The Royal Dutch Shell is one of the most renowned companies in the energy industry. It is engaged in oil and gas exploration and production, transportation and marketing of natural gas and electricity, and marketing and shipping of oil products and chemicals. Shell is also oriented toward the renewable sources of energy such as wind, solar and hydrogen. This company whose the headquarters is in the Netherlands has extensive operations in more than 90 countries around the world and employs about 101,000 people. It produces around 3.2 million barrels of oil equivalent per day and is world's largest fuel retail network (45,000 services stations).
Shell core competencies are divided between the upstream and downstream segment. The upstream part refers to the ways we find and extract crude oil, natural gas and oil sands while the downstream refers to the ways we transform them into products. Shell invest a lot in the exploration and production as well as in the exploration and production research and development (R&D) in order to develop new technology to enhance the cost-efficiency and performance of the company. There is also a third segment called the non-operating corporate segment, which represents the functional activities supporting the whole group. This segment consists of the following functional activities: holdings and treasury, headquarters and central functions, and Shell insurance operations.
The major source of revenue still comes from the upstream segment with $20.2 billion earnings in the exploration and production, $5.3 billion earnings in gas and power and $941 million in oil sands (2009). In the downstream segment the oil products bring 446 million USD while the chemicals record a loss of $405 million (2009). The corporate segment recorded a loss of $69 million (2009).
[...] Thus Shell focusing its attention on performance increase and costs reduction. Shell managed to reduce its operational costs by more than billion. ➢ Shell Eastern Petrochemicals Complex Shell is following its strategy of differentiation by developing its activities in Asia. We've got one example with the Shell Eastern Petrochemical Complex project that they have completed in Singapore in May 2010. It's represents the company's largest, fully-integrated refinery and petrochemical hub and the biggest investment made by Shell in petrochemicals. In this project they have located refining and petrochemicals production through a single manufacturing hub on Bukom and Jurong islands which are near Singapore coast. [...]
[...] To attain competitive advantages Bp will base its strategy on its own strengths and the market opportunities. Its major strengths are similar to the one of Shell: ✓ Vertically integrated operations BP is also involved in upstream, midstream and downstream oil businesses. Moreover, it operates on two different business segments, from one side exploration and production and from the other refining and marketing. The upstream activities concern the exploration and production of oil and natural gas while downstream activities include the refining and the marketing of these products. [...]
[...] Here come the similarities between leaders which are also investing to assure their future growth and gain a competitive advantage. Bp is present in 80 countries over the world, this wide presence provides them access to the key markets, and the company is also taking advantages of opportunities arising in some emerging markets. On the other hand, the strategy of Bp based on future development, relies on many opportunities with mid and long term effects. In fact, Bp plans to form alliances with strong partners that will allow to the company to increase its exposure to growing energy markets. [...]
[...] It has lead to a refocus of the company functions and thus implies the departure of 30% of top managers. In 2009 Shell withdraw from 20 African countries. It gave up refining, storage and the sale of various products such as lubricants. In 2008 it already withdraw from around 15 countries. Shell wants to develop their activities by investing in new projects such as the GTL Pearl in Qatar and refocus its activities on the most lucrative one which are the exploration and the production. [...]
[...] This is part of the new strategy of Shell set up in 2008. This strategy is engaged by the main competitors in the industry. They anticipate the scarcity of the oil and later the gas. It's crucial for them to invest in the renewable energy to prevent future growth and enhance the company profitability once the oil and gas can't be anymore their main sources of revenue. On the elements of the downstream segment such as the retail one for example Shell wanted to refocus on most profitable position and growth potential. [...]
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