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Restructuring Shell

Table of Contents

Page

1. Introduction 2
2. Problem Analysis 3
3. Recommendation 5
4. Conclusion 6
5. References 8
6. Appendix 9

1. Introduction

Royal Dutch/Shell is a global group of energy and petrochemicals companies, with 104,000 employees in more than 110 countries; it is unique among the world’s oil majors and was formed from the 1907 merger of the assets and operations of the Netherlands-based Royal Dutch Petroleum Company and the British-based Shell Transport and Trading Company. In fact, it is the oldest joint venture. The business interests of the two companies were combined into a single group, with Royal Dutch owning a 60 percent share and Shell a 40 percent share. The expansion of both companies was supported by the growing demand for oil resulting from the introduction of the automobile and oil-fuelled ships. When Exxon was merging with Mobil, Shell was no longer the world’s biggest energy company. In addition, the merger of Total, Fina, and Elf Aquitaine in September 1999 had created the world’s fourth “super-major”, after Exxon Mobil, Shell and BP Amoco.
The daily management activities of the Group are complex, and the structure through which the Group is actually managed does not correspond very closely to the formal structure. The managerial control was vested in the Committee of Managing Directors (CMD), which forms the Group’s top management team. This structure was viewed as a critical ingredient of Shell’s ability to reconcile the independence of its operating companies with effective coordination of business, regional, and functional commonalties. The CMD identified key issues, set strategic direction, and approved major projects, and the planning department formulated the scenarios. However, most of the strategic decisions and initiatives were originated among the operating companies. The role of the planning staff and the regional and sector coordinators was to...