Select and analyze a specific transnational corporation, including its global operations and political activity. What strategies does it pursue? For example, does it outsource? Is it vertically integrated, or does it rely on a network of suppliers?

In 2012 Royal Dutch Shell was crowned number one on Fortune Magazine's Global 500 list, the magazine's yearly ranking of the world's 500 largest corporations (O'leary, 2012). In 2013 alone the company brought in revenues of $451.2 billion with a net income of $16.5 billion. Royal Dutch Shell Group, an oil and gas company, was created when Royal Dutch Petroleum and British based Shell Transport & Trading merged in 1907; the company is headquartered in the Hague, Netherlands but is incorporated in the London and Wales. (About Shell). It was in the early 20th century that the company began its dominate climb to the top of the world market in large part to their role during the first world war. Shell was the main supplier of fuel to the Allies, the sole supplier of aviation fuel, provided 80% of the Army’s TNT and by the 1920s it established itself as the world’s leading oil company, producing 11% of the globe’s crude oil supply (About Shell). Today the company operates in more than 70 countries with an average of 92,000 employees, 44,000 shell service stations around the world, over 30 refineries and chemical plants that produce 2% of the world’s oil and 3% of the world’s gas at 3.2 million barrels produced daily (About Shell).

Vertical Integration
According to their website Royal Dutch Shell’s main mission is to “engage efficiently, responsibly and profitably in oil, oil products, gas, chemicals and other selected businesses and to participate in the search for and development of other sources of energy to meet evolving customer needs and the world’s growing demand for energy.” It is with this mission in mind and a successful business structure in place that Royal Dutch Shell has been able to be successful in the global economy. Shell’s business structure allows the company to be active all the way along the supply chain and they are only one of four vertically integrated private sector oil, natural gas, and gasoline companies in the world. Their business operations are managed into three very distinct sectors: Upstream, Downstream and Projects & Technology. Upstream operations includes the exploration and production aspect of the business, more specifically, it entails managing of liquefaction process of natural gas and the transportation needed to deliver both oil and natural gas to market. Downstream operations manage the refining or manufacturing of crude oil and marketing the oil products and chemicals for home, transport and industrial use (About Shell). Finally, Projects & Technology concentrates on the delivery of major projects, driving research and innovation to develop new technologies as well as taking the company lead in areas of safety & environment and contracting & procurement (About Shell). Having a vertically integrated business model has proved very valuable; this model allows Shell to control of the value chain and tightly control costs while dramatically increasing levels of production and ultimately their profits and global market share.

Diversification & Innovation
Since the company first started it understood that diversification and innovation would be a key to their future success in the global market and as such Shell has been dedicated to diversifying its businesses and products. During the boom in oil fueled forms of transportation in the early 20th century Shell was one of the first oil and gas companies to explore and expand operations across the globe and develop more efficient fuel sources. Over the decades Shell has continued that traditions by exploring ventures in nuclear power, coal, metals and electricity generations. As discussion of alternative energies exploded onto public forums in the early 2000’s Shell was at the forefront of the renewable energy wave and invested in solar power, wind power, hydrogen, and forestry. Although the previous ventures have been unproductive to date Shell continues to seek and develop new energy technologies to bring to the global market. From 2011 to 2014 the company planned on spending $100 billion on developing cleaner energy like natural gas as a compliment to wind and solar power all in an effort to reduce CO2 emissions (Shaping the Energy Future Through Innovation). The company has also heavily invested in the potential of unlocking energy through deep water projects like the Mars B (Olympus) Development project; through human ingenuity and advanced technical expertise the project is estimated to have a future production of 1 billion barrels of oil while limiting impact on the marine environment.

Political Activities Because of the nature and of their business and the regions where they work Shell has been and will always be enthralled in all kinds of controversies ranging from threats to the environment, public health and safety, their business practices and most particularly political corruption. In the 1970s it was found that Shell Italiana was paying off politicians to the tune of £2.5 million in the form of political contributions and was recording the payments as advertising and publicity expenses on company books. Many more of the company’s improper political activities have come to light thanks to Wikileaks. In 2009 cable between a Shell executive and the U.S Ambassador to Nigeria it was found that Shell had successfully infiltrated several important government ministries and they had access to everything that was going on in those ministries. In 2010 a UK newspaper discovered that former Prime Minister Tony Blair lobbied former president of Libya Muammar Gaddafi on behalf of Shell and helped secure a joint business venture with the Libyan National Oil Corporation (Royal Dutch Shell and its Sustainability Troubles, 2011). In the light of the Wikileaks controversy Shell has taken steps to remake their image in the public. Reportedly the company has tightened internal controls among its different subsidiaries, professed commitment to corporate social responsibility, as well as launching extensive global advertising campaigns and other initiatives. Most recently the company has engaged in positive political action involving the environment; Shell is among 70 leading companies that have championed efforts to take on climate change and are pushing governments to take action as well. The initiative demands that governments enact policies that will stop the cumulative emission of carbon by setting a timeline for achieving net zero emissions before the end of the century, designing a strategy to tackle the global economy's reliance on fossil fuels (BT, Shell and Corporates Call for Trillion Tonne Carbon Cap, 2014).

Conclusion It seems almost an impossible task to balance the financial goals of a business with the ever mounting ethical and social responsibility the public demands of global corporations. Shell, like all transnational corporations have to carefully and skillfully walk the tight rope making sure that they meet the financial goals which they owe to their shareholders but take into account how their actions will impact the people and environments in which they work. Despite their past missteps, however colossal they were, it is definitely encouraging to see that a corporation as large and as impactful on the world as Shell is taking positive steps and it will be interesting to see where the company is heading in the future.

Works Cited

About Shell. (n.d.). Retrieved May 5, 2014, from Shell Global: http://www.shell.com/global/aboutshell
BT, Shell and Corporates Call for Trillion Tonne Carbon Cap. (2014, April 8). Retrieved May 6, 2014, from The Guardian: http://www.theguardian.com/environment/2014/apr/08/bt-shell-corporates-trillion-tonnes-carbon
O'leary, J. (2012, July 9). Royal Dutch Shell tops Fortune's Global 500 rankings. Retrieved May 5, 2014, from Reuters: http://www.reuters.com/article/2012/07/09/us-fortune-rankings-idUSBRE8680UY20120709
(2011). Royal Dutch Shell and its Sustainability Troubles. Amsterdam: Milieudefensie (Friends of the Earth Netherlands).
Shaping the Energy Future Through Innovation. (n.d.). Retrieved May 6, 2014, from Shell Global: http://www.shell.com/global/future-energy/shaping-future.html