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Business Environment Assignment - Shell Oil
There have been organizations of various types in the business sector. It can be sole proprietorship, Partnership, private companies, or even public companies. All the companies are categorized in these forms of business. It is the owner’s choice to determine which form of business he should be adopted, and accordingly, the registration will be made with the relevant authorizes. The government is to be informed about the company, which is being formed in order to develop the same aspect regarding the nature of the company. What categorization is to be made, greatly depends upon its nature of operation.
Shell oil is one of the leading companies in the field of oil and exploration. The major reason for it to become one of the leading brands in this field is the fact that the company has a very good supply of oil across the globe. It is basically operated in the Asian countries and has got quite an impressive year since it has been operated. Shell oil exploration is basically a public company where the shares of the company are traded in the market. It does have certain stakeholders as well, the specific needs of whom are to be satisfied with the activities of the organization. The stakeholders of shell are as follows:
- Owners: Initially, it is important to make sure that the owners are satisfied with performance of the company. In this scenario, the owners are its shareholders who have invested their money in the stocks of the company. These owners are the reason as to why the capitalization of the company has been high. Therefore, it is an important aspect for the company to make sure that its owners are satisfied. Proper dividend should be given to them and along with that it is necessary for them to have a higher EPS for its company. Higher EPS will generate positive reviews about the company, which will eventually aide the company itself. (Shell, 2012)
- Employees: Secondly, the employees of the company are also considered to be the stakeholders as they are directly linked with the performance of the company. The employees of the company are greatly dependent on the performance of the company in the long run. The salary package and other finance related aspects of the company regarding the employees, greatly depends upon the company’s performance in the long run. Hence it can be said that, employees, who are actually the part of the company does play an important role as the stakeholders of the company. And the company shall make measures to make sure that the needs of the employees are met too.
- Environmental Groups: Corporate Social Responsibility (CSR) is one of the most celebrated theories in today’s world. Why do we say so? This is because of the fact that all the companies which are operating in this world will have to be sure that they are doing their part to conserve the environment. The conservation of the environment along with that of its resources is one of the major concerns for the people in the long run. CSR basically is one of the reasons for the companies to be aware of their social responsibility. The resources which they are using to manufacture their product belongs to the environment and hence, every measure should be taken in order to make sure that the environmental groups are not severely hampered.
- Government: Apart from the above mentioned scenarios, the government too forms, one of the parts of the stakeholders of the companies operating its activities in a nation. The company will have to follow the policies as formulated and implemented by the government. The objectives of the company greatly depend upon the policies of the government. They cannot determine their objectives beyond the scope of the policies as mentioned by the government. For this particular reason, it can be said that, the government does play an important role, being the stakeholders of the company. Therefore, it should be said that the government does play an important role, being one of the stakeholders of the company. (Richard, 2012)
- Employees: Shell has taken up measures to make sure that the employees working in their exploring unit will be having no difficulty. The basic structure is built in such a way that safety will not be an issue for the people in the working environment. The company has even got the insurance policies of these employees. It is because of these insurance policies, the workers/employees are being able to work appropriately. This appropriateness is very much necessary so that the employees will not have to face any difficulty in the long run regarding its own health or its family. The employees in the organization are given equal opportunities as there are scope for all the employees to grow. Growth has been a major aspect for the people in the long run and same goes with the nature of employees. Generally, the employees do have to be productive enough in order to reap the most positive results for the company. Once the employees of the company are given equal opportunities, the efficiency of these companies increases and hence, it is required by the company to make sure that they keep their employees happy by providing them with safety measures and equal opportunities.
- Ethical Issues: As the company has been doing so much for its employees, it will have to make sure that they are actually being ethical towards the environment. As mentioned above, the company has done its best to make sure that the environmental group is conserved. Oil exploration obviously leads to the fact that the pollution in the surrounding areas will rise. Hence, the company will have to make sure that this do not occur as it will lead to situation where the people will not be able to reside. And hence to avoid this situation, the company has adopted the policy as implemented by the government to avoid as much pollution as possible to conserve the environment.
These activities even lead to global warming which has been one of the major concerns in for the UN. Global Warming is indeed increasing the normal temperature, which is obviously a bad sign for the people in the long run. The glaciers in the Atlantic are melting which is an adverse issue for the people living across the world. Shell has done its best to make sure that the company does not give rise to the greenhouse gases, the basic reason for the increase amount of global warming. To avoid this scenario, the company will have to make use of those equipment, which does not involve the use of greenhouse gases. Hence, it can be said that the company is doing its best to avoid the greenhouse gases to reduce the amount global warming which is affecting the world.
The European Government had filed a suit against Microsoft for the abuse of its dominant position in the industry. As we all know that, Microsoft has a monopoly of having the Microsoft office, which is one of the most prominent features, which is needed in almost all the organizations and for the students who needs to prepare reports or essays. It was reported against the Microsoft that it was actually blocking its competitors in the market by using anti-competitive skills. Novell, had reported the issue to the authorities which is one of the basic reasons for them to be considered as against the business law . Microsoft, which had once entered the European market, did not let any other company introduce itself in the market, which has motivated the other companies to file a suit against it. (EuropeanCommission, 2013)
Microsoft had actually entered in to an agreement with various computer-making companies that it will be using their software, in exchange of some royalty fees. They were licensed to use the software as established by Microsoft only, because of which many other software companies had gone against it. In the year 1994, the license practice of Microsoft ended, giving the positive result to those who had filed a suit against it. In the year 2008, EU had fined an additional cost to the Microsoft of US$ 1.44 billion for the failure to comply by the ruling as given in the year 2004, March. This competitiveness in Microsoft was obviously not a good aspect as it did not give rise to any form of competition. (SANS, 2011)
After being filed against a certain prospective of the company, it had become necessary for them to change and review their own competition policies. It had become necessary for them to do so. They were not letting any company to come in to the market with the products as offered by them. Though, they still have their monopoly in the form of Microsoft office, yet there were certain aspects in their policies, which were to be changed. This abuse was a much talked about issue in the whole world as it is a huge company and the products as launched by them are being used in daily lives of the people and the company.
After having the case solved, Microsoft had to make sure that they change their competition policy, as varieties of issues were being faced by the company in the European region. The competition of policy of Microsoft was to use its position in the best possible manner. But hardly did they know that, once they start using this position of theirs over excessively, it should be said that Microsoft has actually abused its position in the industry. They had to make certain alteration in their own policies so that other countries do not file a suit against them. “Microsoft had determined, that they might not follow their policy aggressively as it would be the same situation as it was in the case of European Commission.” (Brussels, 2013)
The major aspect of this whole scenario was not actually to change the policy of Microsoft. The controversy actually lied in the fact that the company was misusing it dominant position in the industry. They were actually dominating, but they started to abuse its position as well, which had given the rise to this suit against it. The EU commission after scrutinizing the whole scenario had come to this conclusion that the Microsoft was entitled to pay for a hefty amount of more that US$ 1 billion, as compensation to EU commission. Though the laws were changed in the year 1994, yet the company had to face certain consequences till the time it was not properly solved.
Not only the competition policy, Microsoft had to even make sure that their marketing policy is altered as well. The marketing policy of was not appropriate because of which it had become necessary for the management to discus its policy with the marketing department. The other thing, which is to be observed is the fact that the company will have to make certain provisions in order to make sure that this kind of situation does not arise in some other country. The EU commission had charged, Microsoft, with a huge amount of compensation giving rise to various important issues for the company in the long run.
- Political Factors: The political factors do play an important role to determine as to how the shell corporation will organize its activities. The major aspect in this situation is that the government which is ruling the nation, i.e. UK, policies as formulated by them is to be made sure that they are being applied. This application is very important or otherwise the company might face consequences, which will lead to a harmful defect in the company. Hence, it is advisable for all the companies to follow the policies as generated by the ruling government in the country. Shell, too, has laid down its objectives as per the policies of the government. (Jessops, 2013)
- Socio-Cultural Factors: Apart from the political factors, the socio-cultural factors also play an important role for the organization to set its objectives in the long run. Every country has its own cultural environment, which should be followed at the time when the company is actually operating in any nation. Apart from this, the people in the environment might also raise their voices if there is any form of violation of country’s culture. Hence, these socio-cultural factors do play an important role in the total activities of the company. (Grimsley, How The Social Environment Affects Business: Examples & Impact, 2010)
- Educational factors:Apart from the above mentioned factors, education can also be considered as one of the major factors which determines the existence of the organization. Many companies provide their own training process for its employees. These companies basically hire the people who have taken training from them. Apart from the education policies as mentioned by the government are to be followed as well. These educational aspects are the major factors, which should considered as without their existence, the company will not be performing in the best possible manner. (Classle, 2012)
- Technological Factors: There are certain external factors as well which affects the daily activities of the company. The technology is basically the reason as to why many companies have been involved in competition. The technology is the most important factor to determine the performance of the company. These factors are basically beyond the control of the companies and hence all the companies, including shell will have to be sure of the facts that these technologies are being utilized appropriately. (Grimsley, 2011)
- Legal Factors: Not only does the technology, legal factors are also considered to be the external factors. Legal factors include the law related to the companies act and up to what extent a company can take its activities. Anything beyond the legal factors performed by the company will be reported against and strict action can be taken against the companies, by the authorities. For this particular reason, legal factor does play an important role in the overall performance of the company. (Carpenter, 2011)
- Environmental Factors: The environmental factors also are considered a major external source, affecting the company. It is important for the company to make sure that they do not perform any activities, which are against the environment or affect the environment adversely. Hence, it can be said that the environment also plays an important role in determining the activities of the company.
The European Union (EU) is considered to be a supra-natural authoritative and regulatory framework body which initiates and introduces economic and political policy making for the 27 member countries which are a part of the European Union Commission. The political body was formed as a consequence of the Treat of European Union, more commonly known as the Maastricht Treaty, a successor to the previous European organizations which existed before 1993 (Encyclopedia of Management 2009). The initial number of members to EU was 15, however with time other nations joined in, including United Kingdom (UK) in order to make combined attempts at stabilizing the growth and control of Europe on its own cities as well as, across the globe.
Let us take up the following two EU introduced policies and study their impact on the UK business scenarios:
Introduction of the EU data protection policy in 2012: When the EU policy making board announced the introduction of the new EU data plan policy for businesses in UK, majority of the UK IT managers perceived this as a new form of increasing costs for businesses and reducing the profitability as a consequence (Ashford 2012), stats revealing around 59%. Almost 11% of the IT managers in UK felt that the costs would rather go down overall, around 23% considered that there would be no significant impact on the operation costs of businesses and around 7% did not know what impacts could it get along to their businesses. (Citron, 2014)
According to the policy of data protection framework pushed by EU, business organizations in the United Kingdom will be required to inform the concerned data fortification authorities and analysis data subjects within 24 hours of any cyber attack on the encrypted data of a business processes of any organization (Ashford 2012). Such a plan was made to cater to the needs of a stronger data protection plan for the businesses in UK, thereby aiming to improve the business and security processes, and at the same time guard the forces of data storage from cyber criminals. (Ashford, 2012)
However with the pros that the EU policy gets along onboard, a major concern remains in terms of the major cons which, come along with it. For instance, around 40% of the IT managers think that such strong data protection protocols with the governance of the EU policy will also lead along to public announcement of security weaknesses even prior to the individual data reviews by the UK organizations themselves (Ashford 2012). Another 36% of the target market which would be affected by such data policies by the EU feels that there would be uncalled for false security breached warning which would garner public negative attention and lead to un-peace of mind-frame of these IT managers in the UK business scenario. On the other hand, around 24% of the IT managers feel that the data protection policies are perfectly fine, and would assist the IT companies in catching data thieves. (KeyStone, 2011)
In order to conclude, it can be said that the business, which are operating its activities should be categorized. The major thing, which is to be observed in this form of scenario is the fact that, all the businesses, be it private or public company. The manufacturing unit like Shell Oil incorporation is also registered under the relevant authorities. From the above discussion, it can also be said, that the external factors in for the company also plays an important role in the actual sense.
Brussels. (2013). Antitrust: Commission fines Microsoft for non-compliance with browser choice commitments. Retrieved December 1, 2014, from europa.eu: http://europa.eu/rapid/press-release_IP-13-196_en.htm
Davison, L. (2009). Why Do Companies Exist? Retrieved December 1, 2014, from hbr.org: https://hbr.org/2009/02/why-do-companies-exist.html
Denise. (2008). Company Registration. Retrieved December 1, 2014, from www.dineshbakshi.com: http://www.dineshbakshi.com/igcse-business-studies/business-organisation/revision-notes/879-private-limited-companies
Richard. (2012). Balancing stakeholder needs. Retrieved December 1, 2014, from businesscasestudies.co.uk: http://businesscasestudies.co.uk/shell/balancing-stakeholder-needs/#axzz3KiIlHBMt