SWOT Analysis of Shell PLC
Submitted to:
Dr. Md. Mesbah Uddin
Associate Professor
Department Of Management
University of Dhaka
Submitted by:
Name Merit Position
Md. Nur-A-Alam Siddiky 189
Simon
Tajkia Akter 305
Israth Jahan Chaity 311
Afsana Sharmin Akhi 523
Date of Submission: 25 October 2023
Course Code: MGT-104
Course Title: Principles of Marketing
Session: BBA 1st year, 1st semester
Introduction
SWOT analysis is a strategic planning tool used by organizations to identify strengths,
weaknesses, opportunities, and threats in their current business environment, helping them
understand future developments and assess their strengths and weaknesses.
The British-Dutch multinational oil and gas firm Shell was founded in 1907 and is present in
more than 70 countries in Europe, Asia, Africa, and America. Its operations encompass
renewable energy as well as exploration, production, refining, transportation, and distribution.
Strength
In the context of business, strength refers to any internal capability, resource, or attribute that
provides a company with a competitive advantage, enhances its performance, and contributes to
its success in the market. It represents a positive aspect or characteristic that enables a company
to achieve its strategic objectives and outperform competitors.
• Global Presence: Shell PLC boasts a robust global presence across various countries,
diversifying its revenue streams and exposure to different market conditions. Its well-
established brand image signifies high-quality products, innovation, and sustainability
commitment.
• Innovation and Research: Shell's high focus on innovation, coupled with strong
research and development investments, facilitates the company's first-mover advantage
and continuous development of new products and technologies.
• Adaptive to Change: Shell's adaptability to changes, both internally and externally,
allows it to maintain its competitive position and respond to evolving market demands.
• Market and Consumer Insight: Shell's proactive approach to consumer trends and
market behavior, along with its access to comprehensive market and consumer data,
enables the company to make informed decisions and stay ahead of industry trends.
• Financial Stability and Performance: With strong revenue growth, profitability, and
stable cash flows, Shell has a solid financial base, providing it with the necessary
resources for strategic investments and business expansion.
• Technological Advancements: Shell's advanced IT infrastructure, high usage of
automation, and focus on developing innovative technologies contribute to the company's
operational efficiency and effectiveness.
• Strong Brand Image: Shell's strategic marketing efforts and brand-building activities
have led to the development of a robust brand with high customer satisfaction and strong
brand equity (Moorthi, 2009).
• Vertical Integration and Distribution Network: Shell's vertical integration, strong
distribution network, and reliable supplier base enable it to control a significant market
share and ensure quality control and cost benefits (Own Assessment).
Weaknesses
Weaknesses are the areas where a company can improve using SWOT analysis and build on its
analysis, which are areas where the company can enhance its competitive advantage and strategic
positioning to improve its overall performance. Let’s look at the weakness of Shell which should
be improved by it.
• Increasing Debt: Over the last few years, Shell has incurred more debt. From $37774
million in FY2012 to $58379 million in FY2015, the company's debt grew. Its net current
debt decreased by 45.38% YoY to $526M in 2023, while its annual net current debt
increased by 2171.43% YoY to $0.318B in 2022 and by 122.22% YoY to 202 [The
Guardian]. Growing debt exposes a company to greater risk, and as a result, interest must
be paid on a larger amount of cash flow. Future corporate operations may be
impacted by rising debt.
• Absence of appropriate succession planning: At Royal Dutch Shell plc, there is an
inadequate level of succession planning. Because of this, Royal Dutch Shell plc depends
a lot on hiring from outside, which raises operating expenses as well as training expenses.
Royal Dutch Shell plc has not been able to capitalize on the developing economies of the
BRIC countries, even with their increased international development. Due to this, Royal
Dutch Shell plc has missed out on potential revenue growth and first-mover advantage.
• Restricted use of influencers for marketing: Royal Dutch Shell plc also doesn't utilize
influencers for marketing. Consequently, a significant portion of the target audiences and
prospective target audience groups are not reached by Royal Dutch Shell plc. Royal
Dutch Shell plc forfeits cost-effective marketing opportunities by missing out on
influencer marketing and is forced to use pricey traditional marketing channels instead.
• Legal infraction: Shell has violated several laws in the past few years. It was discovered
in July 2007 that Shell Oil had used the freight forwarding company Panalpina in
violation of the anti-corruption provisions outlined in the Foreign Corrupt Practices Act.
The fine for violating the anti-corruption law was $30 million. This also affected the
company's reputation and brand image.
• Log-in customer service: Royal Dutch Shell plc prioritizes improving and developing its
products. As a result, it is becoming a more product-focused company. On the other hand,
Royal Dutch Shell plc only provides subpar customer service, which deteriorates the
whole customer experience with the organization.
• Reliance on a single product for revenue growth: Shell's reliance on oil and gas for
revenue growth necessitates constant supply searches and high exploration costs. The
company's environmentally unacceptable flaring and burning of gas from oil extraction
sites raises concerns. Political instability in Nigeria and potential withdrawal could
compromise resources and production obligations. The company is also considering wind
power development. One of the biggest challenges is the company's traditional business
of producing and selling fossil fuels. Despite the increasing demand for renewable
energy, oil and gas still account for the majority of Shell's revenues. Another challenge
the new CEO faces is the public perception of the oil and gas industry.
• Blue Ocean exploration is still limited: Within the confines of the current business,
Royal Dutch Shell plc is still active in mainstream markets and industries. The failure of
the advertisement to establish new markets with less rivalry and blue oceans and
prospects to explore has also been acknowledged by Shell plc.
Opportunities
External factors and circumstances that can potentially have a positive impact on our business or
situation.
• Increase in energy demand globally: According to the reports of the US Energy
Information Administration, the total world energy consumption will increase by 40% by the
year 2040. Cleaner energy resources are increased in numbers. The position of Shell to take
the demand is increasing rapidly.
• Planned Expansions: Shell has been focusing on expanding its operation strategically
across the globe to match the energy demands of the developed and emerging nations in the
future. Shell also creates a merger or JV deals with companies in some nations like China to
extend its market.
• Collaboration with Prelude: The collaboration with Prelude for Floating Liquefied Natural
Gas (FLNG) will open up access to challenging-to-develop offshore gas deposits. 5.3 million
tons of liquids will be produced by the Prelude FLNG program once it is fully operational.
These kinds of projects will meet the needs of the future.
• Customers from online channels: Over the past few years, the company has invested vast
sums of money into the online platform. This investment has opened new sales channels for
Shell. In the next few years, the company can leverage this opportunity by knowing its
customers better and serving their needs using big data analysis.
Threats
Examining the ever-changing global energy scene, it is critical to identify the various challenges
that Shell can encounter, including the following:
• Lower demand and margins for oil and gas products: Changing customer sentiment
towards renewable and sustainable energy products may reduce demand for our oil and gas
products. An excess of supply over demand could reduce fossil fuel prices. This could be a
factor contributing to additional provisions for assets and result in lower earnings, canceled
projects, and potential impairment of certain assets.
• Changing preferences of investors and financial institutions: Financial institutions are
increasingly aligning their portfolios to a low-carbon and net-zero world, driven by
regulatory and broader stakeholder pressures. A failure to decarbonize the business portfolios
in line with investor and lender expectations could have a material adverse effect on the
ability to use financing for these types of future projects. This could also adversely affect its
potential partners’ ability to finance their portion of costs, either through equity or debt.
• Climate-related regulatory risk: The transition to a low-carbon economy will increase the
cost of compliance for its assets or products and may include restrictions on the use of
hydrocarbons. The lack of net-zero-aligned global and national policies and frameworks
increases the uncertainty around this threat. Shell’s annual carbon cost exposure is expected
to increase over the next decade because of evolving carbon regulations. The forecasted
annual cost exposure in 2030 is estimated to be within the range of $1.0-2.5 billion. This
estimate is based on a forecast of Shell’s equity share of emissions from operated and non-
operated assets (including joint ventures and associates), and real-terms carbon cost estimates
which range from around $25 to around $200 per ton of GHG emissions in 2030. This
exposure also takes into account the estimated threat of free allowances as relevant to assets
based on their location.
• Deteriorating relationships with key stakeholders: Failure to decarbonize Shell’s value
chain in line with societal, governmental, and investor expectations is a material risk to
Shell’s reputation as a responsible and market-leading energy company. The impact of this
risk includes shareholder divestment, greater regulatory scrutiny, and potential asset closure
resulting from public interest groups’ protests.
• Environmental activism: Public pressure for sustainability and cleaner practices may harm
Shell's reputation and result in regulatory and legal challenges from competitors advocating
for green energy solutions.
• Renewable Energy Rivals: Notable competitors include British Petroleum (BP),
ExxonMobil, Chevron, TotalEnergies, ConocoPhillips, and Equinor. These businesses
compete in various aspects such as exploration, extraction, refining, transportation, and
marketing of oil and gas products. Additionally, they are also striving to establish a strong
presence in the renewable energy sector. Renewable energy sources can challenge Shell’s
dominance, especially as the world shifts towards cleaner alternatives.
Conclusion
Despite facing challenges related to its environmental impact and regulatory compliance, Shell
PLC is strategically positioned to capitalize on its strong brand image, technological
advancements, and international presence. By leveraging its innovation capabilities and focusing
on renewable energy investments, Shell can navigate the dynamic energy market and maintain its
industry leadership.
References:
1. Annual Report of Shell, 2020
2. The Guardian
3. [Link]
