1. How World you characterize, in cultural terms, the nature of Shell
when it was a “cohabitation” of Royal Dutch Petroleum and shell Transport and trading? Culture refers to cumulative deposit of knowledge, experience, beliefs, attitudes, meanings, religions, notion of time, roles and behavior. Culture is the systems of knowledge shared by a relatively large group of people. In the area of mergers the company becomes integrated into management’s process of globalization and internationalization. According to the case of Royal Dutch Petroleum company and Shell transport and trading company merged and formed a company called “Royal Dutch Shell plc” Before merging, these two companies had different cultural backgrounds. After the merge of the two companies, new features were found due to the changes of Royal Dutch Shell company, 1) Unification Unification of parent parent compani companies es under under Royal Dutch Dutch Shell Shell company company had had provided them with a clear, simpler, more efficient and accountable form of governance. 2) Chief executiv executives es reports reports to a single single board board comprisin comprising g 10 non executive executive directors and five executive and a key advantage of single, smaller smaller broad is that it provides a very clear and direct line of accountability to share holders. 3) Company Company has made made significa significant nt progress progress in changi changing ng our culture culture and and organization to ensure that they can deliver their strategy. 4) By sharing sharing service, service, the the companies companies have been been able to share and and adopt best best practice more quickly and so improve operational performance. 5) The organizat organization ion is now now more dynamic dynamic,, responsive responsive and and effective effective due to to the integration of the oil products and chemicals business into one down stream business. 6) There are particu particular lar benefits benefits at sites sites which contains contains both both refineries refineries and chemical manufacturing products
2) What changes in the culture of Shell are the “marriage” of the two companies expected to bring? The two companies expected to bring in the culture in the Shell are massive. According to the case study it is mentioned as “ We changed a lot of the culture of this company” insist Jeroen Van der veer, appointed as Shell’s first ever chief executive. Through further analysis, it is proved that there were certain changes in the culture of the Shell plc. They are,
1) The executives are now a more transparent, supportive, action oriented executives team that makes thing happen. They come to conclusion faster and deals master. 2) They were very much a “bottom up” company but now there is certainly more direction from the top. And also the direction of the group is headed will include takeovers. 3) The union will put the relationship on a new footing and fundamentally after the way the company is governed .i.e. in corporate governance structure –long a source of befuddlement to outsiders. 4) They will approve the formal marriage of the two, which together make up the world’s biggest publicly traded oil company after Exxon-Mobil and BP
5) Under the new plan, the merged company will be incorporated in Britain and listed on the London Stock Exchange.
3) What were the reasons for the strategic decision to merge the two companies? 1. 2. 3. 4.
Poor management Anglo saxon’s are more bureaucratic. They were irregular from the regular ones. (exotic) Shell had a conservative style of management.
4) How did the reserve crisis precipitate the changes? According to this Shell’s case it says that; Shell was paralyzed because the necessary tools were absent when the reserves crisis hit. And it took some measures to improve the way in which it booked reserves and addressed other compliance matter. Jeroen van der veer, appointed as Shell’s first ever chief executive following the reserve scandal and due to this investors were happy about it because of the speed it was moving. And not only this the shareholders wanted an end to the company’s dual board system which they maintained hamstrung the company with a cumber stone decision making process and obstructed accountability. According to the senior adviser of the company, he says that that the company thought the structure was doing well and when the reserves disaster hit to some extent the company were in denial and the group did not know what to do. And then afterwards they thought of merging. The joint venture between two companies twisted a decentralized decision making and overlapping of resources. As other smaller oil companies merged, expended and captured industry share, Shell suffered from this defect and was unable to respond quickly to the market.
What do you consider to have been the key managerial and cultural factors involved in the merger process? •
Relationship among people Eg: The company’s chief executives now reports to a single board
comprising 10 non executive directors and five executive directors and which provides a very clear and direct line of accountability to shareholders.
•
Relationship with the environment Eg : The company’s idea was to try to preserve the Anglo-Dutch
heritage in as many ways as possible
To offset the perception that it is becoming too British. The company will be headquartered in The Hague and will be a tax resident of the Netherlands.
6) What evidence can you find in the text to suggest the possible emergence of a ‘third culture” within the new company? According to the case, Shell had one culture and Royal Dutch had another culture, and when both of them merged it became the third culture. Referring to the case given it shows possible emergence of a third culture within the two companies. It is highly expressed in the following statement of the case, The case study states that is “Mr. Van der says the company must be ready for the next wave of consolidation in the industry. And again he says so you better be prepared, you must have the tools in your toolkit” this evidence shows that there was an emergence for a third culture.
