Extensive SWOT Analysis of Shell – Detailed Explanation & Highlights

About Shell 

The Royal Dutch Shell Firm, or famously known as Shell, is a British-Dutch multinational oil and gas company based in London, that was founded in April 1907. Shell is involved in exploration, production, refining, transportation, distribution, and marketing, petrochemicals, power generation, and trading in the oil and gas business. Shell engages in renewable energy activities such as wind, hydrogen, and biofuels.

Oil and gas will remain a vital part of the global energy mix for many decades to come as technology hasn’t been so developed till now. The purpose of the company is to extract these energy resources and deliver them profitably in environmentally and socially responsible ways.   

In India, Shell has a retail presence across six states – Maharashtra, Karnataka, Tamil Nadu, Telangana, Gujarat and Assam. It is expanding its network of fuel stations across the country. There is an LNG regasification terminal in Hazira which is completely owned and operated by it. Shell has an entire Lubricants end to end value chain in this country, from conceptualization and development to production and distribution.

Products by Shell

These are among the few major products produced and sold by Shell:

• Oils 
• Fuels 
• Car services 
• Exploration 
• Production 
• Refining 
• Petroleum products

Competitors of Shell

There are many organisations in the oil and gas business around the world. Following are Shell’s major competitors:

• Imperial Oil
• ConocoPhillips Company 
• Chevron Corporation 
• Exxon Mobil Corporation

Let’s start with the SWOT analysis of Shell.

SWOT Analysis of Shell 

SWOT means strengths, weaknesses, opportunities and threats of anything. The SWOT analysis of Shell will help us to understand the future developments of the company. SWOT analysis helps to understand the positives and negatives of the company, which will help the company cut off the negatives.

1. Strengths of Shell

The strengths of Shell are the key to its success. Let’s see a few of the strengths of Shell.

• Market controlling position – Shell’s operations are done upstream and downstream in over 70 countries of the world. It is one of the biggest oil companies in the world, having various fuel brands under its shelter like Shell V-Power, Shell LPG, Shell Rotella etc. The seat of power gives Shell significant bargaining power in the industry.
• Vertical Integration – Shell has successfully integrated its business operations vertically by engaging in exploration and production of natural gas, crude oil, etc. The upstream market, involving exploration and production. In the downstream market, it is in the marketing of refined products. They enjoy quality control and cost benefits as competitive advantages by vertical integration.
• Research and Development – Shell is continuously trying to improve its technology to decrease its carbon footprint and greenhouse emission while trying to extract more fuel with fewer efforts. Shell has many patents registered in their name and Shell has sustained investment in R&D. R&D helps in reducing expenditure and also gives competitive advantages.
• Capable to Explore – Shell has invested in developing technology for exploration purposes. With the help of geophysical data, Shell has developed its methods for exploring oil and gas and thus has been able to efficiently explore more oil and gas in the last few years. This resulted in a decrease in the US’s dependence on Gulf countries for fuel.

2. Weaknesses of Shell

The weaknesses of Shell are the issues because of which Shell is at a loss of few things. Let’s look at the weaknesses of Shell which should be improved by Shell.

• Violation of Laws – Shell has violated a few laws in the past few years. In July 2007, Shell Oil had been involved in violation of corruption laws in the US in case of using freight forwarding Panalpina and violating corruption rules from the Foreign Corrupt Practices Act. The fine for violating the corruption law was $30 million. This also affected the brand image and goodwill of the company.
• Increasing Debts – Shell has been experiencing a growing debt for the past few years. In FY 2012 the debt of the company was $37774 million. In FY 2015 the debt of the company increased to $58379 million. The increasing number of debt means increasing business risk and a subsequential amount of cash flow goes for payment of interest. This may increase the number of financial obligations in future.

3. Opportunities for Shell

The opportunities of Shell means the chances of the progress of the company in future. Let’s discuss a few of the opportunities of Shell.

• Partnership with Prelude – The partnership with Prelude for Floating Liquefied Natural Gas (FLNG) will give access to offshore gas fields that are difficult to develop. Once fully operational the Prelude FLNG program will produce 5.3 million tonnes of liquids. Demands of the future will be taken care of by such initiatives.
• Increase in energy demand globally – According to the reports of the US Energy Information Administration, the total world’s energy consumption will increase by 40% by the year 2040. There has been an increase in cleaner energy resources. Shell is certainly in a position to take control of the potential demands of the future.
• Merger with BG Group – Shell merged with the BG Group in 2016 which gives it a stronghold in the offshore of Brazil and Australia. Shell is in a better position as compared to its competitors as Brazil and Australia have rich oil and gas resources. 

• Expansion Planning – Shell has been focusing on expanding its operations strategically across the globe to cater demands of developed and emerging nations in the future. In some nations like China, Shell has been merging or going on JV deals with local companies to set up its footprints in those markets

4. Threats to Shell

The Threats of Shell are issues that can cause problems in future. Let’s observe a few of the threats of Shell.

• Climate Changes – As energy demand is increasing, carbon dioxide emission in production as well as upstream is expected to increase which needs to be under control for Shell. Shell has to find ways to reduce the emission of carbon dioxide or else Shell has faced increasing costs and strict regulation. 
• Political Volatility – Oil and gas have been a very important subject of discussion between many countries for the last century. Energy demands and Production are always surrounded by politics. Shell has a disadvantage of becoming a victim of political development in the future.

With this, we reach the end of the SWOT Analysis of Shell. Let’s conclude this case study in the section below.

Conclusion

Shell is a highly technologically advanced company in the field of oil and fuel extraction and production. They have proven to be a great player as they have survived with this cutthroat competitive market while doing great despite the midst of the 2020 pandemic.

Shell has to pay attention to its shortcomings with the increased debt and law violations, to continue its well-reputed status. However, their strong R&D along with their curiosity to explore has guided them to lead in the market. One of the key reasons for Shell’s success is its marketing strategy; to sustain in the lockdown they shifted to digital marketing, which helped them bag profit during the lockdown. Additionally, its strong research and development along with its curiosity to explore have guided them to lead in the market. 

Shell utilises a plethora of digital marketing platforms such as Emailing, SEO, and Content Marketing to advertise and educate its customers regarding current and upcoming offers. Obtaining the requisite skills in Digital Marketing and completing Certified Courses may lead to employment opportunities with famous corporations such as Shell.

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If you enjoy in-depth company research, check out our section IIDE Knowledge for more interesting case studies. 

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