Essay about Analysis Case Study:Shell Oil Company

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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
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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 grouped together. Many companies including Shell Oil have often been skeptical about doing business in Nigeria because of the political and social instability that exists in the country. This instability creates optimum opportunities for corruption to occur, contributing to Nigeria being one of the most corrupt countries in the world today. This instability also made doing business risky within Shell's existing Nigerian facilities. Shell had been severely criticized outside of Nigeria for its Nigerian political activities and
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