ROYAL DUTCH SHELL GROUP

Royal Dutch Shell Group

Royal Dutch Shell Group

Q- Identify and assess the main features of Royal Dutch Shell Group?

Ans. The “learning organization” is not an end in itself, but a route to improved performance, productivity and profit. Successful learning associations can learn progressively and institutionally, and are able to bypass sudden and massive restructuring. Despite the confident rhetoric, it is extremely difficult in practice to measure how effective learning associations actually are at achieving these claimed advantages. One foremost company identified as a learning association is the international oil firm Royal Dutch Shell (RDS). Dutch scribe Arie de Geus was employed by the company for 38 years and argues that the prosperity of RDS over time could be largely attributed to its “institutional learning” abilities. This sense of commitment and community is particularly significant in times of intense environmental turbulence. For RDS, the oil crisis of the early 1970s represented the most turbulent period in recent annals, yet due to its international mindset and flexibility the company was able to make decisions infinitely quicker than its rivals.

Institutional learning and employee commitment at RDS was facilitated by a “jobs for life” policy that the company held. Learning was promoted by the use of scenario planning. Managers were encouraged to gaze at a poorest case scenario: could there be life after oil- This fundamental questioning of the core business led numerous managers to not only become more innovative in their approach to management problems, but furthermore become better prepared for the unexpected.

The oil crisis clearly demonstrated how RDS' approach was beneficial. By looking at what might happen to the provide chain in a time of difficulty, senior management was able to design how greater control could be handed to local business flats in order to source alternative supplies of raw materials. Almost when the oil embargo was announced in October 1973, RDS trebled its deliveries from Nigeria and by doing so reacted quicker than all of its competitors to the escalating crisis.

Scenario designing was seen as one way of rehearsing possible pathways to the future, and this type of learning was complemented by role-playing and simulations. The replication of provide disturbances proved invaluable throughout <-xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />the Gulf War when RDS lost its supplies from Iraq and Kuwait.

RDS furthermore introduced the “management challenge” where senior executives were encouraged to visit foreign plants and question the owner management team about policies and procedures in order that fresh attitudes on possible problems could be discovered and collective knowledge used to gain competitive advantage over rivals.

By the turn of the 1990s, RDS' approach was giving dividends and it eventually overtook the Exxon Corporation as the world's biggest oil firm. The numbers made staggering reading: revenues of $107bn, sales of $125bn, earnings of $6.4bn, refineries in 34 countries, operations in over 100 countries and a “treasure chest” of more than $10.5bn in cash and securities. (Trompenaars, F 1993, Pp. 45-49)

By 1998, RDS was collectively referred to as a premier learning ...