The paper "Features of Shell’ s Strategic Planning System" is a great example of a finance and accounting assignment. The following are the main features of Shell’ s strategic planning system. Shell’ s strategic planning emphasizes on long term strategic thinking with its planning period (horizon) extending 20 years into the future as opposed to the four or five years planning periods employed by most companies. Furthermore, the basis of the strategic plans is scenarios (alternative views of the future that allow managers to consider strategic responses in different ways in which the future might unfold) as opposed to most other companies which use forecasts as a basis of planning. The system is based on a broad vision and emphasizes on generation and application of ideas as opposed to focusing on financial performance alone.
The system is open to ideas from disciplines such as economics, psychology, biochemistry, biology, mathematics, anthropology, as well as ecology which have made the company pioneer many managerial techniques such as multiple scenario analysis, business portfolio planning, cognitive mapping as well as the application of organizational learning concepts to planning processes. Shell applies a planning strategy that encourages thinking of the future, develops the capacity for organizational learning, promotes organizational dialogue and facilitates organizational adoption to a changing world. Application of a bottom-up approach to strategic planning where the committee of managing directors (CMD) identifies key issues, sets the strategic direction and approves major projects while the planning department formulates scenarios although most strategic decisions and initiatives originate from among the operating companies(Robert, 56).
The planning staff, the regional coordinators as well as sector coordinators coordinate the operating companies’ strategic plans. Question 2 The main changes between the early 1970s and early 1990s that transformed the world of the petroleum industry Between the year 1970 and 1990, the global petroleum industry underwent some fundamental changes that transformed it.
These changes included the following; the growing power of the oil-producing countries Their growing power and influence were not only seen in the sharp increase in crude oil prices during the 1974’ s first oil shock but more fundamentally in the nationalization of the oil reserves owned by the major oil companies. This can be evidenced by the fact that by the 1990s the world’ s top twenty oil and gas producers list was dominated by state-owned and controlled companies.
These included companies such as Saudi Aramco, Petroleos de Venezuela, Kuwait oil among others. Furthermore, the traditional oil majors such as Shell faced competition from newly established majors which included such companies as Elf Aquitaine, Total, and Nippon oil among others (Beck, 65). This led to the reduction of oil production by the traditional oil majors (known as the “ seven sisters” ) from 31 percent to 7 percent of the total world’ s oil production. Loss of control over the crude oil sources by the oil majors This had an overwhelming effect on the petroleum majors owing to the fact that their tactic of vertical incorporation was based upon the theory of risk management through acquiring the downstream facilities required for providing secure outlets for the crude oil.
This led to the prices becoming more volatile as market transactions for crude oil and refinery outputs became increasingly important. For instance, the prices fell from 42 dollars per barrel to 9 dollars between 1981 and 1986 before recovering briefly to 38 dollars in the wake of Iraq invasion of Kuwait and then resumed downwards.
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