Case: Shell Oil in Nigeria
CLASS: BUS6351 - 2010SU-25535-BUSINESS AND SOCIETY
Submitted by: Group 06
Nawazuddin Mohammed Khaja
The purpose of this paper is to critically analyze the case “Shell Oil in Nigeria” presented in our text book “Business and Society”. Here we discuss the company’s mission statement, their crisis in Nigeria, and the resulting outcome of their actions. Further we make some recommendations for future actions that may help Shell’s alleviate their crisis in Nigeria.
Table of Contents
3Analysis of Mission Statement3
4Internal Environment Analysis4
5External Environment Analysis4
6Global Code of Conduct for MNCs5
7Nigerian Culture and SPDC’s Crisis6
8Public Relations Strategy6
Shell Petroleum Development Company of Nigeria (SPDC) was a wholly owned subsidiary of Royal Dutch/Shell who operated in Nigeria. They were the first major oil to initiate oil production in Nigeria. This led to a major joint venture with the Nigerian government and two other private firms which gave SPDC a major market share of Nigeria’s oil production and exploration industry. However, the activities associated with the oil exploration and production of SPDC proved to clash with the Nigerian culture and led to an internal and external crisis. In this research composition, we will attempt to analyze the mission statement, the internal and external environment, the codes of conduct, the public relations strategy, and the actions of SPDC Furthermore, we look to offer recommendations for the future actions that may help SPDC revamp their international and domestic reputation regarding their activity in Nigeria.
Analysis of Mission Statement
SPDC’s mission and objective as stated in the text was “to find, produce, and deliver hydrocarbons safely, responsibly, and economically for the benefit of our stakeholders.” The mission statement states that their stakeholders will be the beneficiaries of their activities but their actions in Nigeria seem contradictory. The stakeholder who seemed to enjoy SPDC’s attention was the stockholders. SPDC produced nearly a million gallons of oil per day and this gave SPDC and its stockholders billions in revenue. However, the mission statement also states that they will deliver hydrocarbons safely and responsibly. This text stated that SPDC’S oil ventures turned Ogoni into a virtual wasteland. Also, they were largely responsible for a major oil spill in Ogoni’s Ebubu area which led to harmful environmental and ecological effects. These are examples of SPDC’s contradictory actions against there mission statement. The mission statement was intended to benefit all shareholders but, as with several oil producing companies, there focused remained narrow to their stockholders
Internal Environment Analysis
Economically and strategically, SPDC exhibits a strong internal environment. They have adequate financial resources and produce nearly half of Nigeria’s output of oil. They are strategically setting up their infrastructures to ensure and increase profits. As indicative of the text, they earned between five and thirty billion dollars revenue in their Ogoniland ventures. They are also ahead in the experience curve relative to other oil production and exploration companies. SPDC also seems insulated from legitimate competitive pressures. The joint venture with the Nigerian government gives them a strong stake in the oil industry. SPDC is structured on a highly effective decentralized management style which gives them strategic flexibility.
External Environment Analysis
The external environment analysis shows that SPDC is exposed to several potential threats. The unstable political...