptibility to price fluctuations,
declining reserves, dependence on oil prices, and a limited presence in renewable
energy. Addressing these vulnerabilities is essential for the company's sustained
success, requiring strategic initiatives such as diversification, robust risk management,
resource replenishment, and an accelerated focus on renewable energy to align with
global sustainability goals and effectively navigate the evolving energy landscape.

VII. PORTER’S FIVE

Force Level

Threat of New Entrants Low to Moderate

Bargaining Power of Suppliers Moderate

Bargaining Power of Customers High

Threats of Substitute Moderate

Competitive Rivalry Very High

Threat of New Entrants

Threat of New Entrants for Shell Pilipinas Corporation in the Philippine oil and
gas industry is notably low due to several key barriers. Firstly, the industry demands a
substantial capital investment for exploration, extraction, and distribution infrastructure,
creating a significant barrier to entry. The capital-intensive nature of these operations
makes it challenging for new entrants to match the financial capabilities of established
players like Shell Pilipinas Corporation. Furthermore, economies of scale in production
and distribution contribute to a cost advantage for existing companies, making it difficult
for newcomers to achieve the same level of efficiency and cost-effectiveness.
 32

Secondly, the regulatory environment poses a formidable challenge for potential

entrants. The oil and gas industry is subject to strict regulations concerning
environmental impact, safety standards, and health protocols. Complying with these
regulations requires substantial expertise and resources, creating an additional barrier
for new players. Navigating the complex reg ulatory landscape demands time and financial
investment, making it less likely for new entrants to swiftly establish themselves in the market.

Lastly, the presence of established relationships, distribution networks, and

brand loyalty further reinforces the low threat of new entrants. Shell Pilipinas
Corporation, as a recognized and trusted brand, enjoys customer loyalty, making it
challenging for newcomers to sway consumers away from existing choices. Overall, the
combination of high capital requirements, regulatory barriers, and the strength of
established players in the market collectively contributes to a low threat of new entrants
for Shell Pilipinas Corporation in the Philippine oil and gas sector.

Bargaining Power of Suppliers

The bargaining power of suppliers for Shell Pilipinas Corporation is moderate.

While the company relies on suppliers for petroleum products, additives, lubricants, and
other specialty oil-based products, it has a strong global presence and established
relationships with suppliers. This gives Shell Pilipinas some bargaining power to
negotiate favorable terms and ensure a reliable supply of products. However, the
availability and pricing of these inputs can be influenced by global market conditions
and supplier concentration, which may impact the company's bargaining power. Shell
Pilipinas needs to maintain strong relationships with its suppliers and actively monitor
market dynamics to mitigate any potential risks.
 33

Additionally, Shell Pilipinas operates an integrated supply chain network that

encompasses procurement, import, storage, and distribution of finished petroleum
products. The company has strategically located fuel storage terminals, supply points,
warehouses, and import facilities. This infrastructure provides Shell Pilipinas with some
leverage in managing its supply chain and ensuring the safe, timely, and reliable
delivery of products to its customers. By maintaining a robust supply chain network,
Shell Pilipinas can mitigate potential disruptions and maintain a competitive edge in the
market.

Furthermore, Shell Pilipinas' commitment to sustainability and the energy

transition can also influence its bargaining power with suppliers. As the company aims
to provide more sustainable and cleaner energy solutions, it may seek suppliers who
align with its environmental goals and offer low carbon products. This can give Shell
Pilipinas an advantage in negotiating with suppliers who can provide the necessary
inputs for its sustainable product offerings. By actively engaging with suppliers who
share its sustainability vision, Shell Pilipinas can strengthen its bargaining power and
drive positive change in the supply chain.

Bargaining Power of Customers

The bargaining power of customers for Shell Pilipinas Corporation is relatively

high due to several factors. Firstly, customers have numerous options when it comes to
fuel providers in the Philippines. This high level of competition gives customers the
ability to switch between different fuel providers based on factors such as price,
convenience, and service quality. As a result, customers have the power to negotiate for
better prices or seek alternative options if they are not satisfied with Shell Pilipinas'
offerings.

Secondly, customers' bargaining power is also influenced by their price

sensitivity. Fuel prices are a significant factor for customers, especially in a price-
 34

sensitive market. Fluctuations in global oil prices can directly impact the prices of
petroleum products, and customers may seek out the most cost-effective options
available. This puts pressure on Shell Pilipinas to remain competitive in terms of pricing
and offer attractive promotions or loyalty programs to retain customers.

Lastly, customers' increasing awareness and demand for sustainable and

cleaner energy solutions can also impact their bargaining power. As more customers
prioritize environmental considerations, they may seek out fuel providers that offer
greener alternatives or have a strong commitment to sustainability. Shell Pilipinas needs
to respond to these customer demands by providing cleaner energy options and
demonstrating its commitment to environmental stewardship to maintain customer
loyalty and mitigate the risk of customers switching to more sustainable competitors.

Threats of Substitute

The threat of substitutes for Shell Pilipinas Corporation is relatively moderate. As

a downstream operator in the oil and gas industry, Shell Pilipinas faces potential
substitution from alternative energy sources and technologies. Factors contributing to
the moderate threat include the increasing focus on cleaner and renewable energy
sources, technological advancements in the automotive industry, and government
policies promoting sustainability.

The global energy landscape is shifting towards cleaner and renewable energy
sources, which poses a potential threat to traditional petroleum-based products offered
by Shell Pilipinas. As consumers and industries become more environmentally
conscious, there is a growing demand for alternative fuels, electric vehicles, and
renewable energy solutions. Shell Pilipinas needs to adapt to this changing landscape
 35

by investing in low-carbon solutions and offering sustainable energy alternatives to

mitigate the threat of substitution.

Technological advancements in the automotive industry, such as the

development of electric vehicles (EVs) and advancements in battery technology, also
pose a potential substitute threat to traditional fuel-powered vehicles. As EV adoption
increases, the demand for gasoline and diesel may decline. Shell Pilipinas should
closely monitor these technological advancements and consider diversifying its offerings
to include charging infrastructure and other services related to EVs to mitigate the threat
of substitution. Furthermore, government policies and regulations aimed at reducing
carbon emissions and promoting sustainable energy solutions can also contribute to the
threat of substitutes. Incentives and mandates for renewable energy adoption, stricter
emission standards, and carbon pricing mechanisms can accelerate the shift towards
alternative energy sources. Shell Pilipinas needs to stay informed about evolving
regulations and proactively adapt its business strategies to align with these changes.

Competitive Rivalry

The competitive rivalry within the Philippine fuel market presents a dynamic
landscape for Shell Pilipinas Corporation, as it contends with formidable industry
players. Petron Corporation holds a leading position with a robust 27.08% market share,
closely followed by Pilipinas Shell at 18.50%. Chevron Philippines and Phoenix
Petroleum follow with 7.82% and 7.08% market shares, respectively. The so-called "Big
3" oil companies collectively represent over half (53.44%) of the market, indicating
intense competition among these major players. Independents, including Phoenix
Petroleum, contribute significantly to the competitive landscape, comprising about a
third (38.17%) of the market. The trailing competition between Phoenix Petroleum and
Chevron Philippines highlights the potential for agile independent players to challenge
the established giants, showcasing a dynamic and competitive market environment.
 36

The Department of Energy's observation that local oil refiners Petron Corp. and
Pilipinas Shell account for 45.58% of the total market emphasizes the strategic
importance of refining capabilities in the competition. The shift in Chevron Philippines'
strategy, closing its refinery and converting it into an import terminal due to
competitiveness concerns, underscores the adaptability required to navigate the
competitive forces within the industry.Moreover, fuel importers and end-users
collectively represent more than half (54.42%) of the market, indicating the significance
of understanding and meeting the diverse needs and preferences of these stakeholders.
Shell Pilipinas Corporation must navigate this complex competitive landscape by
continually innovating, optimizing its operational efficiency, and adapting its strategies to
meet evolving market dynamics.

The competitive rivalry analysis for Shell Pilipinas Corporation reveals a highly
competitive market characterized by the dominance of major players, active
participation of independents, and the strategic importance of refining capabilities.
Success in this environment requires strategic agility, innovation, and a keen
understanding of the diverse factors influencing competitive dynamics within the
Philippine fuel market.

VIII. STRATEGY ANALYSIS

A. SWOT Matrix

A SWOT analysis is a strategic management tool used to assess a company or

organization's strengths, weaknesses, opportunities, and threats. It involves evaluating
the internal factors (strengths and weaknesses) and external factors (opportunities and
threats) that can impact the organization's performance and strategic decision-making.
The analysis helps identify areas of competitive advantage, improvement areas, growth
 37

opportunities, and potential risks or challenges the organization may face. A SWOT
analysis provides a comprehensive understanding of the organization's position and
helps inform strategic planning and decision-making processes.

STRENGTH WEAKNESS

Strong stakeholder engagement: Reliance on traditional fuel sources

Commitment to sustainability Vulnerability to price fluctuations

Strong financial framework Dropping Reserves

Size and Financial Resources Depending on Oil Prices

Vertical Integration Low Presence on Renewable Energy

Research and Development

Strategic Partnership

Wide Product Portfolio

Exploration Capabilities
 38

OPPORTUNITIES THREATS

Expansion of renewable energy offerings Intensifying competition

Investment in electric vehicle Regulatory changes and policy shifts

infrastructure

Economic Growth Macroeconomic Uncertainty and Price

Volatility

New Discoveries Shift toward sustainable energy

Partnership, Merger and Acquisition

STRENGTH

Strong stakeholder engagement. Shell Pilipinas has established robust and

regular stakeholder engagement channels, allowing them to understand stakeholders'
needs and concerns and respond promptly.

Commitment to sustainability. Shell Pilipinas is committed to becoming a net-

zero emissions energy business by 2050 and supports the Shell Group's target. The
company focuses on reducing emissions, providing low-carbon energy products, and
implementing sustainable practices.

Strong financial framework. Shell Pilipinas aims for strong cash generation at
competitive returns and disciplined capital expansion. The company prioritizes
economic growth and resilience.
 39

Size and Financial Resources. In the energy industry, scale counts. Shell
operates in more than 70 countries, employing more than 80,000 people, and has an
integrated supply chain. Owing to its scale, it possesses comparatively greater financial
resources and adaptability to weather periods of decreased profitability. Shell is able to
make investments for future profits because of its robust cash flow. Shell ensures the
sustainability of their business by taking this action.

Vertical Integration.Shell has a high degree of upstream and downstream

vertical integration. The business is involved in every stage of the supply chain, from
exploration (finding oil) to production, refining, marketing, and shipping.

Research and Development. Shell makes significant investments in R&D. 2018

saw $1 billion invested on research and development. Numerous scientists, engineers,
and researchers work at Shell. Enhancing the effectiveness of their operations,
procedures, and goods is their goal. To keep a viable business going forward, this is
essential. Shell invests in R&D collaboratively. The business collaborates extensively
with academic institutions, research facilities, government agencies, and IT startups.

Strategic Partnership. Shell has alliances with several entities, such as local
groups, governments, energy companies, non-governmental organizations, and trade
associations. The company's wide range of relationships enable them to have a
dominant position in the market.

Wide Product Portfolio. Shell offers a wide range of products. The business
operates in several markets. This exposes the company to the price of natural gas,
crude oil, oil products, and chemicals. Shell reduces the risk of price fluctuation in one
 40

of these markets with this diverse range of products. In the present market, when supply
has been reduced and oil prices have been low, this is beneficial. Natural gas
production has not decreased as significantly at this time.

Exploration Capabilities. Shell makes significant investments to locate new gas

and oil reserves. The process of exploration is getting harder and harder. Drilling deeper
is necessary for oil and gas firms to access untapped resources. It takes time and
complexity to find new oil and gas deposits. Shell has demonstrated that they have the
know-how to continuously locate new reservoirs.

WEAKNESS

Reliance on traditional fuel sources: Shell Pilipinas' heavy reliance on fossil

fuels as its primary source of revenue may pose challenges in the face of increasing
demand for renewable energy sources and the transition to a low-carbon economy.

Vulnerability to price fluctuations: Shell Pilipinas' profitability and financial

performance can be impacted by fluctuations in global oil prices, which are influenced
by various factors such as geopolitical tensions, supply and demand dynamics, and
economic conditions.

Dropping Reserves. Shell's gas and oil reserves have been diminishing lately.
For the sixth consecutive year, Shell's oil and gas reserves have less production years
remaining in 2019. Furthermore, Shell's reserves are depleting more quickly than those
of its rivals. This implies that Shell will always need to locate or acquire new gas and oil
resources. Morgan Stanley downgraded its rating on Shell's shares in 2019 due to a
shortage of reserves.

Low Presence on Renewable Energy. The energy supply in the globe is

shifting to come from more sustainable and renewable sources. Solar and wind energy
are two examples of this kind of energy. The trend in mobility is also toward charging
 41

electric vehicles. Although Shell is investing in these new energy and technology, the
company's roots are in fossil fuels. According to estimates, Shell only invested a small
portion of its budget on green energy initiatives in 2020, falling short of its targets. Shell
intends to increase its renewable energy investment. But Shell is currently also pulling
out of planned investments. The challenging market conditions in the oil business
prompted the corporation to take this choice. It would be fascinating to observe how
expenditure on renewable energy is affected by the state of the market.

Depending on Oil Prices. The price of oil has a major impact on Shell's
earnings. Due to a decline in oil demand brought on by COVID-19, the price of oil has
dropped. The present low price of oil depresses both Shell's revenue and asset value.
This proves once more why Shell needs to switch to other energy sources. In the past,
Shell has consistently paid out a large dividend. However, Shell made the bold choice to
drastically reduce payouts by two-thirds as a result of the present market difficulties.
This demonstrates how Shell is reliant on the price of oil.

OPPORTUNITIES

Expansion of renewable energy offerings: Shell Pilipinas can seize the

opportunity to further develop and expand its portfolio of renewable energy solutions,
such as solar and wind power, to meet the growing demand for clean and sustainable
energy sources in the Philippines.

Investment in electric vehicle infrastructure: With the increasing adoption of

electric vehicles (EVs) in the country, Shell Pilipinas can invest in the development of
EV charging infrastructure to cater to the needs of EV owners and position itself as a
leader in the emerging EV market.

Economic Growth. Economic growth is one of the main factors influencing the
demand for Shell's goods. The coronavirus has had a severe negative influence on
economic growth for 2020, yet long-term global economic growth is anticipated. For
 42

LNG (liquid natural gas), in particular, the economic picture is favorable. Global demand
increased by 13% in 2019 and is predicted to continue rising in the ensuing decades.

New Discoveries. New discoveries that come from exploration efforts may help
the company hold onto its market position. As was indicated under Strengths, Shell is
quite capable of exploration.

Partnership, Merger and Acquisition. Partnerships may enable Shell to

expand and gain more knowledge about renewable energy sources. Additionally, it
could facilitate the company's quick ascent to a larger market share in this industry.
Activities related to corporate development may also expedite this process. As seen by
its (failed) 2019 takeover attempt to acquire Dutch energy company Eneco, Shell is
aware of the potential benefits of mergers and acquisitions. Eneco places a lot of
emphasis on renewable energy.
THREATS

Intensifying competition: Shell Pilipinas faces competition from traditional

petroleum companies and emerging players in the renewable energy sector. The
company must continuously innovate and differentiate its offerings to maintain its
market position.

Regulatory changes and policy shifts: Changes in government regulations

and policies related to the energy industry, environmental protection, and climate
change can pose challenges and uncertainties for Shell Pilipinas. Adapting to new
regulations and ensuring compliance may require significant investments and
operational adjustments.

Macroeconomic Uncertainty and Price Volatility. The COVID-19 pandemic

has caused a sharp decline in oil prices. The demand for oil fell as a result of the
epidemic. The present low price of oil depresses both Shell's revenue and asset value.
This proves once more why Shell needs to switch to other energy sources. The
 43

prognosis for the market is quite unpredictable historically. When will there be a spike in
oil demand again? Furthermore, it has been demonstrated that Russia and Saudi
Arabia are prepared to increase their oil output. Supply growth will drive down oil prices
once more.

Shift toward sustainable energy. The shift to renewable energy has already
been mentioned several times in this article as one of Shell's major issues. This
presents both a chance and a risk. The existing Shell business model is not viable in the
long run due to depleting reserves and a move towards renewable energy sources.
Shell is forced to make significant investments in innovative, sustainable energy
sources.

B. SPACE Matrix

Financial Position (FP) Ratings

Return on Investment 4
Leverage 3
Liquidity 4
Asset Turnover 4

Average 3.75

Competitive Position (CP) Ratings

Market Share -1
Product and Service Offerings -1
Product Life Cycle -1
Customer Loyalty -1
 44

Capacity Utilization -1

Average -1

Stability Position (SP) Ratings

Expansion of Renewable Energy offerings -2

Investment in Electric Vehicle -1
Infrastructure
Economic Growth -1
New Discoveries -2

Average 1.5

Industry Position (IP) Ratings

Growth Potential (Services) 5

Growth Potential ()Products 3
Profit Potential 5
Technological know-how 6

Ease of Entry 6

Average 4.17

CP+IP Averages -1+4.17 = 3.17 (X-axis)

FP+SP Averages 3.75+1.5 = 5.25 (Y-axis)
 45

C. Boston Consulting Group (BCG) Matrix

RELATIVE MARKET SHARE

 46

Shell Pilipinas’ revenue skyrocketed in 2022, recording 291,483,000 for the said
year compared to its revenue for 2021 which is 177,157,000. The sales growth is
64.53% compared to its sales growth in 2021 which is 12.87%. On the other hand, Shell
Pilipinas’ market share for 2023 is 15.55 that comes from its low point (14.61) The
relative growth of Shell Pilipinas in terms of its revenue could be a basis on what
strategy to be formulated.

With the data being presented above, Shell Pilipinas is included in Quadrant II. The
second quadrant of the Star Quadrant represents that the company is at its momentum
of growth and ability to have consistent earnings. The data presented indicates that the
revenue of Shell Pilipinas should consider horizontal or forward strategies, the data
presented also justifies the need to formulate strategies such as penetration, product
and market development.

D. Internal-External Matrix
 47

Considering SHELL Pilipinas’ obtained numbers in the IFE Matrix which is 2.63,
the company belongs in the fifth cell on the second column which suggests hold and
maintain strategy. The cell where SHELL Pilipinas belong may execute massive and
intensive strategies such as the penetration in the market, and development of product.

In penetrating the market, SHELL Pilipinas has the opportunity to boost and
improve its market share in the petroleum industry by developing the offers and
promotions and its overall marketing strategy to widen its reach. On the other hand, the
development of its product through scientific means aims to cover the sustainability
factor and upgrade their products through adapting to the sustainable and efficient way
of delivering products to the market. The strategy suggested through the Internal-
External Matrix is significant and accurate to ensure the progress and consistency of the
profitability rate of the company.

E. Quantitative Strategy Planning Matrix (QSPM)

Table ___ SHELL Pilipinas, Quantitative Strategy Planning Matrix

Strategy Alternatives
 48

Motivate offers and Sustain and

programs of develop stations
promotions

Key Factors Weight AS TS AS TS

Opportunities

Expansion of 0.05 3 0.15 3 0.15

Renewable Energy
Offerings

Investment in 0.15 3 0.45 3 0.45

Electric Vehicle
Infrastructure

Economic Growth 0.10 3 0.30 4 0.40

Partnership, Merger 0.10 3 0.30 3 0.30

and Acquisition

New Discoveries 0.10 4 0.40 4 0.40

Regulatory 0.10 4 0.40 3 0.30

Changes and Policy
Shifts

Threats

Intensifying 0.07 4 0.28 3 0.21

competition

Regulatory changes 0.08 3 0.24 4 0.32

and policy shifts

Macroeconomic 0.10 4 0.40 3 0.30

Uncertainty and
Price Volatility

Shift toward 0.15 3 0.45 3 0.45

sustainable energy

Strength
 49

Strong stakeholder 0.07 4 0.28 3 0.21

engagement:

Commitment to 0.10 3 0.30 4 0.40

sustainability

Strong financial 0.07 4 0.28 4 0.21

framework

Size and Financial 0.10 3 0.30 3 0.30

Resources

Vertical Integration 0.05 3 0.15 4 0.20

Research and 0.08 4 0.32 3 0.24

Development

Strategic 0.06 4 0.24 4 0.18

Partnership

Wide Product 0.06 3 0.18 3 0.18

Portfolio

Exploration 0.05 4 0.20 3 0.15

Capabilities

Weakness

Reliance on 0.05 4 0.20 3 0.15

traditional fuel
sources

0Vulnerability to 0.06 3 0.18 3 0.18

price fluctuations
 50

Dropping Reserves 0.08 4 0.32 4 0.32

Depending on Oil 0.07 4 0.28 4 0.24

Prices

Low Presence on 0.10 4 0.40 4 0.40

Renewable Energy

TOTAL 4 7 6.64
Attractive Score (AS) 1= Not attractive 2= slightly attractive 3= attractive 4= very
attractive

Quantitative Strategy Planning Matrix or QSPM is a tool that is used to assess

strategies that suit the business. The Quantitative Strategy Planning Matrix will help
SHELL Pilipinas to weigh and compare strategies that have been floored to the
business. In line with this, the weight of each factor is based on the Internal Factor
Evaluation (IFE) which assesses the strengths and weaknesses of the company. On the
other hand, the External and Internal Factor Evaluation or the EFE has been the other
considered basis of the rating and weighing of all factors mentioned. The AS or the
Attractive Score is determined based on the impact of the strategies on the given factor.
Having these considerations, the scores will be 4 for very attractive, 3 for attractive, 2
for slightly attractive, and 1 for not attractive.

For SHELL Pilipinas’ Quantitative Strategy Planning Matrix or QSPM, there are
alternative strategies formulated having the rates of the internal and external factors that
impact the operation of the company. The company has been operating for years in the
Philippines and it is known that the prices of the goods that they offer places bottom of
the price competitiveness. Having that fact, SHELL Pilipinas continues to attract clients
and make them believe that the products that they offer together with their prices are
reasonable and law-abiding.

Moreover, sustainability is one of the major priorities of all oil companies around the
globe in order for them to continue with the business without harming the environment.
In the new millennium, many scientists and innovators started to make inventions that
offer the same services as how transport vehicles serve the people but the major catch
is that it is more sustainable and greener compared to the vehicles that use gas. This
competition between the SHELL Pilipinas and the companies alike, has been one of the
considered factors by the company in making sustainable and more progressive gas
stations around the globe. This initiative by SHELL Corporation could be the benchmark
of a greener world for all. This strategy wins the satisfaction of all people from different
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walks of life and executing this strategy could boost the economy and the business as
well.

VIII. FINANCIAL STATEMENTS (in million)

a. Statement of Financial Position

2018 2019 2020 2021 2022

Current 40.778.6 47,469.4 29,902.6 36,475.6 49,833.3

Assets
 52

Non-current 39.387.8 55,450.1 56,647.5 58,673.6 67,203.2

Assets

Total Assets 80.166.4 102,919.5 86,550.1 95,149.2 117,036.4

Current 28,456.8 39,453.2 33,394.3 32,704.4 59,770.8

Liabilities

Non-current 12,737.8 23,680.0 29,524.0 36,273.4 28,336.2

Liabilities

Total 41,194.6 63,091.2 62,918.3 68,977.7 88,107.0

Liabilities

Total Equity 38,971.8 39,828.3 23,631.8 26,171.5 28,929.4

Total 80,166.4 102,919.5 85,550.1 95,149.2 117,036.4

Liabilities and
Equity

b. Statement of Income

2018 2019 2020 2021 2022

Gross Sales 223,817.7 224,288.6 162,022.7 182,522.5 296,382.4

Sales (4,949.0) -5,885.6 (5,070.8) (5,365.6) (-4,899.8)

discount and
 53

rebates

Net Sales 218,868.7 218,403.0 156,951.8 177,156.6 291,482.6

Cost of Sales (-196,573.9) (194,952.7) (-153,291.2) 154,412.7 (266,482.6)

Gross Profit 22,294.8 23,450.3 3,660.6 (22,744.2) (25,362.8)

Operating (14,386.6) (14,448.6) (13,722.8) (15,347.7) (16,679.6)

Expense

Other 583.9 388.4 (177.8) 1,914.8 (3.1)

operating
income (loss),
net

Income (loss) 8,492.1 9,390.1 (21,008.8) 9,010.9 8,680.2

from
operations

Income (loss) 7,292.1 8,021.2 (23,028.2) 6,765.9 5,466.3

before income
tax

Profit for the 5,076.3 5,621.2 16,182.7 3,855.7 4,075.7

year/period

c. Statement of Cash Flow

2018 2019 2020 2021 2022

Net cash from 14,143.6 6,897.2 5,945.5 1,071.6 1,621.0

Operating
 54

Activities

Net cash from (4,291.5) (4,903.3) (3,961.5) (3,339.3) (4,507.8)

Investing
Activities

Net cash from (11,719.9) (1,670.1) (472.3) (2,351.5 4,172.7

(used in)
Financing
Activities

Net increase (1,1867.3) 323.7 1,511.6 (4,619.3) 1,285.9

(decrease) in
cash of the
year

Cash at the 6,163.3 4,455.1 4,778.9 6,290.5 1,684.3

beginning of
the year

Cash at the 4,455.1 4,778.9 6,290.5 1,684.3 2,967.2

end of the
year

d. Net Income Segmentation

2018 2019 2020 2021 2022

Core 5.1 4.2 1.1 2.3 2.8

Income

Marketing 6.9 8.1 4.9 3.1 2.9

 55

(1.8) (3.8) (3.8) (0.8) (0.1)

Manufacturin
g/Supply/Oth
ers

Inventory (0.1) 1.4 (4.8) 2.3 1.6

Holding
Gains/Losse
s

Non-Core - - (11.8) (0.7) (0.3)

Income One-
Offs

Net Income 5.1 5.6 (16.2) (3.9) 4.1

IX. FINANCIAL PROJECTION

X. BALANCED SCORECARD -

A balanced scorecard (BSC) facilitates organizations in several ways. BSC intensifies

business as its focus is on long-term objectives. BSC also permits performance to be
scrutinized by comparing results to a set objective. Moreover, the BSC may boost
accountability. Shell Pilipinas mainly deals in the petrochemicals and energy industry
and has a considerable market share with revenue of about four million. Shell's primary
strategy ensures that they deliver and extract gas and oil in a socially, environmentally,
and profitably responsible manner. In the BSC, all the aims are linked with the strategy
to create a relationship that helps Shell Pilipinas attain long-term objectives. In the BSC,
an example of a cause-and-effect relationship might be by enhancing employee and
 56

organization relations; employees will be more enthusiastic when they feel valued,
which eventually improves business processes like reduction in oil spillage. Shell can
state about spillage reduction through the media and in their review. It will improve
Shell's image in customers' eyes, as Shell Pilipinas might assert less environmental
risk. As a result, Shell may increase business profitability and attract new customers.

Moreover, from the BSC, the cause and effect relationship refers to Shell
Pilipinas ascertaining new locations of gas and oil; the company may set a quantity of
oil to transform into BiofuelBiofuel. It will direct to more transportation modes, including
dealers. This new mode of transportation (such as BiofuelBiofuel can be transported to
petrol pumps) increases customer availability, thereby increasing shareholders'
profitability. This BSC will allow Shell to meet stakeholders' needs (Davis & Albright,
2004).

According to Robert S. Kaplan and David P. Norton, 85 percent of executive

teams spent less than one hour per month discussing strategy, with 50 percent
reporting that they spent virtually no time on strategy discussions. Balanced Scorecards
help "Shell Effort" to translate, communicate, and measure its strategies. Some of the
questions answered by Balance Scorecard Analysis of Royal Dutch/Shell in Transition
(A) are -

1. How do customers perceive Shell Effort? What is required to improve the brand
equity or market performance in marketing, sales, distribution, and pricing
strategy?
2. What is essential for Shell Effort shareholders? How can Shell Effort's decisions
impact the financial reports and balance sheet?
3. Are we innovative and ready for the future?
 57

4. Which internal processes can add value? What are the core competencies of
Shell Effort, and how it can add value in the future?

XI. SUSTAINABLE REPORT

REFERENCES:
Annual Sustainability Report for 2022. (2022). Pilipinas Shell Petroleum
Corporation | Pilipinas Shell Petroleum Corporation.
https://pilipinas.shell.com.ph/investors/financial-reports/_jcr_content/par/
textimage.stream/1682658696815/9bf74570143c11347bc15d351aff4519e47ed647/
annual-and-sustainability-report-2022.pdf

Prevailing Retail Prices of Petroleum Products in NCR as of October 10, 2023.

(n.d.). https://www.doe.gov.ph/retail-pump-prices-metro-manila. Retrieved October 18,
2023, from https://www.doe.gov.ph/sites/default/files/pdf/price_watch/petro_ncr_2023-
oct-12.pdf

Retail products. (n.d.). Pilipinas Shell Petroleum Corporation | Pilipinas Shell

Petroleum Corporation. Retrieved October 18, 2023, from
https://pilipinas.shell.com.ph/about-us/retail-products.html
 58

What we do. (n.d.). Pilipinas Shell Petroleum Corporation | Pilipinas Shell

Petroleum Corporation. Retrieved October 25, 2023, from
https://pilipinas.shell.com.ph/about-us/what-we-do.html

Who we are. (n.d.). Pilipinas Shell Petroleum Corporation | Pilipinas Shell

Petroleum Corporation. Retrieved September 30, 2023, from
https://pilipinas.shell.com.ph/about-us/who-we-are.html