The ‘Downstream’ business manufactures petroleum products for retail throughout Australia. The purpose of this report is to analyze the business strategy of Royal Dutch Shell. The report will address three main questions: What Is Shell’s business strategy? How Is Shell’s business strategy developed and articulated? Is Shell’s strategy appropriate for success? The answers to the first two questions will be brief and descriptive in nature.
To answer the fall question, the report will analyze Shell’s strategy using a framework of the four common elements of a successful strategy, as detailed by Robert M.
Grant; simple, consistent, long-term goals; a profound understanding of the competitive environment; an objective appraisal of resources; and effective implementation. Shell’s strategy Is outlined In Its 2009 Annual Report.
In analyzing the third element of a successful strategy?the objective appraisal of resources? this report contends that this is an area of strength in Shell’s strategy. In evaluating its resources, the Company has recognized that there are regions or market sectors that are operationally ineffective.
The strategy detailed in the Annual Report recommends exiting those regions or sectors. Their appraisal acknowledges the company’s strengths; notably in the development and application of technology, financial and project-management skills, and the management of integrated value chains. It is clear that Shell has conducted an objective appraisal of its resources and more importantly, it has used the findings in the development of its strategy. Shell has applied the strengths and weaknesses of its resource base in the layers of strategy development detailed earlier in this report.
The best-laid strategies are of little use without the fourth element of a successful strategy; effective implementation. Considering the intended (external) audience, it is not surprising that there is little guidance regarding the implementation of strategy in the 2009 Annual Report.
Whilst the GAP provides guidance on the manner in which the Company should conduct its business, the guidance is more about values and principles than it is about executing strategy. The core guidance for the effective implementation of Shell’s strategy is contained within internal communications; tarring with the Coo’s strategy message to the Company executive. Peter Poser sees improved performance in the implementation of company strategy as one of the keys for addressing Shell’s competitive performance. He reiterates the Company’s position and stresses the need to “work together to meet our targets”.
The CEO moves beyond merely stating what a successful strategy is and he communicates how to make the strategy successful. He states the importance of speed in the implementation of strategy, to ensure that Shell is operating inside the decision-making cycle of its monitors. Furthermore, the CEO calls for “sharper delivery’, with a focus on the precise implementation of the strategy. He proposes a culture of continuous Improvement, particularly In ten areas of AT estate, operational excellence, cost Ana profitability. 12] There is a notable consistency in his message and a clear link to Shell’s stated long-term goals. It is an important observation that Shell’s objective, goals, and strategy are recurring messages in communication at all levels in the Company. Furthermore, Peter Poser’s ideas and emphasis on the swift and precise implementation of strategy are also prevalent at all levels. In analyzing the appropriateness of Shell’s strategy, this report firstly stated what the strategy is and how it is communicated.
The report concludes that Shell’s strategy contains a clear objective or mission statement, and the GAP provides excellent values and principles to guide the business. Shell’s stated goals are simple, consistent and enduring, satisfying the first of Grant’s elements of a successful strategy. Shell’s strategy has fulfilled the second and third elements of a successful tragedy through the understanding of its competitive environment and the objective appraisal of its resources.