The following analysis evaluates the challenges faced by Royal Dutch Shell Oil Company
involving their monumental proposed investment into their Nigerian operations. When
global companies experience extreme criticism such as Shell, they are usually tasked with
identifying optimum solutions to reverse the negativity. In addition to assessing the
challenges, this analysis provides some potential strategies that can be implemented to
resolve the issues within this case.
Problem Statement
Royal Dutch Shell Oil Company proposed to execute the largest industrial investment ever
made in Africa. Their proposal was a response to three separate issues. However, there
were problems with the proposal. A major problem was that two critical entities that Shell
proposed to share in the investment, made it clear that it would take some time before they
could even consider Shells proposal. Other major problems included political and social
instability within regions where Shell operated. Shell acquired a very negative public
image, and it was primarily due to the following: Shell had also been accused of waging an
ecological war against natives and the natural habitat. Furthermore, the company was
accused of being responsible for the deaths of natives from the land in which Shell
procured oil.
Situation Analysis
Shell Oil is one of the largest oil traders in the world. With extensive international
operations their largest African operation existed in the country of Nigeria. In this case,
Shells operations in Nigeria created a very complex situation, thus creating numerous
factors for the various components included in the environmental scanning analysis.
The economic factor consists of Shell proposing an $8.5 billion integrated oil and natural
gas investment, making it the largest industrial investment ever made in Africa. Shell
estimated that their proposal would bring an additional $20 billion to the government of
Nigeria over a 25-year period. The proposal also called for 70 percent of the cost to come
from private companies (mainly Shell), and the other 30 percent from the Nigerian
government. A government owned company named the Nigerian National Petroleum
Corporation (NNPC), which is a joint venture partner in all Nigerian petroleum projects
contributes to Nigeria having more foreign direct investment than any other country in
Africa. Another important economic issue is that the European Union actually withheld
$295 million in aid to Nigeria while protesters attempted to boycott the purchase of
Nigerian oil, and while considerations were being made to implement an embargo on
business with Nigeria.
The political, legal, and regulatory issues are closely related in this case, and therefore are
