Financial Analysis of Shell plc - Macroenvironment, Capabilities, Strategies assignment sample

Financial Analysis of Shell plc - Macroenvironment, Capabilities, Strategies Assignment Sample

1. Introduction -

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The influences and impact of the macro environment are going to be analysed in this report that can help in proper analysis of the financial performances of the business. Adequate assessment of the internal factors of Shell plc in this assessment played a crucial impact in maintaining the sustainable growth into the organization. The effective assessment of the capabilities and the internal environment played its crucial attention into the business to maximize the internal strengths and financial growth strategies into the organization. With the help of analysing

 the relevant perspective and the sustainable models, it can be able to modify the sustainable aspects of the business growth for a frequent period of time. The competitive edge and the market factors of Shell plc are analysed to modify the crucial business aspects over a fixed number of periods to evaluate the financial schemes and long-term business policies of Shell plc.

2. Analysis of the impact that influences the macro environment of Shell plc

2.1 Pestle analysis

Political

The rules and the several laws implemented by the government of the UK played an impact into the business policies and the financial strategies of Shell plc. The changes into the managerial scenario and the evaluation of the financial schemes need to be developed for a fixed period of time. As opined by Christodoulou and Cullinane (2019), the certain changes into the administration system and the business evaluation are considered with making a strategical change into the financial growth of the business. The associates and allies of the UK are said to be crucial in identifying the prospects to improve the business strategies of the company.

Economic

One of the main economic factors that make an impact on business is the GDP of that country that seems to develop the financial activities of the business. As stated by Thomas et al. (2021), the specifications into their tax rates and the stimulation into the tax rates are supposed to have played the role of the impactor into the foreign direct investment of Shell plc. The diversification of the economic activities and proper evaluation of the foreign direct investment are considered as one of the major areas which help in developing the financial strategies of the company.

Social

The social factors such as healthcare system, education level, population and income level of the country has played an impact into the overall growth and the development of the country. In this regard, the impact of those above-mentioned factors played its impact into the growth and the maintenance of the financial schemes of the business (Beatrix and Irawan, 2022). The development of the business and the utilization of the financial schemes for a given period of time are to be made to improve the financial concerns and managerial techniques within the fixed number of years.

Technological

The advancement of technological changes and the development of the financial projection are playing the role of making financial growth into the business. The estimation of the business factors and projection of the business factors need to be properly maintained that can help in improving the financial business factors and mobilize the financial growth of the business. The implementation of the proper implementation and development of the financial schemes are considered as one of the main factors within Shell plc (Shahid, 2022).

Legal

The employment act 1996 of the UK has played a significant role in setting the performances of the business to develop the sustainable growth of the business. Utilization of the business factors and development of the financial schemes should be evaluated to determine the financial growth of the business. As believed by Suci and Pratama (2021), the estimation of the financial strategies and the legal policies which are determined to evaluate the promotional strategies. The utilization of the business factors and maintenance of the financial development are said to be necessary to improve business techniques.

Environmental

The strategies of the business and the evaluation should be maintained to improve the financial growth of the business which can be visualized to maintain the financial growth of the business. Several environmental issues need to be implemented to improve the financial activities of the business (Barik and Kumar, 2018).

2.2 SWOT analysis

Strengths

The market controlling position and vertical integration factors are considered as the strengths of Shell plc. The research development and the capital exploration process are strengths of the business (Shell.co.uk, 2022). The capabilities of making capital exploration helped to maintain the financial activities are the other crucial positive aspects of Shell plc.

Weaknesses

The violation of laws is said to be one of the weaknesses of its business as it makes a negative impact into the overall financial performance of the business. The calcification of the financial activities and the development of the business factors played a negative impact on its oil and gas business (Shell.co.uk, 2022). The company has suffered in the last two years due to an increase in the volume of overall debts of the organization.

Opportunities

The increase of the overall demand of energy in the global market has facilitated in accumulating a wide range of demand in its business. Mergers with the BG group are associated with developing the financial resources of the business (Shell.co.uk, 2022).

Threats

The threats of the business are directly associated with the changes in climate changes associated with the financial growth of the business for a sustainable number of years. The classification of the business activities and utilization of the political volatility are the major problems in the expansion of Shell plc (Shell.co.uk, 2022).

2.3 Porter Five Forces Analysis

Bargaining power of suppliers

The power associated with the buyers has directly related with evaluating the business factors and crucial techniques to improve the growth of the business. As argued by Isabelle et al. (2020), the suppliers implemented monopoly into the market with the help of evaluating the business tactics and changes into the financial activities. With the help of experimenting the product design into the product design into the market it visualizes major changes into the organization to develop the sustainable policies.

Bargaining power of buyers

The reduction of the bargaining power of the buyers played a huge impact in utilizing the financial schemes to improve the financial growth. The development of the sustainable business activities and the utilization of the financial schemes need to be evaluated to accumulate the financial developmental process of Shell plc. As per view of Eymer (2022), the proper classification of the financial activities and the maintenance of the business factors has to be implemented to develop crucial development aspects into Shell plc.

Threats of substitute product and services

The arrival of the similar kind of organization which sells the same products just like Shell plc as its impact is visualized into profitability. The classification of the financial schemes and the development of the business techniques are considered as one of the major issues to improve the potentiality of the business (Arianty, 2018). The proper development and the projection of the financial schemes are to improve the maximum demand of the business. The classification of the value proposition and present offerings are not developed to improve the financial techniques to mobilize the financial activities.

Rivalry among the existing competitors

Rivalry among the exciting companies which are said to be the competitors into the market played a huge impact into the financial performances of the business. The price of the products of Shell plc come down as it mitigates the financial growth strategies of the oil and gas company. As narrated by Björk (2021), the evaluation of the business and the understanding of the policies should need to be maintained which can be considered as effective in managing the financial growth of the business for a specific number of months.

Threats of new entrants

The threats of the entry of new organizations can be justified as the promotional strategies of the business helped in making projection of the business. The evaluation of the financial growth and the concentration of changing the business pattern has played a crucial impact on the sustainable changes. The classification of the financial growth and maintenance of the performances are helped in developing the growth and managing the business issues of the company. (Jelonek, 2022)

3. Estimation of internal capabilities and environment of Shell plc 

3.1 Identification of the Resource Capabilities in 2022

Shell plc is a British Dutch multinational company with business activities related with the oil and gas activities. The changes into the managerial techniques and effective contribution of the related financial growth are said to be a managerial perspective to improve the growth of the managerial development for a fixed number of years. As narrated by Sofyan and Fantini (2021), the classification of the development of the managerial perspectives and the necessary actions has been taken to improvise the financial activities of the business. The maintenance of the financial scheme and the constant focus on managing the managerial growth should need to be maintained to develop the business policies over a fixed period of time. Total number of 86,000 employees are currently working within Shell plc and the intention of the business is to promote the sustainable expansion of the business as to improve the developmental aspects of the business. The products that are implemented by Shell plc are directly associated with managing fuels, petroleum products and the refining products into the business. The classification of the business policies should need to be developed that can help in exploring the production activities.

3.2 Justification of the business strategies of Shell plc

The acceptance of the managerial pattern and the specific dates and the time factors are analysed that can help in exploring the growth of the total business products of Shell plc. The competitors of Shell plc are imperial oil, Chevron corporation and Exxon Mobil corporation should need to maximize total volume of the financial activities for a specific number of years (Shell.co.uk, 2022)). The recent business strategies of Shell plc are to explore the production activities of the business that can help in maintaining the financial scenarios of the business. In further, the adaptation of the classical data analysis and the projection can be considered as valid in evaluating the overall financial procedures of Shell plc.

4. Application and evaluation of the Porter's five forces

4.1 Short-term objectives of the business

Based on the point mentioned in the Porter five forces evaluation, it can be visualized that the projection of the financial strategies and the justification of the recent technological perspective has to be followed to improve the financial techniques. As idealized by Pranadita et al. (2021), the classification of the business developments and the managerial growth are said to be the short-term objectives of an Oil and Gas organization. In further, making proper allocation of resources and effective allocation of the financial products of a business are the other short-term objectives. In the next few years, the organization wants to achieve sustainable financial growth as well as making proper evaluation of the financial budgets. Shell planned to visualize the differences into the financial activities and find adequate solutions that can be able to improve the sustainable growth in its global expansion.

4.2 Aim and goals in business in 2025

• Expansion of business in different organization activities, Shell plc is targeting organic free cash flow around $35bn by 2025
• Improvise production facilities to increase supply in global market, it would be imported effective to capture global market
• Achieving of gearing ratio around 15 to 25% by FY 2025, which would be better return to investors and shareholders (Shell.com, 2022)
• $25 buy back of shares and provide a $125bn dividend to shareholders by 2025
• For progress of community and organization focus on cleaner energy solutions to capture 15% of the global market demand

The main aim and goal are to uplift the company by generating a “net-zero emissions energy business” in upcoming years. As per the view of Arief et al. (2021), the next five-year plan of the Shell plc for the period 2020-2025 consists of major changes or upgrades. The company wants to increase the “organic free cash flow” to $35bn in 2025. It will be assumed that the oil prices will be $60 per barrel in near future. The total returns to the company’s shareholders rose to be $125bn in the coming period. As stated by Chen et al. (2018), the firm should maintain the gearing ratio range between 15-25%. The business is mainly involved in its global expansion where it deals in various operations that lead to profitable outcomes.

4.3 Values and the customer of the organization

Shell plc is focusing the values and culture in organizational activity. This organization's refinery process has increased the pollution level of the environment, where the organization has decided to move toward green energy production. Change of strategies would change the activity of organization because business strategy influences organization planning. Due to increasing pollution by oil refinery related business operations, Shell Plc has set a business strategy to gain more business by focusing on the green energy market. According to business activity and playing organization would change operation activity. Following organization values and culture Shell Plc focuses on implementing integrity in business operations.

Making decisions over the green energy segment increases business activity by 2025. Strategic change in organization also influences business actions and allocation of resources would change productivity of different operational segments (Pratiwi, 2021). Ethical practice in Shell Plc is to deliver financial transparency in organizational activity. Coronavirus impact on global business also makes a hit in this organization's profitability. To overcome this crisis, organizations have to focus on the supply chain to ensure sufficient flow of raw materials. Implementing this strategy to Shell Plc would need to change production operation to improvise production volume (Lee et al. 2021). Focusing over the green energy segment for future business expansion, business operation to distribution would require a more effective supply chain for sufficient flow of energy to clients. Moreover, production cost would need to be analyzed to set goal for revenue generation. This strategic plan would help to overcome covid crisis and increase productivity of green energy would help to maintain sufficient flow of revenue.

4.4 Busienss analysis using Ansoff matrix

Figure 1: Ansoff matrix

(Source: Rukh and Qadeer, 2018)

Market development: With the help of this matrix Shell Plc market would be developed by starting new green energy production. Along with that market development would be possible by focusing on green energy production and distribution. Distribution process would need to be improvised by a new partnership that would help to establish a supply chain of green energy. 

Market Penetration: Penetration of a new market is not easier because of existing competitors' presences. Penetration in the market with unique service or product helps to gain market capture. Considering this fact Shell Plc would be in the green energy segment to create a new business plan regarding green energy distribution would help to increase market capital.

Diversification: Diversified product portfolio is considered a health business management for business expansion. Shell Plc has market capital with existing oil and energy products additionally green energy supply (Rukh and Qadeer, 2018). Along with that green energy product segment would add advantage in business expansion. Diversified product profile will help to start future business possibilities through green energy production. 

Product development: Each business organization tries to develop a product range to enrich the number of customers. Considering that shell Plc would be effective by introducing green energy in the global market (Polyanska et al. 2019). Green energy is being considered as a future source of energy, where penetration in the global market by green energy would be useful to establish a new market for Shell Plc.

5. Application of the relevant theoretical framework to support organizational strategies

5.1 Critical evaluation of the organization's culture

The company is a multinational corporation where it had adopted HRM policies to maintain a systematic organization culture. As opined by Gallegos-Baeza et al. (2021), the managed workforce is greatly organized by global ventures. The interventions of different cultures and HRM functions show a strategic alliance or significance in maintaining the organization culture of the firm. The values, practices and expectations actions of the employers and the employees represent the company's culture. The company implies a different kind of business operation that is “without active business operations or significant assets”. These kinds of businesses are usually illegal. However, as part of the business, the companies evaluate its operators in a legal view where it has a global expansion with franchises and subsidies (Henry et al. 2019). This oil and gas company follows general rules and principles to maintain value and integrity in the firm.

The company’s ethical compliances are mainly developed by its effective workforce where the employees complete their job with efficiently available resources. As per the author Kim et al. (2021), the core values or ethical components of the firm are “honesty, integrity and respect for people”. The clear vision of the firm is to produce clear and more energy solutions for the growing population all over the world. The working culture of the firm shows an effective mode where they are connecting with real-world examples. The firm needs to evaluate different components where they improve their means and work to attain the stated objectives. As mentioned by Pupovac and Moerman (2020), the belief of the company and organizational views in relation to the firm objective and its working enhancements reflects the healthy views of the firm. Excellence and experience of the employees and leadership can improve the drawbacks of the company into better conditions.

5.2 Motivation and business dynamics of Shell plc

The firm is engaged in producing energies, oils and gas for the world. The company needs less motivation compared to other organizations. As stated by Sadjiarto et al. (2020), the transitions of the business are directly influenced by the mentors who are engaged in managing and exporting the business activities. The constant reactions that are occurred due to frequent changes in the employers and leader behavior show effective motivational factors. Changing reactions to the regular life experiences show the dynamic motivation factor in business. There are lots of projects and opportunities that can grow an individual's knowledge as well as a vision in newly developed areas. As per the view of Shala et al. (2018), Shell Company values its employees and considers their performances to upgrade the professionalism among the employees. The formal relationships and the informal relationships of the firm are balanced in a systematic way; by this the workers can keep themselves motivated throughout the working venture.

Business dynamics refers to the changes in business activities and in operations. In order to understand the whole procedure of business dynamics, it can be stated that the power of the ripple effect in the firm. As opined by Travis and Hodgson (2019), the response to the changing aspects of the firm can be associated with the potential opportunities and threats of the business operations. As the firm is engaged in oil and energy production, the dynamic effects are usually generated by changes in the environment and climatic conditions. Economic factors, social and legal factors, and cultural and technological factors are mainly considered as dynamic elements of the business. 

6. Recommendations and conclusion

6.1 Recommendation

The recommendations for the firm can be given to hence the working aspects s well implementing proper organizational culture. The recommendations are as follows.

• Hierarchy and market culture must be adopted by the firm to analyses the other activities of the firm.
• Quick changes derive quick implementations in the business plan where the firm must be attentive in raising the events at a growing level.
• The abovementioned general principles must be followed in the firm with full ethnicity and partnerships.
• Organized sustainability development must be availed in the firm to recognize the accuracy is using the natural resources by limiting the other factors.
• Sales and purchase decisions must be taken by reevaluating its financial and non-financial factors.

6.2 Conclusion

Based on the above context it can be concluded that the firm needs to adopt the required changes to follow growth and extension in near future. The stated goals and objectives must be accomplished within the state's timescale and allotted budgets. Further acquisitions of reform must be overdrawn with the users of the products and by analyzing its potential outcomes. From the swot analysis, the threats must be identified by the owners to mitigate it as early as possible to meet the stated goals of the firm. The strategies that are opted for by the rival firm must be used in the current market scenario. The political and legal constraints must be rectified by the owners in the selling of oil and gas products all over the world. The short-term objective must be fulfilled by adopting suitable strategies and solutions from professional advisors. The environment and societal impacts must be followed by the firm to show their effectiveness and authenticity in managing the firm's works and activitie

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