Strategic Management

SHELL

SHELL

OUTLINE
1.
2.
3.
4.
5.
6.
7.

INTODUCTION
PESTLE ANALYSIS
EFE MATRIX
IFE MATRIX
IE MATRIX
CONCLUSION
REFERENCES

INTRODUCTION
Shell, one of the worlds largest and most profitable multinational companies.
Shell is a global group of energy and petrochemical companies. Its aim is to
meet the energy needs of society in ways that are economically, socially and
environmentally viable, now and in the future.
HQ are in Netherlands, and the parent company of the Shell group is Royal
Dutch Shell plc, which is incorporated in England and Wales.

INTRODUCTION
Global and Challenge
Building an energy system that produce more energy with
less CO2

- Building a responsible energy future

- more sustainable transport
- cleaner fuel for power
- more upstream oil
- Responsible operations
- environmental impact
- personal and process safety

INTRODUCTION
STRATEGIC TOOLS USAGE
STRATEGIC TOOLS

PURPOSE

PESTLE ANALYSIS

to scan the organization's external macro environment.

EFE (EXTERNAL
FACTOR
EVALUATION)
MATRIX

to evaluate firms internal environment and to reveal its

strengths as well as weaknesses

IFE (INTERNAL
FACTOR
EVALUATION)
MATRIX

to examine companys external environment and to identify the

available opportunities and threat

IE MATRIX

to analyze the current position of the divisions and suggest the

strategies for the future for the better results.

PESTLE ANALYSIS

This analysis provides a holistic view of any country from historical

current and future.
This analysis on critical, current and future is presented through detail is
called SCPT. means (strengths, challenges, prospects, and threats)

 Government policy and ideology

-Economic Transformation Programme (ETP) GNI to be USD15000 by 2020
-Strategic Reform Initiatives (SRIs)- Globally competitive
-Performance Management and Delivery Unit (PEMANDU)- 20% revenue from Oil
and gas

Taxation and social insurance policy

-Income Tax Act, 1974 (PITA) - 38%
Social welfare policies
Foreign trade regulations and regulatory agencies
-Export duty of 10%
Industrial Building Allowance
Infrastructure Allowance
Tariff Related Incentives

 Business and economic growth cycles

Interest rates

Inflation rates,
Average disposable income,
Levels of unemployment and

Deprivation

 Demographic trends

Increased cultural diversity

Distribution of income
Social mobility

Life style
Education

Employment law
Health and safety legislation

Regulatory systems and product

safety rules

 Technology capabilities and computerisation

- Peninsular Gas Utilisation (PGU) project
Automation
-Centralised utility facilities
- Supply of utilities such as power,
industrial gases, water and steam

Internet,
Mobile phone technologies

 Environmental protection legislation

Waste disposal policies
Energy consumption regulations
- Environment Technology Park
Incorporating a training centre, a waste collection and
processing centre as well as raw material management
and storage facilities, maintenance and servicing
facilities.

 Political section on Malaysia provides get the information about the whole
political system governors indicators and all key figures in the country.

From economic section we get all outlines of the economics stories of the
country and is provides balanced between assessments on core macro
economical issues.
In social section of Malaysia country it enables understanding of consumer
demographics by the income distribution, rural market and urban market
segmentation health care and education scenario in country.
Technological section provides all strategies information and communication
of the technology, technological laws and policies, gapes patterns data also.

In legal section we can get information about legal structure, corporate laws,
business setup procedures and tax information

IFE & EFE Matrix

Aspects

Internal environment

EFE

Purpose

Evaluate internal
environment

Evaluate external
environment

Information from SWOT

Use strength & weakness

Use opportunity & threat

Rating (1-4)

Strength : 3-4
Weakness : 1-2

Opportunity : 1-4
Threat :1-4

Weightage
Score

From Industry
Using cut off point at 2.5
<2.5 : below average score
>2.5 : above average score
Both together can produce IE Matrix

External Factor Evaluation

(EFE) Matrix
External Factor Evaluation Table

From
industry

From company
analysis

<2.5 : below average

Internal Factor Evaluation

(IFE) Matrix
Internal Factor Evaluation Table
Key Internal Factor

Weight

Rating

Weighted Score

Strength

Strong financial position with income of $26.5

Billion and capital investment $38.4 Billion

0.10

0.4

High production capacity - producing 2% of the

worlds oil, 3% of the worlds gas and selling
7.5% of the worlds LNG

0.09

0.36

Large volume of customer around the world

0.08

0.32

Investment in R&D more than $1.2 Billion

0.09

0.36

Spending on alternative energy and CSS $1.7

Billion in the last 5 years

0.06

0.18

Generating wind power for nearly 250,000

homes

0.06

0.18

Internal Factor Evaluation

(IFE) Matrix
Internal Factor Evaluation Table- cont
Key Internal Factor

Weight

Rating

Weighted Score

Strength

Operating in more than 100 countries and with around

45,000 service stations worldwide

0.09

0.36

Running more than 25 refineries and chemical plants

0.09

0.36

Weakness

Loss of $474 millions in chemical and corporate

portfolios

0.10

0.1

LNG sales of 13.05 million tonnes, down 1%

0.04

0.08

Oil Sands higher operating costs, lower bitumen

production volumes

0.10

0.1

Chemicals significantly lower margins, lower income

from equity-accounted investments and higher operating
expenses

0.10

0.1

Total

1.00

2.9

>2.5 :
above
average

IE Matrix
IFE SCORES

EFE
SCORES

EFE = 2.09
IFE = 2.60

STRONG
(3.00-4.00)

AVERAGE
(2.00-2.99)

WEAK
(1.00-1.99)

STRONG
(3.00-4.00)

I
GROW

II
AND

III
BUILD

AVERAGE
(2.00-2.99)

IV
HOLD

V
AND

VI
MAINTAIN

WEAK
(1.00-1.99)

VII
HARVEST

VIII
OR

IX
DIVEST

Eg : If Shell & BP are at same strategy of Hold & Maintain, BP will have higher
competitive advantage due to higher IFE score. Shell should work on its internal
factors to be at the same level as BP
<2.5 : below average

IE Matrix Strategies
Grow & Build
Market Penetration
Market
Development
Product
Development
Backward
Integration
Forward Integration
Horizontal
Integration

Hold & Maintain

Market Penetration
Product
Development

Harvest or Divest
Retrenchment
Divestiture
Liquidation

IE Matrix (Identify Strategy Position) + ANSOFF (Evaluate risk) Strategy

CONCLUSION
PESTLE Analysis
Shell is looking to continue to contribute to the sustainability of the world
economy by making existing hydrocarbon-based fuels more efficient,
removing the harmful effects of pollution while at the same time using research
and development to develop fuels for the future.
most of external factors are directly or indirectly control by the government.
Shell :
EFE = 2.09 (below average)
Due to the government control and issues
IFE = 2.60 (above average)
more strength to overcome their weaknesses and has a great potential to growth.

IE Matrix = Hold & Maintain

Use ANSOFF together to analyze risk to formulate strategies

References
1. Royal Dutch Shell Plc Annual Review and
Summary Financial Statements 2008
2. Royal Dutch Shell Plc Sustainability Report
2008
3. Fred R. David, Strategic Management
concepts and cases, 2007, 11th Edition,
Pearson Education International