hat is also critical to note that management structure of the firm is largely de-centralized with Regional control exercised through regional hierarchy of management and structure is largely decentralized with strong delegation at the local level.
Shell has extremely decentralized organizational environment wherein most of its subsidiaries work independently under the Regional control. As such the corporate governance issues that are faced by local subsidiaries of the firm. At the international scene, Shell therefore faced mostly the local corporate governance regulations and modeled itself according to the local regulations rather than forming a centralized corporate governance mechanism. It is however, also important to note that Shell has been criticized for the higher compensation of its executives and it was because of this reason that shareholders in 2009 rejected the executive compensation plan.(Lublin & Chazan,2009).
Shell works in petroleum industry in which the overall cost of doing business is really high because of high cost of capital involved. Apart from this, the output in the industry is mostly dominated by the States wherein the direct control of oil resources is in the hands of the State. OPEC is the largest cartel in the world which controls the output of oil to be produced and as such industry is largely concentrated in nature.
Shell Plc is the largest organization in the world in this industry however; major competitors included British Petroleum, Exxon Mobil as well as Total. (Hoovers, 2010). It is however, also important to note that competition is largely concentrated and firms are mostly price takers with little influence over the output as well as prices.
Oil and Petroleum products are not manufactured rather they are minerals which are extracted from the soil. As such their presence depends upon the availability of reserves in any particular market therefore Shell has to operate at the international level in order to take advantage of