Royal Dutch/Shell: A Shell Game with Oil Reserves (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Royal Dutch/Shell: A Shell Game with Oil Reserves (A)
In January 2004, the Royal Dutch/Shell Group of Companies announced that it would reduce its estimate of proved oil reserves by nearly 4 billion barrels, or 20 percent. The announcement set off a series of events, including a drop in the company's share price, internal and external investigations, and the resignation of several senior officers. During this period, details came to light about the sometimes bitter disputes among company officials over its reserve practices. Company officials had to decide what changes to make to restore public confidence in the organization.
Authors :: David F. Larcker, Robert Lawson, Brian Tayan
Swot Analysis of "Royal Dutch/Shell: A Shell Game with Oil Reserves (A)" written by David F. Larcker, Robert Lawson, Brian Tayan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Shell Dutch facing as an external strategic factors. Some of the topics covered in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) case study are - Strategic Management Strategies, Boards, Performance measurement and Organizational Development.
Some of the macro environment factors that can be used to understand the Royal Dutch/Shell: A Shell Game with Oil Reserves (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, technology disruption, geopolitical disruptions, supply chains are disrupted by pandemic , customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies,
increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Royal Dutch/Shell: A Shell Game with Oil Reserves (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Shell Dutch, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Shell Dutch operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Royal Dutch/Shell: A Shell Game with Oil Reserves (A) can be done for the following purposes –
1. Strategic planning using facts provided in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) case study
2. Improving business portfolio management of Shell Dutch
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Shell Dutch
Strengths Royal Dutch/Shell: A Shell Game with Oil Reserves (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Shell Dutch in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) Harvard Business Review case study are -
Strong track record of project management
– Shell Dutch is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Shell Dutch is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Shell Dutch is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Shell Dutch has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Shell Dutch is present in almost all the verticals within the industry. This has provided firm in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Training and development
– Shell Dutch has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Effective Research and Development (R&D)
– Shell Dutch has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Innovation driven organization
– Shell Dutch is one of the most innovative firm in sector. Manager in Royal Dutch/Shell: A Shell Game with Oil Reserves (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Shell Dutch are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Organizational Resilience of Shell Dutch
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Shell Dutch does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Shell Dutch digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Shell Dutch has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Shell Dutch in the sector have low bargaining power. Royal Dutch/Shell: A Shell Game with Oil Reserves (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Shell Dutch to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Shell Dutch is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David F. Larcker, Robert Lawson, Brian Tayan can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Weaknesses Royal Dutch/Shell: A Shell Game with Oil Reserves (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Royal Dutch/Shell: A Shell Game with Oil Reserves (A) are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Royal Dutch/Shell: A Shell Game with Oil Reserves (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Shell Dutch has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Shell Dutch 's lucrative customers.
Interest costs
– Compare to the competition, Shell Dutch has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Low market penetration in new markets
– Outside its home market of Shell Dutch, firm in the HBR case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
No frontier risks strategy
– After analyzing the HBR case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A), it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A), it seems that the employees of Shell Dutch don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Royal Dutch/Shell: A Shell Game with Oil Reserves (A) can leverage the sales team experience to cultivate customer relationships as Shell Dutch is planning to shift buying processes online.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Shell Dutch supply chain. Even after few cautionary changes mentioned in the HBR case study - Royal Dutch/Shell: A Shell Game with Oil Reserves (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Shell Dutch vulnerable to further global disruptions in South East Asia.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Shell Dutch is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Shell Dutch has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, David F. Larcker, Robert Lawson, Brian Tayan suggests that, Shell Dutch is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Royal Dutch/Shell: A Shell Game with Oil Reserves (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Shell Dutch can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Shell Dutch can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Shell Dutch is facing challenges because of the dominance of functional experts in the organization. Royal Dutch/Shell: A Shell Game with Oil Reserves (A) case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Better consumer reach
– The expansion of the 5G network will help Shell Dutch to increase its market reach. Shell Dutch will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Loyalty marketing
– Shell Dutch has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Shell Dutch can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Shell Dutch can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Shell Dutch to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Shell Dutch to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Shell Dutch can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Developing new processes and practices
– Shell Dutch can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Manufacturing automation
– Shell Dutch can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Shell Dutch can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Shell Dutch can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Building a culture of innovation
– managers at Shell Dutch can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Threats Royal Dutch/Shell: A Shell Game with Oil Reserves (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) are -
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Shell Dutch with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Shell Dutch
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Shell Dutch.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Shell Dutch needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Consumer confidence and its impact on Shell Dutch demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Shell Dutch in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Stagnating economy with rate increase
– Shell Dutch can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology acceleration in Forth Industrial Revolution
– Shell Dutch has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Shell Dutch needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High dependence on third party suppliers
– Shell Dutch high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Shell Dutch can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) .
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Shell Dutch in the Organizational Development sector and impact the bottomline of the organization.
Environmental challenges
– Shell Dutch needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Shell Dutch can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A), Shell Dutch may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Shell Dutch can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Royal Dutch/Shell: A Shell Game with Oil Reserves (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Royal Dutch/Shell: A Shell Game with Oil Reserves (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Royal Dutch/Shell: A Shell Game with Oil Reserves (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Shell Dutch needs to make to build a sustainable competitive advantage.