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Shell Case Study Balancing Stake Holder Needs Definition

Page 1: Introduction

A stakeholder is anyone who has an interest in what a business does or an influence upon the business.

Large organisations have many different stakeholder groups. Some are internal to the business, like employees. Others are external as they are outside of the business, like government. It is important to identify and balance the needs and expectations of these groups and to act responsibly to all of them in order to keep the 'licence to operate, which is necessary for good business. 

Balancing the needs of all stakeholders is particularly important for large energy companies like Shell, one of the world”s largest and most profitable multinational companies.

Shell is a global group of energy and petrochemical companies.  Its aim is to meet the energy needs of society in ways that are economically, socially and environmentally viable, now and in the future.

Shell's headquarters are in The Hague, the Netherlands, and the parent company of the Shell group is Royal Dutch Shell plc, which is incorporated in England and Wales.  Shell provides 2% of the world”s oil and 3% of its natural gas. Shell's fuel retail network has around 44,000 service stations and it sells transport fuel to some 10 million customers a day.

Global challenges

Oil and gas are non-renewable resources but remain essential for powering the world”s needs.  Energy use is increasing due to a growing world population and higher standards of living. This means more demand not only for oil and gas but also for other energy sources.

Shell is therefore faced with an enormous challenge to help meet the needs of the present and future generations, while creating as little negative impact as possible to the environment.

Shell aims to provide energy safely and responsibly and serve all its stakeholders, customers and investors effectively.

Two key aims of the Shell Group are:

  • to engage efficiently, responsibly and profitably in oil, gas, chemicals and other businesses
  • to participate in the search for and development of other sources of energy to meet evolving customer needs and the world”s growing demand for energy.

The case study examines how stakeholders influence the achievement of these aims and how Shell seeks to meet the needs of all of its stakeholders and balance the social, economic and environmental impacts of its work.

Page 2: Internal stakeholders

Internal stakeholders are seen by the wider community as reflecting Shell and how it works.

Shareholders

Shell's main internal stakeholders are its shareholders, employees and suppliers. Large businesses like Shell, Sainsbury's, Virgin, and M&S are owned by shareholders. Shareholders play a crucial part in the life of the business.  They provide a sizeable part of the capital required to set up and run the business. They take a reward from a share of the profits in the form of a dividend. This varies according to how many shares they own.

The shareholders choose a Board of Directors to represent them and provide a direction to the company. This is set out in a long-term plan which is called a strategy. The directors are responsible for the implementation of the strategy. Each year the directors must produce a report for shareholders. This report is presented each year at an Annual General Meeting of shareholders.

Employees

Another important internal stakeholder group is employees. Shell employs over 100,000 people worldwide. These include senior international managers specialising in finance, marketing, sales, oil and gas exploration and other aspects of the business. Other employees include geologists, market researchers, site engineers, oil platform workers, office administrators, business analysts and many more.

As stakeholders, employees are influenced by Shell but also affect how Shell operates. The employees' standard of work and commitment to health and safety and excellence is vital in order to keep Shell as a leader in the energy field. Mistakes can be costly in terms of reputation and the livelihood of other employees.

A priority at Shell is to respect people. It seeks to provide its staff with good and safe working conditions and competitive terms of employment. This has a positive influence on employees as it keeps them safe and motivated.

Suppliers

Suppliers are also internal stakeholders and are Shell's partners in the chain of production - for example, in bringing petrol from the oil well to the petrol pump. Shell has a number of core values that are central to everything it does. Shell's reputation depends on making sure that its business actions reflect these core values. Shell works with contractors and other partners in the supply chain who also must demonstrate these values. If they do not, Shell will not use them.

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