At the present, crude oil is perhaps the most researched industry of primary products. Political determinants and unpredictable price fluctuations both contribute to the volatile nature of this industry. The majority of the top ten exporting countries are members of the Organization of Petroleum Exporting Countries which have bonded together to collectively regulate oil distribution among themselves.
Global Value Chain
The oil industry has three levels: upstream, midstream, and downstream which encompass the main segments in the supply chain. The overall production of oil is driven by global demand. The “supermajors” of oil industry are Saudi Aramco, ExxonMobil, Royal Dutch Shell, BP, Chevron, Total S.A., and ConocoPhillips.
Social and Environmental Issues
Just as crude oil prices have increased in the past decade, so have environmental, social, and practical concerns related to the industry. The oil producing companies are focusing from time to time on environmental concerns about the crude oil industry, the new global standards and policies that have emerged in regards to these issues, the extent to which these standards are effective, and the degree to which these new standards hold the ability to drive empirical change.
Porter’s Five Forces and Shell
Bargaining Power of Suppliers:
Shell considers its suppliers as assets, the threat of bargaining power of suppliers for Shell is low due to partnership, supply chain management, training, and dependency. Primary strengths are, extremely high quality, asset base, talented technical personnel, strong management, and a strong balance sheet, moreover, its global spread of assets, financial strength, its people, and the depth and breadth of their operational skills, highly contributed to reduce the threat of suppliers’ bargaining power.
Bargaining Power of Customers:
The Environmental issues concerning the depletion of fossil fuel resources and climate change have sparked...