HIEREARCHY LEVELS IN MANAGEMENT OF SHELL

AND PSO
INTRODUCTION
Shell is a global group of energy and petrochemicals companies. According to the
manager, With around 101,000 employees in more than 140 countries
and territories, Shell helps to meet the world's growing demand for
energy in economically, environmentally and socially responsible
ways
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ASSIGNMENT
SUBMITTED TO: DR. WAQAR ALI KHAN
SUBMITTED BY:
M. AHMED SHAHZAD
09-CH-43
2009-UET-IEFR-CHEM-FD-43
8
TH
SEMESTER
CHEMICAL ENGINEERING DEPARTMENT
NFCIEFR
The Shell brand is one of the most familiar commercial symbols in the world.
Royal Dutch Shell is the world's largest private sector oil company by revenue,
Europe's largest energy group and a maor player in the petrochemical industry.
!ne of "orth America's leading producers of oil, gas, and petrochemicals, Shell
!il #ompany has distinguished itself through its commitment to industry
innovation. $ts mar%eting e&pertise has enabled the company to compensate for
its relatively low volume of crude oil production, as compared to its strongest
competitors, by selling an e'uivalent amount of gasoline nationwide.
Although the company conducts business primarily in the (nited States, Shell
also e&plores for and produces crude oil and natural gas outside the country, both
independently and through oint ventures with other subsidiaries of its parent
organi)ation, Royal Dutch*Shell +roup. Shell ,etroleum $nc. is a holding
company that is -. percent owned by Royal Dutch ,etroleum #ompany and /.
percent owned by The Shell Transport and Trading #ompany.
Shell has five core businesses0 e&ploration and production, gas and power,
refining and mar%eting, chemicals, and trading and shipping. Shell's primary
business is the management of a vertically integrated oil company. The
development of technical and commercial e&pertise in all the stages of this
vertical integration from the initial search for oil 1e&ploration2 through its
harvesting 1production2, transportation, refining and finally trading and
mar%eting established the core competencies on which the company was
founded. Similar competencies were re'uired for natural gas, which has become
one of
the most important businesses in which Shell is involved, and which contributes
a significant proportion of the company's profits.
!ver the years Shell has occasionally sought to diversify away from its core oil,
gas and chemicals businesses. These diversifications have included nuclear power
1a short3lived and costly oint venture with +ulf !il in the (SA24 coal 1Shell #oal
was for a time a significant player in mining and mar%eting24 metals 1Shell
ac'uired the Dutch metals3mining company 5illiton in 678.2 and electricity
generation 1a oint venture with 5echl called $ntergen2. "one of these ventures
were seen as successful and all have now been divested.
$f we tal% about a single franchise, it provides0
!il change service
"onvenience store
#as
$etrol
2
Shell %istory in $a&istan
The documented history of Royal Dutch Shell plc in $ndo ,a%istan subcontinent
dates bac% to 67.9 when partnership was struc% between The Shell Transport :
Trading #ompany and the Royal Dutch ,etroleum #ompany to supply petroleum
to Asia.
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$n 67;<, to enhance their distribution capabilities, the mar%eting interest
of Royal Dutch Shell plc and the 5urmah !il #ompany =imited in $ndia were
merged and 5urmah Shell !il Storage : Distribution #ompany of $ndia was born.
After the independence of ,a%istan in 67/8, the name was changed to the 5urmah
Shell !il Distribution #ompany of ,a%istan. $n 678., when >6? of the
shareholding was transferred to ,a%istani investors, the name of changed to
,a%istan 5urmah Shell 1,5S2 =imited. The Shell and the 5urmah +roups
retained the remaining /7? in e'ual propositions. $n @ebruary of 6779, as
economic liberali)ation began to ta%e root and the 5urmah divested from ,5S,
Shell ,etroleum stepped into raise its sta%e to >6?. The years ;..63; have seen
the Shell ,etroleum #ompany successively increasing its share, with the +roup
now having a 8-? sta%e in Shell ,a%istan =td 1S,=23 an e&pression of confidence.
!'#()*+(,*!)(- S,'.",.'/ ()0 0/$(',1/),(-*+(,*!)
The organi)ational structure and departmentali)ation is as follows0
!rgani2ational structure3
An organi)ational structure is a mainly hierarchical concept of
subordination of entities that collaborate and contribute to serve one
common aim. Shell is basically a multinational corporation, so for
operating successfully worldwide, it needs to have a tall structure which is
further divided on the basis of geographical regions, functions, goods and
services. A tall structure is one in which there are many supervisors
handling different tas%s, it has more levels of authority. Shell has a wide
networ% of outlets and a very comple& structure. As it is a very large3scale
organi)ation, so it follows a matri& structure. This means that employees
are grouped on the basis of function and product simultaneously.
As told by the manager, if we broadly see the organi)ational hierarchy, it will be
formulated as follows0
4oard of directors
+onal heads
4
Front Line
Manager
"hairmen 5regional62onal7
1anaging directors
0epartmental heads
'egional 1anagers
,erritory 1anagers
8ranchise %eads


Service %eads 5$etroleum, oil change, convenience store
8ront line 1anagers
So, to sum up, the organi)ational structure is a tall one which has further
divisions such as )onal, regional or territory heads 1geographically spea%ing2,
then departmental heads 1when we tal% about functions2 and service heads are
the supervisors of specific services provided li%e head of convenience store, oil
changing department etc.
$f we tal% about a single shell outlet, it has0
8ranchise %ead
5


Service %eads 5$etroleum, oil change, convenience store etc7

0epartmentali2ation3
Similarly, if we tal% about a single Shell outlet, it has following departments as
told by the manager0
1 $etroleum3 @illing petroleum in vehicles.
9 #as3 @illing gas in the vehicles according to their need.
: !il "hange3 #hanging oil in vehicles.
4 "onvenience Store3 ,roviding snac%s and other things of basic necessity to
customers.
"ow, if we ta%e the whole organi)ation in view, then it has following
departments0
1 /;ploration and production3 To e&tract the petroleum and produce the
fuel needed.
9 #as and power3 The e&traction of gas and power and its provision to service
outlets.
: 'efining and mar&eting3 To refine the e&tracted material and ma%e it fit
for use and then its promotion etc.
4 "hemicals3 Different chemicals produced
< ,rading and shipping3 Trading it to different parts of world where Shell is
wor%ing.
These were the maor departments. !ther than that, there are separate
organi)ations settled for handling management activities such as human
resource, controlling and assurance etc.
"ompetitor (nalysis
Shell ,a%istan =td. supports free enterprise. They see% to compete fairly and
ethically and within the framewor% of applicable competition laws4 they will not
prevent others from competing freely with them. Aaor competitors of Shell are
,S! with petrol pumps and #alte& with petrol pumps. 5ut shell ,a%istan limited
operates in the petroleum refinery sector. Shell ,a%istan limited also competes
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with three other petroleum refiners in Asia. Shell ,a%istan =imited !perates in
the ,etroleum refining sector. This Analysis compares shell ,a%istan =imited
with three other petroleum refiners in Asia.
Pakistan State Oil
The past of ,S! dates bac% to mid38.s when the +overnment of ,a%istan
amalgamated three B!il Aar%eting #ompaniesC0 Esso Eastern, ,a%istan "ational
!il 1,"!2 and Dawood ,etroleum as part of its B"ationali)ation ,lanC.
The company is the only public sector entity in ,a%istan that has been competing
effectively with three multinationals 1Shell, #alte& and Total2. ,S! is currently
enoying over 89? share of 5lac% !il mar%et and >7? share of Dhite !il mar%et.
$t is engaged in import, storage, distribution and mar%eting of various petroleum
products including mogas, high speed diesel 1ESD2, fuel oil, et fuel, %erosene,
li'uefied petroleum gas 1=,+2, compressed natural gas 1#"+2 and
petrochemicals. ,S! also enoys around 9>? mar%et participation in lubricants
and is blending*mar%eting #astrol brands, in addition to a wide array of its own.
$t is considered as one of the most successful mergers in the history of ,a%istan.
The company has retail coverage of over 9,<.. outlets, representing <.?
participation in total industry networ%. The company has been the winner of
=arachi Stoc& /;change ,op "ompanies (ward for many years and is a
member of Dorld Economic @orum.
,S! serves a wide range of customers throughout ,a%istan including retail,
industrial, aviation, and marine and government*defense sectors. ,S! has been
meeting the countryFs fuel needs by merging sound business sense with national
obligation.
The +overnment of ,a%istan 1+!,2 holds appro&imately >/? sta%e in ,a%istan
State !il #ompany =imited 1B,S!C2, including both direct holdings of the @ederal
+overnment and indirect holdings through +!, owned institutions. The +!, is
in the advanced stages of divesting >6? of the in ,S! to a strategic investor.
%*/'('"%> -/?/-S (, $S!
"%(*) !8 "!11()0
$t is an unbro%en line of authority that e&tends from the upper levels of the
organi)ation to the lowest levels and defines who reports to whom.
As ,S! follows traditional obective setting decision are made totally by the top
management. The authority is given to the managers to give orders and
employees are bound to follow them. $t is the responsibility of the employees to
perform those duties assigned to them.
.)*,> !8 "!11()0
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!n ,S! the unity of command hoes in the following se'uence0
#hairman
Aanaging Director
8 +eneral Aanagers
Divisional managers
6 sale E&ecutive
<36; Sales officers
Details are
62 Aanaging Director is answerable to the #hairman
;2 AD has 8 general managers wor%ing under him
92 Every +eneral Aanagers has < Divisional Aanagers wor%ing under him
/2 Every Divisional Aanager has a Sales e&ecutive
>2 And under him there are <36; sales officers.
"/),'(-*+(,*!)
,S! is a highly centrali)ed company i.e. decision3ma%ing is concentrated in the
upper levels of the organi)ation. The Top management ma%es the companyFs %ey
decisions with little or no input from the lower level employees. ,S! is more
centrali)ed because the environment is stable company is large and lower level
managers are not as capable or e&perienced at ma%ing decisions as upper level
managers.
1/"%()*S,*" !'#()*+(,*!)
,S! is a mechanistic organi)ation with a highly controlled structure. $n the
mechanistic
structure wor% speciali)ation creates obs that are simple routine and
standardi)ed.
E&tensive departmentali)ation increases impersonality and the need for multiple
layers of management to coordinate these speciali)ed departments. There is also
a strict adherence to the unity of command principle. As the distance between the
top and the bottom of the organi)ation is wide, top managers tend to impose
rules and regulations to control the employeesF behavior.
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