Global Business and Environmental Risk - Essay Example

GLOBAL BUSINESS AND ENVIRONMENTAL RISK ANALYSIS Introduction Business organisations are designed with the main objective of meeting identified needs and challenges in the human and social environment according to their set goals and objectives. Of the expectation of setting up business organizations is that they can exist and remain relevant and productive in the future. In order to meet this objective, business organizations set strategies that they use in addressing challenges they face in their operations.

The ability to maneuver through the emerging issues and challenges gives the business the much needed competitive advantage and market position. One of the things that businesses pay much attention is their effect on the environment; here, business ensure that their respective practices do not contravene policies and regulations laid down for management and conservation of the environment. For instance, the business has to ensure that its production activities do not result in environmental pollution and degradation, so that the future generations can also obtain from the same environment through their business activities.

This paper examines the effect that Shell, a company that sells petroleum products has on the global social, political and environmental opportunities in the environment. It looks at the company has been responding to issues and challenges arising in its business environment and how it is positioning itself to remain relevant and profitable in the coming future. Shell Petroleum Oil Company Shell is a subsidiary company of the Royal Dutch Shell, which is one of the world’s largest multinational oil companies in the world (Priest 2007, 17).

It is the US-based company, having its headquarters in the Texas state of the United States. In the United States, the company has been very successful, managing to establish many petrol stations with an estimated employment of about 22,000 employees in the US alone. Shell is one of the largest American companies that deal with natural gas and oil. Currently, the company stands out as the market leader in the US petroleum industry, having more that 25,000 gas stations spread in many states in the United States.

The petroleum products that the company deals in include fuels, oils and card services. Additionally, the company is often involved in oil exploration, production as well as refining of various petroleum products, which it eventually sells to other countries and directly to its clients in many parts of the world, besides the United States (David 2012, 73). The global economic, political, social and environmental opportunities facing the company It is important to understand that the global economic environment is very unpredictable for most business operating in various industries.

First, different countries have different economic policies that differ from one country to another. For this reason, any business has to research and prepare adequately to cope by the economic policies and regulations for businesses in those countries. In order to prepare adequately for the changing economic conditions in different countries, shell has established various marketing research teams that enable it to understand effectively the economic policies and regulations in the different countries they have been established (Obi & Olofin 2009, 37).

Currently, the world’s investments in the energy industry have plummeted significantly; this has been prompted by a fall in the cash flow, demand dynamics and the changing financial environment because of the changing economic environment (Maugeri 2006, 48). Shell, like many other companies have equally been affected. However, the company undertakes regular audits in its operations so that necessary steps can be taken for the company to maintain it market position and overall competitive advantage.

As far as social and economic opportunities are concerned, Shell has been devising strategies towards enhancing its image to its consumers as a company that cares for the environment and the welfare of the people in various ways. For instance, in many of the developing companies, the company has been offering educational scholarship programs to students for them to pursue secondary and tertiary education in various institutions (Matthew 2004, 53). The company has a realization for the need to conserve and care for the environment because of the global concerns over climatic changes.

The company collaborates with various non-governmental organizations to advocate for environmental management and conservation practices in various countries. In most of the developing countries, the company has been sponsoring tree-planting exercises for people increase tree cover and vegetation in their environments. In all these processes, the company has been preparing itself adequately to take care of the emerging opportunities in its environment in the future. The company understands the need for having proper branding practices to have a cutting edge over its rivals.

The company has become an active player in the reduction of carbon and other green house gases in its petroleum products through refining and selling of product that are environmental friendly to vehicles and automobiles to ensure that the harm posed by global warming are reduced. The global economic, political, social and environmental risk facing the company In as much as many opportunities are beckoning for Shell Oil Company in the coming future, it has to prepare adequately to face the many risks existing in its external business environment.

First, many developing countries have been facing various political instabilities in their governance. This development often results in reduced business and economic activities, something that hampers its profit margins. Additionally, the world is currently facing huge security concerns in the face of changing terrorists’ activities, which in most cases targets business installations like petrol stations. Terrorism activities often lead to increased destruction to business activities, scaring away potential investors and bringing loses to businesses already existing.

In response to this development, shell has been cooperating with various governments to ensure that they are in good terms to advance their business interests and contribute to the economic developments in those countries. Economically, the company has been making research on the various economic policies and regulations being developed in different countries and the potential effect on its business practices. The company has been checking in the various demand-dynamic and the increasing competition from new companies emerging in the petroleum industry (Yanochik & Kumazawa 2009, 13).

The company has been devising various pricing approaches for its products to remain competitive in its environment. The changing climatic patterns in the world provide another important risk factor for the company. Worldwide, many attempts are being made to ensure that people and companies reduce their reliance on petroleum energy because of its effects in enhancing global warming (Matthew 2005, 67). For this reason, the company is being forced to check on its petroleum refinery processes in order to reduce carbon content and other green house gases in the atmosphere.

The company is currently involved in various research practices to improve on their refinery processes so that it refines and sells clean energy to automobile consumers worldwide, and reduce the prevalence of carbon emissions in the atmosphere, thus reducing global warming. Bibliography David. B. F. 2012. Capital Structure and Corporate Performance in Nigeria Petroleum Industry: Panel Data Analysis. Journal of Mathematics and Statistics, Vol 6. No 2. 168-173. Matthew R, S. 2005. Twilight in the Desert the Coming Saudi Oil Shock and the World Economy, John Wiley & Sons, New York.

Matthew Y. 2004. Oil: Anatomy of an Industry. New Press, NJ, USA. Maugeri, L. 2006. The age of oil: The mythology, history and future of the worlds most controversial resource. Praeger, Westport, Conn. Obi, B & Olofin, S. 2009. An economic analysis of the impact of the petroleum industry in the Niger delta: A regional input-output framework. African Journal of Economic Policy. Vol 4, No 3. 34-56. Priest, T. 2007. The offshore imperative Shell Oils search for petroleum in postwar America. Texas A & M University Press, College Station.

Yanochik, M., & Kumazawa, R. 2009. Interest Rate Manipulation, Environmental Damage and Loss Valuation. Journal of Business Valuation and Economic Loss Analysis. Vol 4. No 2. 1-14.