...Submitted by: Waqas Ahmed Student ID: M003416757 Module: MGT3201 – Global Business Strategy Module Leader: Dr Qiuping Li Global Business Strategy: Case Study – Royal Dutch Shell in Nigeria: Operating in a Fragile State by Dr. Isaiah A. Litvak 21 March 2011 1 Royal Dutch Shell ◦ 1907 - Merger of Shell Transport & Trading Company Ltd. and Royal Dutch Petroleum Company (Shell) ◦ 1936 - Shell operations started in Nigeria – Shell D’Arcy (Shell Nigeria) ◦ “Royal Dutch Group of Companies proved more than 50% of Nigeria‟s oil and gas reserves” – (Parboteeah, 2011) Nigeria ◦ Formed by Britain in 1914 - “…the colony and Protectorate of Nigeria, governed by „indirect rule‟ through local leaders” (BBC News, 2010) ◦ High poverty and deteriorated political and security stance since existence ◦ Worldwide economic importance – Huge oil reserves ◦ 80 % revenues to Nigerian Government through oil reserves Global Business Strategy: Case Study – Royal Dutch Shell in Nigeria: Operating in a Fragile State by Dr. Isaiah A. Litvak 21 March 2011 2 Compliments ◦ Support to Nigerian economy Criticism ◦ Oil Pollution (Jolly, 2011) ◦ Development of communities ◦ “Shell invests $1bn on Nigerian oilfield” (BBC News, 1999) ◦ “Currently the Delta gets 13 percent with the balance going to the central government and other states” (Ruseckas, 2009) ◦ Employment for Nigerians (Parboteeah, 2011) ◦ Involvement in violence – Ken SaroWiwa (Pilkington,...
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...Background. Royal Dutch Shell Group is one of the world’s largest oil corporations and one of the largest companies in Europe. The company was created as a result of a merge between Netherlands’ Royal Dutch and UK’s Shell Corporation. The case looks at the issue of price differentials between several equity listings in different markets from the perspective of investors seeking an arbitrage opportunity. Royal Dutch trades more actively in the Netherlands and U.S. markets, whereas Shell trades more actively in the United States. The result is that the Royal Dutch/Shell relative price moves positively with the Netherlands and U.S. markets and negatively with the U.K. market. Structure. The Royal Dutch and Shell Group’s structure has all of its subsidiary companies controlled by the holding group of the company. These companies include Shell Petroleum NV located in Netherland, The Shell Petroleum Company Ltd based in UK, and Shell Petroleum Inc. based in the United States. These companies are controlled by the two parent companies, which are Royal Dutch Petroleum and Shell Transport & Trading. The ownership is divided in terms of 60/40 ratios. The relationship between these groups of holdings are meant to be 60/40, which means that all the inflows coming and all the outflows made to shareholders are divided between the two holdings. This represents that one share of Royal Dutch and one share of Shell is entitled to the same cash flows. The structure of the company...
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...the structure of Royal Dutch/Shell Group. Does it differ from the equity listings of other companies that you know? These equity listings are different from companies such as BP and Exxon. All subsidiary companies’ shares were held by the Group Holding Companies in the ratio of 60/40 (Royal Dutch/Shell). The corporate structure is outlined in the figure below. Individuals and Institutions Individuals and Institutions Royal Dutch Petroleum Company Netherlands 60% The “Shell” Transport and Co, PLC UK 40% The Shell Petroleum Company LTD. UK Shell Petroleum Inc. USA Shell Petroleum NV Netherlands Service Companies Operating Companies Shell Oil Company USA Individuals and Institutions Individuals and Institutions Royal Dutch Petroleum Company Netherlands 60% The “Shell” Transport and Co, PLC UK 40% The Shell Petroleum Company LTD. UK Shell Petroleum Inc. USA Shell Petroleum NV Netherlands Service Companies Operating Companies Shell Oil Company USA 2. What are ADRS? Why might companies find it attractive to issue ADRs? ADRS stands for American Depository Receipts, which is an underlying security that trades in the US financial markets. Foreign companies would find it attractive to issue ADRs because it would allow US investors to invest in their company, potentially increasing the value of the company. 3. Identify price differentials between different equity listings of the Royal Dutch/ Shell Group. How...
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...Earnings Management Study Oil & Gas Industry Abstract This study mainly focused on the earnings management in oil and gas industry and we used Jones model to detect discretionary accruals in the subject companies. Specifically, we examined three oil and gas sample companies that have been required to restate their financial reports due to the oil reserve overestimation. After running the regression and comparing statistics with other oil and gas companies, we found that the sample companies do revise oil reserves to manipulate the DDA expenses, thus achieving their goals of earnings management. Some recommended auditing guidance to detect such manipulation were given at the end. Introduction/Assumption Earnings management, in accounting, is the act of intentionally influencing the process of financial reporting to obtain some private gain. Earnings management involves the manipulation of company earnings towards a pre-determined target. This target can be motivated by a preference for more stable earnings, in which case management is said to be carrying out income smoothing. Management may also overstate the income for personal interests. Other possible motivations for earnings management include the need to maintain the levels of certain accounting ratios due to debt covenants, boost earnings to beat analyst targets, or intentionally understate the earnings to get rid of the...
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...Background……………………………………………………………………….. 2 Purpose of the case study… ………………………………………………...…2 Shell Company, the oil Industry giants………………………………………..3 The Iceberg ----Shell oil scandal ……………………………………………….. 4 Effect of the Scandal ……………………….……………………………………..6 The Origins of the Scandal …….………………………………………………....7 Weak internal controls, the dual company structure ......……………….…7 The shortage of oil reserves and World oil crisis ……………….....………10 The Closed Corporate Culture…………………………….………………..….11 Conclusion…………………………………………………………………….……14 Works Cited………………………………………………………………………15 Background: In recent years, Shell was one of the most famous companies of the world because of excellent long-term planning, outstanding technical capabilities and unique management style. Shell, which was the Anglo-Dutch heritage and a twin board structure, once was treaded as textbook example of a multinational company. When people talked about the Shell Company, they always remembered the old corporate slogan, 'You could be sure of Shell'. Yes, this seemed a mere statement of fact. But such the good company liked this also did some bad things from the mid-1990s. The company had dealt with the environmental and human right's problem, and its competitors took this opportunity to grow bigger. In 2004, the company was involved in an oil reserves reporting scandal. They were caught in low point. Most people think this is the result of the twin board structure. Purpose of the Case Study: Corporate failure is never...
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...Merrill Lynch The Dual Listings July 2002 EVENT DRIVEN & EQUITY ARBITRAGE SALES FOR INTERNAL USE ONLY Trades Examined: UK - Netherlands Reed Elsevier NV (REN NA) vs Reed Elsevier Plc (REL LN) Royal Dutch Petroleum (RDA NA) vs Shell Transport & Trading Co Plc (SHEL LN) Unilever NV (UNA NA) vs Unilever Plc (ULVR LN) UK - Australia BHP Billiton Ltd (BHP AU) vs BHP Billiton Plc (BLT LN) Brambles Industries Ltd (BIL AU) vs Brambles Industries Plc (BI/ LN) Rio Tinto Ltd (RIO AU) vs Rio Tinto Plc (RIO LN) Introduction: The purpose of this report is to provide a basic overview of the dual-listing environment, highlighting the nature of company structures involved, why the structures were adopted and how they work. Contents: Page 1. Frequently Asked Questions 2 2. Why do Dual Listed Companies Exist? 4 3. Dual Listing Structures 5 4. Currency Risk 6 5. Terminology 7 6. Factors Affecting Performance 8 Appendix 1: Stock Specific Data A.1 Reed Elsevier NV vs Reed Elsevier Plc 10 A.2 Royal Dutch NV vs Shell T&T Plc 12 A.3 Unilever NV vs Unilever Plc 14 A.4 BHP Billiton Ltd vs BHP Billiton Plc 16 A.5 Brambles Ind. Ltd vs Brambles Ind. Plc 18 A.6 Rio Tinto Ltd vs Rio Tinto Plc 20 Glossary of Terms 22 1. Frequently Asked Questions Q. What is a dual listed structure? Where a company is listed on two exchanges it is referred to as a...
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...provides insight into Shell’s goals, culture, and resources. An example of a specific problem that Shell faced, oil spills in Nigeria, continues off of the company analysis. Nigeria is a major extraction location for shell, but sabotage and oil leaks grew to be a major concern. Shell faced court cases in search of relief in Nigeria, but the majority of the oil leaks were a result of sabotage; therefore, shell was not responsible. However, people believed that it was shell’s responsibility to safeguard the oil lines and prevent sabotage in the first place. Shell funded the cleanup of previous oil spill sites along with a major advertising campaign to avoid a negative impact on its business. Some people still believe that Shell should be taking more responsibility for the oil spill crisis in Nigeria. Shell Company Analysis Oil is a resource that has been in great demand since the production of combustion engines, as well as other industrial machines. Royal Dutch Shell, commonly referred to as Shell, has been a dominant force in the oil industry for over 100 years. Shell management has enabled success and allowed the company to overcome any obstacles. An in-depth analysis of Royal Dutch Shell’s management techniques provides information on how it can conquer the challenges of change. A recent challenge that Shell faced in Nigeria indicates that Shell...
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...A Study of Shell Oil and its Stakeholders in Nigeria Part 1 (Week Six) A Review of Basic Issues Regarding the Background and Interests of Stakeholders of Shell Oil Company in Nigeria Chapter 1 Introduction The complexity of understanding the Shell Nigeria oil spill and applying critical analysis and leadership theories to the problem is a challenging debate. A reader would tend to assume that Shell is at fault and should take all the blame for this corporate and ecological mess. Therefore, the introduction needs to provide the reader with sufficient historical information and background of stakeholders such as Royal Dutch Shell Company, Nigeria (country), Niger Delta (province of Nigeria) and its directly affected tribal communities of the oil spill. The introduction is thorough as to avoid explaining in other key elements of this research paper. The Royal Dutch Shell was ranked No1 as the largest organisation in the world in 2012 by Global 500. Shell has boosted its first quarter earnings of 2012 by 11% compared to that of 2011. Shells long term projects that have just commenced creating; a gas to liquids plant in Qatar and further projects in Canadian oil sands, have in part contributed to these revenues. Royal Dutch Shell has 87000 employees globally (Global 500, 2012) The first Shell Company in Nigeria was started in 1936 by The Royal Dutch/Shell Group. The Royal Dutch/Shell Group then founded Shell D’Arcy. Two years later in November 1928...
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...How? It would be wise for Voser to get in front of the negativity voiced by some members of the organization before it festers into discontent and organizational tension. “Voser did not think it appropriate to measure his commitment to diversity and inclusion by looking only at the group of eight people at the very top of Shell” (Sucher 2020, p.1). It is important that Voser points out that the creation of the new Executive Committee (EC) does not represent the efforts of the organization to be both diverse and inclusive. He should reaffirm throughout the ranks that the mission will continue to be diversity and an atmosphere that encourages inclusion. It is pretty obvious from reading the case that the committee does not adequately reflect the culture that has been devised within the Royal Dutch Shell Company. I feel that it is important that this issue of negativity be dealt with and not overlooked. If left unattended it could lead to distrust, skepticism, and low morale amongst the employees. It should be handled properly and promptly before the situation becomes critical. As a new CEO, Voser needs to quickly clarify his position of diversity to gain trust and begin to build a good relationship with him employees. These efforts might start by having a session with the top levels of management to clarify his intent concerning the formulation of the committee. It is particularly important that he does not lose the support at this level of the organization. He should brief them...
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...Cook f her many important cont Liquefied N Natural Gas (L LNG) capacity h risen by ov 60% in the last five years, with more to come. has ver tch rmer CEO Jer roen van der V Veer.1 —Royal Dut Shell’s for Peter V Voser, CFO an soon-to-be CEO of the oil and gas c nd e company Roy Dutch She (hereafter Shell) yal ell realized th the “optic surrounding the comp hat cs” position of his just-announ s nced Executiv Committee (EC) ve e were not g good. It was May 27, 2009 and Voser w addressin 200 of She 9, was ng ell’s top mana agers in Berlin His n. all-white, male, Swiss, American, an British eig nd ght-person team was a sig gnificant depa arture from th of hat his predecessor, Jeroen van der V n Veer. Absent were the two female members: Linda Cook, a 25 year o a 5 veteran w who had lost the battle to become CE and whos track recor in growin the firm’s LNG o EO se rd ng business h had brought her wide rec cognition, an Roxanne D nd Decyk, forme erly Corporat Affairs dir te rector, who took on a new po osition as hea of governm ad ment relations in the Unite States. The were no D s ed ere Dutch members, strange for a firm headqu uartered in Th Hague and founded in 1907 through the alliance of the he d h oil compa any Royal Du utch Petroleum Company and the Brit tish Shell Tra ansport and T Trading Com mpany. Nor were there any Asian membe e A ers—despite i being a ma it ajor thrust of Shell’s strategic...
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...There are things that manufactures can do to go green. With any good company they will keep researching what they can do to help protect the environment for years to come. Some of the manufacturing companies will do what the EPA (Environment Protection Agency) wants them to do and there is other that goes above and beyond what it expected of them. In my opinion Shell Gas is one of the manufactures that is trying to do the most that they can to help protect the environment. Some of the things that Shell is doing to go green is using less energy, less water, prevent spills, and protect the environmentally sensitive areas. After the BP deepwater horizon explosion in 2011, Shell has been researching what they can do to make sure that this doesn’t happen again. After this spill happened Shell had worries about how their deep water drilling could be affected by this explosion. This explosion had caused Shell to lose between 40,000 and 80,000 gallons of oil. Along with this it made Shell look bad in the gas and oil industry by the loss of all the oil and the harm that was done to the ocean waters and the animals that depend on that water. Shell is now reinforcing a culture where safety is the core value. They are also making sure that all employees understand this value and making sure that every employee understands their role in making Shell a safer place to work. As a part of Shell’s research they have engaged in a six billion dollar program to improve the safety of their wells...
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...articles that report on results from research conducted on how companies use corporate advertising to increase awareness of corporate social responsibility thus increasing profitability. More specifically focusing on the advantages of corporate social responsibility and the positive benefits in profitability. This review of literature will incorporate various companies and industries from coffee, grocery, amusement parks, cars, oil production, alcohol, and casinos. It will analyze how corporate communication of corporate social responsibility enhances market share and drive increased profits. Companies use Corporate Advertising to increase awareness of Corporate Social Responsibility Therefore Increasing Profitability Numerous studies have been conducted on corporate advertising to increase awareness of corporate social responsibility and increased profitability for business. Companies use corporate advertising to strengthen their identities and create a favorable mental picture in consumer’s mindset. On average, companies spend millions of dollars each year in their marketing budgets toward corporate advertising. With corporate advertising, companies are not necessarily looking to sell a product or service, but rather the company itself and its reputation. They are seeking to gain a particular corporate image. This image aims to associate their product with lifestyle of values. Their intended outcome is to increase consumer awareness, convert the awareness to familiarity...
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...TMG 610 Global Trends in Technology Case #8: Royal Dutch / Shell: Ethical Issues, Human Rights and Resource Extraction Case Study Report Ozel Kirkland 29 March 2014 I. Introduction – In General Terms What is this case is about? Why is it relevant to TMG 610? Whether the extractive industries like it or not, the nature of their involvement with host nations is a precarious balance between competing interests (Dicken, 2010), and firms are either obligated to conduct themselves responsibly when dealing with developing nations like Nigeria, or mitigate the negative effects of their choices after the fact, like Royal Dutch / Shell was compelled to. Unfortunately, some extraction companies have a reputation for embracing their short-term self-interests, exploiting developing countries rich with oil like Nigeria, instead of acting ethically. Many of the extractive resources of the world are found in poorer, or developing countries. The question is how can these resources be exploited without foreign assistance. In the earlier part of the twentieth century, many of these extractive industries originated from colonial powers that had expanded into these countries and invested in these companies. This expansion was singularly intended to expand the grip for these foreign countries over mineral resources, used to support their home country and the growing manufacturing and infrastructure growth in those home nations. However the relationships between these host...
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...Delivery and growth Royal Dutch Shell plc Annual Report and Form 20-F for the year ended December 31, 2007 Royal Dutch Shell Our Business With 104,000 employees in more than 110 countries and territories, Shell plays a key role in helping to meet the world’s growing demand for energy in economically, environmentally and socially responsible ways. Our Exploration & Production business searches for and recovers oil and natural gas around the world. Many of these activities are carried out as joint venture partnerships, often with national oil companies. Our Gas & Power business liquefies natural gas and transports it to customers across the world. Its gas to liquids (GTL) process turns natural gas into cleaner-burning synthetic fuel and other products. It develops wind power to generate electricity and invests in solar power technology. It also licenses our coal gasification technology, a cleaner way of turning coal into chemical feedstocks and energy. Our Oil Sands business, the Athabasca Oil Sands Project, extracts bitumen from oil sands in Alberta, western Canada and converts it to synthetic crude oils. Our Oil Products business makes, moves and sells a range of petroleum-based products around the world for domestic, industrial and transport use. Its Future Fuels and CO2 business unit develops fuels such as biofuels and hydrogen and synthetic fuels made from natural gas (GTL Fuel) and potentially from biomass; and leads company-wide activities on CO2 management. With...
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... Chair: Dato’ Dr Mohd Yusof Ahmad Director, Institute of ASEAN Studies and Global Affairs (INSPAG), FSPPP, Universiti Teknologi MARA Malaysia Commentators: Prof Badriyah Haji Salleh Faculty of Human Sciences, Universiti Pendidikan Sultan Idris, Tanjung Malim, Perak, Malaysia Dato’ Prof Dr Qasim Ahmad Faculty of Administrative Science and Policy Studies (FSPPP), Universiti Teknologi MARA Malaysia Abstract of paper presented: Enemies, Friends, and Relations: Portuguese-Eurasians during Malacca’s Dutch Era and Beyond Mr Dennis DeWitt Management Consultant and Author, Selangor, Malaysia Introduction The Portuguese and the Dutch were age-old enemies and remnants of the historical political and religious competition between the two nations can still be found in the culture and heritage of the Portuguese-Eurasian community in Malacca. Margaret Sarkissian said it best when she observed that whenever the history of the Malacca Portuguese-Eurasian community touches on the Dutch era, people from this community would invoke the brief tale of the cruelty of Dutchmen who “inflicted a period of religious persecution upon the hardy Portuguese, reduced them to subsistence fisherfolk, forced them into the jungle for secret church services, but were unable to crush their spirit.” It is a rather popular point of view which portrays the negative aspects of Malacca Portuguese-Eurasians during the Dutch era that is shared by historians and writers from this community,...
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