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Royal Dutch Shell SWOT & PESTLE Analysis

ID : 52586253| Sep 2019| 15 pages

COMPANY PROFILE -Royal Dutch Shell

Business Sector :Oil and Gas

Operating Geography :Netherlands, Europe, Global

About Royal Dutch Shell :

Royal Dutch Shell is a Dutch energy company headquartered in The Hague, Netherlands. The company is involved in production, exploration, refining and marketing natural gas and oil, as well as marketing and manufacturing chemicals. Shell operates in more than 70 countries and has 82000 employees. The company has 21 refineries and produces 3.7 million barrels of oil per day. The company consists of 4 businesses: Upstream, Downstream, Integrated Gas and New Energies. Upstream focuses on exploration, extraction, marketing and transport of crude oil and natural gas. Downstream focuses on oil products and petrochemicals. Integrated Gas focuses on Liquefied Natural Gas activities. New Energies focuses on opportunities in upcoming energy sources like hydrogen, biofuels, wind and solar.

Royal Dutch Shell Revenue :


$388.4 billion (FY 2018) (27.3% increase YoY)
$305.2 billion (FY 2017)

Competitive Analysis of Royal Dutch Shell

SWOT
PESTLE
The SWOT analysis for Royal Dutch Shell is presented below:
Strengths
Weaknesses
1. One of the world’s largest independent energy companies
2. Strong financial performances and delivery on promises
3. Business model based on integration of the businesses is a competitive advantage
4. High focus on technology and innovation
1. Struggle to resolve safety and trust issues
2. Earnings of the company not yet sustainable
Opportunities
Threats
1. Rising demand for LNG worldwide
2. Positive outlook for the African oil and gas industry
3. Growing market for biofuels worldwide
1. Fluctuation in prices of crude oil, chemicals and natural gas
2. High competition in the oil and gas industry
3. Disruption of operations by cyber attacks
4. Rising climate change concerns may lead to regulatory measures
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Detailed SWOT Analysis of Royal Dutch Shell

 

Strength

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Weakness

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Opportunity

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Threat

1. Fluctuation in prices of crude oil, chemicals and natural gas: Crude oil, chemical and natural gas prices are affected by global as well as regional demand and supply. They are also affected by government actions such as ban on diesel automobiles or a tax deduction for purchasing renewable automobiles. The factors affecting demand and supply are natural disasters, operational issues, political instability and actions by the producing countries. If the prices reduce, then Upstream and Integrated Gas businesses would generate less revenue. Low prices could also affect Shell’s long-term capital investments and the payment of dividends. On the other hand, high prices could reduce the demand for the products of the Downstream business. The resulting increase in costs from the high prices could affect Shell’s entitlement to prove reserves under some production-sharing contracts.

2. High competition in the oil and gas industry: All the businesses of the company face high competition. Though the company attempts to differentiate the products, many of the products are competing in commodity markets. Failure in cost management and performance improvement could be detrimental to the financial condition. The company also competes with state-owned oil and gas entities having access to financial resources, who might be politically motivated while making business decisions. Shell might be at a disadvantage compared to these state-owned entities during bidding on new projects as these entities might not need competitive returns. Shell ranks second in the world according to 2018 revenue figures with a revenue of $388.4 billion, behind China’s Sinopec ($432.54 billion). Petro China is very close behind Shell at $347.76 billion.

3. Disruption of operations by cyber-attacks: Shell relies heavily on IT systems for operation of business processes. The IT systems have dependency on contractors. Shell is often the target for cyber-attacks that attempt to gain access to the systems and data. The company has been hit by cyber-attacks in the past. In 2008, an employee of one of Shell’s contractors had used personal information of Shell employees in running an unemployment insurance claim scam. In 2009, hackers stole personal information of 1400 New Zealand customers and 4500 Australian customers. Shell focuses on timely detection to try and prevent repeat of such incidents as they could damage the reputation and affect the financial performance.

4. Rising climate change concerns may lead to regulatory measures: The company faces the threat of additional legal and regulatory measures due to increasing climate change. Not only will these call project delays and project call offs, but can also lead to reduced demand for fossil fuels, increased compliance obligations and even the chance of litigations. The company is currently fully implementing the terms of the Paris Agreement which was adopted by 195 nations in December 2015. The aims of the agreement are to limit increases in global temperatures to below two degrees Celsius. The agreement however brought along with it several regulations that aim at reducing the emission of greenhouse gases (GHG). Shell thus has been faced with increased compliance costs and operational restrictions in order to ensure that its GHG emissions are compliant with regulations.

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Royal Dutch Shell Analysis Report

1. Annual report 2018 https://reports.shell.com/annual-report/2018/

2. Investors handbook https://reports.shell.com/investors-handbook/2018/

3. Shell Still Isn’t Earning Enough Money https://www.bloomberg.com/opinion/articles/2019-01-31/royal-dutch-shell-still-isn-t-earning-enough-money

4. Inside Africa's Oil & Gas industry in 2019 https://www.fircroft.com/blogs/inside-africas-oil-and-gas-industry-in-2019-94413131536

5. Biofuels Market Size Will Reach USD 218.7 Billion by 2022, Globally: Zion Market Research https://www.globenewswire.com/news-release/2018/01/09/1285912/0/en/Biofuels-Market-Size-Will-Reach-USD-218-7-Billion-by-2022-Globally-Zion-Market-Research.html

The detailed complete set of references are available on request in the 'Complete report' on purchase.

Copyrights and Disclaimer

Royal Dutch Shell SWOT and PESTLE analysis has been conducted by Nipunn V and reviewed by senior analysts from Barakaat Consulting.

Copyright of Royal Dutch Shell SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Royal Dutch Shell SWOT & PESTLE Analysis
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