Management of business enterprises focus on judicious allocation of existing resources and leading the organizational team towards enhanced productivity and profitability. The term management has been defined by F.W. Taylor as the art of knowing what you want to do and then seeing that they do it in the best and the cheapest way. Management involves staffing, planning, directing, and leading changes within the organizational context to derive maximized efficiency in business operations (Singla, 2009). Management Guru Peter Drucker (2007) observes that Management, which is the organ of the society specifically charged with making resources productive, that is, with the responsibility for organized economic advance, therefore reflects the basic spirit of the modern age. The growth and evolution of managerial concepts have assumed new heights and proportion from the ancient times when barter system was considered the acceptable mode of trade. Today management involves increased complexity in operations and functions owing to the growing dynamism of the operating environment and an era of multinational growth and investment that defies geographical boundaries. Technology and innovation are the distinctive factors influencing the formulation of management strategies and managerial perspectives. A critical aspect of business management today lies in formulating effective strategies to meet the needs of the global challenges posed in the form of emerging markets and new opportunities.
Managerial strategies and decision making process are based on various theoretical frameworks that form the supporting pillars of organizational analysis and market perspectives. One such framework is the Competency Value Framework (CVF) that was founded by Robert Quinn based on the idea that organizational culture is a result of the impact of various influences existing within the operating environment. The model is effective in an improved understanding of the organizational functions in the light of leadership competencies, organizational structure, operational processes and managerial perception. The framework suggests that the organization works within a set of competing values that shapes the organization in any of the four distinct models identified as the human relations model, open systems model, rational goal model and internal process model.
The human relations model refers an organization culture that is framed by shared values, goals, cohesion, commitment, participation, individuality and a sense of belongingness. The open systems model is marked by increased flexibility, adaptability to change, and innovation. Internal process model is driven by increased control, efficiency, promptness, consistency, and uniformity in operations. Rational goal model is driven by the external environment rather than the internal affairs and focuses on relationships with external stakeholders of the organization. The competency values determining the type of organization culture are leadership and managerial competencies predominant within the organization. (Quinn et al., 2006) The framework chart given in the Appendix provides a comprehensive picture of this theory and its essential parameters.
2.1 Application of theoretical frameworks within Shell
Shell is a global group of energy and petrochemicals companies having more than 102,000 employees across its various locations in 100 countries (Shell.com, 2009). The group has its headquarters in The Hague, Netherlands and its parent company is the Royal Dutch Plc incorporated in England and Wales. The company reported annual revenue of 458.4 billion in the year 2008 and is ranked the number one Fortune 500 companies in the year 2009. (Shell.com, 2009)
The organization is driven by its transnational operations and the global markets that have a far reaching implication on its managerial strategies and organization culture. The company has a strong brand name and its market presence for more than 100 years has helped in building trust in the market. The strategic management practices at Shell have focused on delivering high quality customer service through improved market research of future trends and consumer expectations. The company has adapted to the needs of the time and this reflects its versatility in carrying out effective operations under diverse market conditions. The SWOT analysis of the company provides a comprehensive view of its market strengths and opportunities in the present operating environment.
Strengths
The strong brand image and recognition among consumers across the globe.
Extensive research and development activities to address global warming issues and conservation of fuel strategies.
Diversification into wide range of products that help the company to minimize risks.
Strategic alliances and partnerships to increase market presence and market shares.
Weaknesses
High cost of operations and research activities.
Low managerial capabilities in developing or low developed countries affect performance and market image.
Increased focus on expanding operations affect quality in some sectors.
Management of diverse product portfolios can result in poor performance in certain segments.
Opportunities
New emerging markets in developing economies.
Exploration and discovery of new oil and gas reserves.
Possible expansion and diversification into alternative fuels market.
Threats
Looming global energy crisis.
Increased contenders for market shares in an increasingly competitive global market.
Shift towards alternative fuel options for example, electric cars.
2.2 Management at Shell
The present and future managerial strategies at Shell are focusing on increasing productivity and performance in terms of improved resource allocation and research in alternative fuel resources. The organizational structure at Shell is influenced by its long history of growth and adaptation to changing market demands and trends. A complex managerial hierarchical system proved to be ineffective in pursuing organizational objectives and adapt to global market changes. The management structure at Shell hence underwent major strategic reorientations that relate to market, products, services, and human resources.
Transnational corporations like Shell are well adapted to the needs of the globalised market environment and localized operational requirements. Such organizations focus on increasing internal competency levels to meet external demands and induce organizational growth through an increased level of operational flexibility and strategic partnerships. All this suggests that Shell presently adopts an open systems model that emphasizes organizational growth through innovation, adaptation to market demands and improved utilization of external resources and market image. This kind of model works in close association with the external operating environment and pursues objectives that are in tune with the current social, economic, and political trends. The internal policies and strategies are shaped by the external environment in which the organization operates. This lends an increased flexibility in operations and improved adaptability to economic context.
Open systems model cannot be understood without also understanding all internal and external environmental forces acting upon it (Daniel, 1999). Shell has demonstrated its flexibility to operate in diverse market and economic conditions through rapid adaptability to changing demands and trends. The sustainable growth and development approach emphasizes the fact that the company meets its strategic goals through the projection of an economically and socially responsible company. Being a socially and environmentally responsible company contributes to our being a profitable company by helping us to earn our license to operate and grow, develop the right products, and maximize opportunities (Shell.com, 2009).
There are increasing number of entrepreneurs who are interested in starting a business venture driven by social causes and purpose that embody a whole range of ideas and values to be spread within the community in which they exist. GEM concludes that more new and established ventures are seeing the necessity and opportunity of serving a broader social mission while also managing and growing the bottom line (GEM Report, 2009). The recognition gained through this process helps the entrepreneurs to collect more funds and resources for further expand their operations and gain wider support to further increase the scope of their objectives.
3.0 The Challenge - The looming energy crisis
One of the impeding threats on the companys future performance is the depleting oil resources that have resulted in increased funds allocation towards research and development activities by oil and gas producing companies. It is estimated that by the end of 2030 the growing demand for oil and gas resources will not be met in view of the existing natural resources. The shortfall between current expectation of oil supply and actual availability will be such that neither gas nor renewables, nor liquids from gas and coal, nor nuclear, nor any combination thereof, will be able to plug the gap in time to head off economic trauma (Leggett, 2005). This situation has been aggravated by the impact of global warming. Over the next half-century, the world will also need to manage greenhouse gas emissions to avoid the worst effects of global warming, about which scientific warnings are getting worse (Voser, 2009).
3.1 Impact on Shell
Shell faces the looming energy crisis with increased determination through extensive research and innovation strategies. Research and development in fuel conservation, exploration of new oil fields, alternative fuel options are some of the focus areas of the Shell group. Innovation in this industry can lead to reduction in operational costs improved time-scale and resource building operations that can result in creation of new and value added products.
The use of Internet in the industry has expanded the possibility of collaboration and exchange of information between manufacturers, suppliers and environmentalists. The use of information technology in the industry has resulted in widespread changes in organizational structure, managerial practices and work culture. The industry is more focused on increasing its core competencies or strengths through extended use of knowledge management systems and employee training development sessions. This has been enabled by an increased participative style of leadership and flatter organization structure that is highly effective in transferring competitive knowledge related to the industry and market information to gain market share.
4.0 Recommendations
In view of the impending energy crisis and the management practices outlined in the previous sections it is recommended that the company focuses more of its resources on research and development activities and opening new possibilities of innovative application in oil and gas management. Focusing on sustainable growth through a right balance of economic development, social interests and environmental protection will lead to effective management practice at Shell. This requires efficient utilization of company resources, minimizing environmental hazards, ensuring safety and health of employees, and encouraging smooth governance through participative decision making policy and transparent dealings with both internal and external stakeholders.
The successful implementation of innovation at workplace involves the nurturing of an organization system that is based on developing individual talent and providing a work environment that provides the employees with the opportunity to deliver their true potentials. The organization in order to be efficient must understand the dynamics of the environment within which it operates and adjust its strategies to accommodate the changes or anticipated changes. The organizational design takes into account the reporting lines, communication protocols, decision making process, employee guidelines and compensation schemes. Businesses today rely on the specialized knowledge and capacities of their workforce for success. Knowledge management has assumed great relevance in formulating managerial strategies and meeting new economic challenges.
Innovation is a key survival strategy for organizations because it enables more rapid adaptation to turbulent environments (Fonseca, 2002). Organizations that apply innovative and creative practices at work are better equipped to meet the expectations of its customers and provide them with increased value for money. The increasing pace of changes in the field of technology has created a need for companies to innovate at faster pace to match the pace of the business environment. This requires improved decision making at the managerial level to improvise the existing processes and operational infrastructure. The pace and effectiveness of decision making process is largely influenced by the availability of supporting information and facts at the fingertips.
Managerial strategies and decision making process are based on various theoretical frameworks that form the supporting pillars of organizational analysis and market perspectives. One such framework is the Competency Value Framework (CVF) that was founded by Robert Quinn based on the idea that organizational culture is a result of the impact of various influences existing within the operating environment. The model is effective in an improved understanding of the organizational functions in the light of leadership competencies, organizational structure, operational processes and managerial perception. The framework suggests that the organization works within a set of competing values that shapes the organization in any of the four distinct models identified as the human relations model, open systems model, rational goal model and internal process model.
The human relations model refers an organization culture that is framed by shared values, goals, cohesion, commitment, participation, individuality and a sense of belongingness. The open systems model is marked by increased flexibility, adaptability to change, and innovation. Internal process model is driven by increased control, efficiency, promptness, consistency, and uniformity in operations. Rational goal model is driven by the external environment rather than the internal affairs and focuses on relationships with external stakeholders of the organization. The competency values determining the type of organization culture are leadership and managerial competencies predominant within the organization. (Quinn et al., 2006) The framework chart given in the Appendix provides a comprehensive picture of this theory and its essential parameters.
2.1 Application of theoretical frameworks within Shell
Shell is a global group of energy and petrochemicals companies having more than 102,000 employees across its various locations in 100 countries (Shell.com, 2009). The group has its headquarters in The Hague, Netherlands and its parent company is the Royal Dutch Plc incorporated in England and Wales. The company reported annual revenue of 458.4 billion in the year 2008 and is ranked the number one Fortune 500 companies in the year 2009. (Shell.com, 2009)
The organization is driven by its transnational operations and the global markets that have a far reaching implication on its managerial strategies and organization culture. The company has a strong brand name and its market presence for more than 100 years has helped in building trust in the market. The strategic management practices at Shell have focused on delivering high quality customer service through improved market research of future trends and consumer expectations. The company has adapted to the needs of the time and this reflects its versatility in carrying out effective operations under diverse market conditions. The SWOT analysis of the company provides a comprehensive view of its market strengths and opportunities in the present operating environment.
Strengths
The strong brand image and recognition among consumers across the globe.
Extensive research and development activities to address global warming issues and conservation of fuel strategies.
Diversification into wide range of products that help the company to minimize risks.
Strategic alliances and partnerships to increase market presence and market shares.
Weaknesses
High cost of operations and research activities.
Low managerial capabilities in developing or low developed countries affect performance and market image.
Increased focus on expanding operations affect quality in some sectors.
Management of diverse product portfolios can result in poor performance in certain segments.
Opportunities
New emerging markets in developing economies.
Exploration and discovery of new oil and gas reserves.
Possible expansion and diversification into alternative fuels market.
Threats
Looming global energy crisis.
Increased contenders for market shares in an increasingly competitive global market.
Shift towards alternative fuel options for example, electric cars.
2.2 Management at Shell
The present and future managerial strategies at Shell are focusing on increasing productivity and performance in terms of improved resource allocation and research in alternative fuel resources. The organizational structure at Shell is influenced by its long history of growth and adaptation to changing market demands and trends. A complex managerial hierarchical system proved to be ineffective in pursuing organizational objectives and adapt to global market changes. The management structure at Shell hence underwent major strategic reorientations that relate to market, products, services, and human resources.
Transnational corporations like Shell are well adapted to the needs of the globalised market environment and localized operational requirements. Such organizations focus on increasing internal competency levels to meet external demands and induce organizational growth through an increased level of operational flexibility and strategic partnerships. All this suggests that Shell presently adopts an open systems model that emphasizes organizational growth through innovation, adaptation to market demands and improved utilization of external resources and market image. This kind of model works in close association with the external operating environment and pursues objectives that are in tune with the current social, economic, and political trends. The internal policies and strategies are shaped by the external environment in which the organization operates. This lends an increased flexibility in operations and improved adaptability to economic context.
Open systems model cannot be understood without also understanding all internal and external environmental forces acting upon it (Daniel, 1999). Shell has demonstrated its flexibility to operate in diverse market and economic conditions through rapid adaptability to changing demands and trends. The sustainable growth and development approach emphasizes the fact that the company meets its strategic goals through the projection of an economically and socially responsible company. Being a socially and environmentally responsible company contributes to our being a profitable company by helping us to earn our license to operate and grow, develop the right products, and maximize opportunities (Shell.com, 2009).
There are increasing number of entrepreneurs who are interested in starting a business venture driven by social causes and purpose that embody a whole range of ideas and values to be spread within the community in which they exist. GEM concludes that more new and established ventures are seeing the necessity and opportunity of serving a broader social mission while also managing and growing the bottom line (GEM Report, 2009). The recognition gained through this process helps the entrepreneurs to collect more funds and resources for further expand their operations and gain wider support to further increase the scope of their objectives.
3.0 The Challenge - The looming energy crisis
One of the impeding threats on the companys future performance is the depleting oil resources that have resulted in increased funds allocation towards research and development activities by oil and gas producing companies. It is estimated that by the end of 2030 the growing demand for oil and gas resources will not be met in view of the existing natural resources. The shortfall between current expectation of oil supply and actual availability will be such that neither gas nor renewables, nor liquids from gas and coal, nor nuclear, nor any combination thereof, will be able to plug the gap in time to head off economic trauma (Leggett, 2005). This situation has been aggravated by the impact of global warming. Over the next half-century, the world will also need to manage greenhouse gas emissions to avoid the worst effects of global warming, about which scientific warnings are getting worse (Voser, 2009).
3.1 Impact on Shell
Shell faces the looming energy crisis with increased determination through extensive research and innovation strategies. Research and development in fuel conservation, exploration of new oil fields, alternative fuel options are some of the focus areas of the Shell group. Innovation in this industry can lead to reduction in operational costs improved time-scale and resource building operations that can result in creation of new and value added products.
The use of Internet in the industry has expanded the possibility of collaboration and exchange of information between manufacturers, suppliers and environmentalists. The use of information technology in the industry has resulted in widespread changes in organizational structure, managerial practices and work culture. The industry is more focused on increasing its core competencies or strengths through extended use of knowledge management systems and employee training development sessions. This has been enabled by an increased participative style of leadership and flatter organization structure that is highly effective in transferring competitive knowledge related to the industry and market information to gain market share.
4.0 Recommendations
In view of the impending energy crisis and the management practices outlined in the previous sections it is recommended that the company focuses more of its resources on research and development activities and opening new possibilities of innovative application in oil and gas management. Focusing on sustainable growth through a right balance of economic development, social interests and environmental protection will lead to effective management practice at Shell. This requires efficient utilization of company resources, minimizing environmental hazards, ensuring safety and health of employees, and encouraging smooth governance through participative decision making policy and transparent dealings with both internal and external stakeholders.
The successful implementation of innovation at workplace involves the nurturing of an organization system that is based on developing individual talent and providing a work environment that provides the employees with the opportunity to deliver their true potentials. The organization in order to be efficient must understand the dynamics of the environment within which it operates and adjust its strategies to accommodate the changes or anticipated changes. The organizational design takes into account the reporting lines, communication protocols, decision making process, employee guidelines and compensation schemes. Businesses today rely on the specialized knowledge and capacities of their workforce for success. Knowledge management has assumed great relevance in formulating managerial strategies and meeting new economic challenges.
Innovation is a key survival strategy for organizations because it enables more rapid adaptation to turbulent environments (Fonseca, 2002). Organizations that apply innovative and creative practices at work are better equipped to meet the expectations of its customers and provide them with increased value for money. The increasing pace of changes in the field of technology has created a need for companies to innovate at faster pace to match the pace of the business environment. This requires improved decision making at the managerial level to improvise the existing processes and operational infrastructure. The pace and effectiveness of decision making process is largely influenced by the availability of supporting information and facts at the fingertips.
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