Royal Dutch Shell B (RDSb) SWOT Analysis / TOWS Matrix / MBA Resources
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Royal Dutch Shell B (Germany)
Based on various researches at Oak Spring University , Royal Dutch Shell B is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, there is backlash against globalization,
cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of Royal Dutch Shell B
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Royal Dutch Shell B can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Royal Dutch Shell B, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Royal Dutch Shell B 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 B can be done for the following purposes –
1. Strategic planning of Royal Dutch Shell B
2. Improving business portfolio management of Royal Dutch Shell B
3. Assessing feasibility of the new initiative in Germany
4. Making a sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Royal Dutch Shell B
Strengths of Royal Dutch Shell B | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Royal Dutch Shell B are -
Learning organization
- Royal Dutch Shell B 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 Royal Dutch Shell B is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Royal Dutch Shell B emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Royal Dutch Shell B in the sector have low bargaining power. Royal Dutch Shell B has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Royal Dutch Shell B to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Royal Dutch Shell B 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 of Germany is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in industry
- digital transformation varies from industry to industry. For Royal Dutch Shell B digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Royal Dutch Shell B 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.
Effective Research and Development (R&D)
– Royal Dutch Shell B has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Royal Dutch Shell B staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Royal Dutch Shell B is present in almost all the verticals within the industry. This has provided Royal Dutch Shell B 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.
Strong track record of project management in the industry
– Royal Dutch Shell B is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Royal Dutch Shell B has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Royal Dutch Shell B to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in
– Royal Dutch Shell B is one of the leading players in the industry in Germany. Over the years it has not only transformed the business landscape in the industry in Germany but also across the existing markets. The ability to lead change has enabled Royal Dutch Shell B in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy of Royal Dutch Shell B comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Training and development
– Royal Dutch Shell B has one of the best training and development program in industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Cross disciplinary teams
– Horizontal connected teams at the Royal Dutch Shell B 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.
Weaknesses of Royal Dutch Shell B | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Royal Dutch Shell B are -
High bargaining power of channel partners in industry
– because of the regulatory requirements in Germany, Royal Dutch Shell B 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.
Interest costs
– Compare to the competition, Royal Dutch Shell B 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.
Lack of clear differentiation of Royal Dutch Shell B products
– To increase the profitability and margins on the products, Royal Dutch Shell B needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ less understanding of Royal Dutch Shell B strategy
– From the outside it seems that the employees of Royal Dutch Shell B 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.
Slow to strategic competitive environment developments
– As Royal Dutch Shell B is one of the leading players in the industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, Royal Dutch Shell B has high operating costs in the industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Royal Dutch Shell B lucrative customers.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Royal Dutch Shell B is slow explore the new channels of communication. These new channels of communication can help Royal Dutch Shell B to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Royal Dutch Shell B is dominated by functional specialists. It is not different from other players in the industry, but Royal Dutch Shell B needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Royal Dutch Shell B to focus more on services in the industry rather than just following the product oriented approach.
Capital Spending Reduction
– Even during the low interest decade, Royal Dutch Shell B has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
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 Royal Dutch Shell B supply chain. Even after few cautionary changes, Royal Dutch Shell B is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Royal Dutch Shell B vulnerable to further global disruptions in South East Asia.
Ability to respond to the competition
– As the decision making is very deliberative at Royal Dutch Shell B, in the dynamic environment of industry it has struggled to respond to the nimble upstart competition. Royal Dutch Shell B has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Royal Dutch Shell B Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Royal Dutch Shell B are -
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Royal Dutch Shell B 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 Royal Dutch Shell B to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Royal Dutch Shell B in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the industry, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Royal Dutch Shell B can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Royal Dutch Shell B to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Royal Dutch Shell B to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Building a culture of innovation
– managers at Royal Dutch Shell B 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 industry.
Loyalty marketing
– Royal Dutch Shell B 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.
Buying journey improvements
– Royal Dutch Shell B can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Low interest rates
– Even though inflation is raising its head in most developed economies, Royal Dutch Shell B 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.
Use of Bitcoin and other crypto currencies for transactions in industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Royal Dutch Shell B in the industry. Now Royal Dutch Shell B can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Royal Dutch Shell B 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. Royal Dutch Shell B 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Royal Dutch Shell B is facing challenges because of the dominance of functional experts in the organization. Royal Dutch Shell B can utilize new technology in the field of industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Royal Dutch Shell B 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Royal Dutch Shell B can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Royal Dutch Shell B External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Royal Dutch Shell B are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Royal Dutch Shell B 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 Royal Dutch Shell B prominent markets.
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. Royal Dutch Shell B needs to understand the core reasons impacting the industry. This will help it in building a better workplace.
Regulatory challenges
– Royal Dutch Shell B needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry to industry are lowering. It can presents Royal Dutch Shell B with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Royal Dutch Shell B in industry. The 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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Royal Dutch Shell B.
Easy access to finance
– Easy access to finance in industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Royal Dutch Shell B can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Royal Dutch Shell B
– 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 Royal Dutch Shell B.
Consumer confidence and its impact on Royal Dutch Shell B 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 industry and other sectors.
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 Royal Dutch Shell B in the sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Royal Dutch Shell B is facing in sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Weighted SWOT Analysis of Royal Dutch Shell B Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Royal Dutch Shell B 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 Royal Dutch Shell B 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 Royal Dutch Shell B 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 B 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 Royal Dutch Shell B needs to make to build a sustainable competitive advantage.
