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Shell Oil AND ITS OWN Stakeholders In Nigeria

The environment in which most organizations are present is increasingly powerful and turbulent, . Under-developing countries are competing to start their market to draw in more international direct investment (FDI) and this globalization movements spreads organisation worldwide, the impact of countrywide culture on the organisation is becoming importance. Variations in nationwide culture have a primary relationship about how the MNC need to mould its tendencies/activities to meet up with the national need. Royal Dutch Shell Plc (Shell) is a British-Dutch group operating in energy and petrochemical sector; headquartered in Netherlands. Referring World-Bank 2011 information Nigeria is the most populated country in Africa possessing a diverse 150 million-population. In our scenario Shell is coming from a low-context ethnic (Brooks, 2009) track record operating in a high-cultural framework region. The oil-leak in the Bonga petrol field in December-11; 120km just offshore from Nigerian cost took place during a fishing boat hit the silicone pipe that carries the oil from the reservoir to the vessel. This event appeals to immediate attention, Shell, Nigerian authorities and coastal Nigerian people and mass media all being truly a part of it apart from cultural activist and environmentalist groupings. Though the contaminants of the leaked petrol didn't reach Nigerian coast as Shell says, contradictory claims created by local people proclaiming the oil leakage devastates the coastal ecosystem and fishermen loses their job and environmentalists demand unfavorable effect on the surroundings,

This paper is based after stakeholder theory (Freeman, 1984), argues that effective management requires the well-balanced account of and attention to the legitimate interests of all stakeholders, e. g. customers, employees, local neighborhoods, suppliers, distributors, and shareholder. It really is argued an organisation's success can best be assessed by returning the business benefits to all the stakeholders among whom it performs and keep maintaining an ideal balance in that (Amadi and Abdullah, 2011). The word, Corporate Social Responsibility (CSR); determines the expected patterns of MNCs towards their commitments to culture and responsibility of conducts towards the environment.


Niger-delta region is the most oil-rich region in Nigeria and properties a wide variety of ethnic teams and eco-diversity area, swamps, creeks, seafood ponds. Nigeria since its self-reliance in 1960 has experienced several military rules leading to instability, underdevelopment. Absence of medical, education and infrastructure associated with extreme poverty leads to a hostile environment for performing business. Ethnic and religious variety apart from the underdevelopment will be the real cause of conflicts and the hostile environment, (Frynas, 1998). SPDC [Shell in Nigeria] which is working in your community since 1937, despite of political instability and hostile environment SPDC is constantly on the do good business in Nigeria. SPDC undertook several interpersonal initiatives to build up the situation of localites. We analyze such different programs initiated by Shell in Nigeria since 1960 until the 2011 GMoUs in the socio cultural context of Niger-delta. We would refer the event in Ogoniland; where in fact the Ogoni ethnic-group led by Ken Saro-Wiwa organized demonstrations against both AUTHORITIES and Essential oil MNCs requiring the needs for development and stop air pollution of environment by the Essential oil companies in your community devastating the wealthy ecological system. This resulted Shell to pull-out from its procedure in Ogoniland, leaving behind its infrastructure.


Political instability and hostile environment, which is the situation in Nigeria, is normally considered a hindrance to carry out business which needs political balance. We try to discuss the ecological community development programs considered by Shell in the framework of political instability and review their efficiency in improving the problem of Niger-delta region. We understand that Shell is only a portion of this, Authorities and other MNCs operating there has their role in this alternative process. Government must embed local ethnic groups in this process and lead it, with financial and other expert help form MNCs.

We then explore areas of political instability that have a direct effect on Shell's operations and those of other engine oil companies. An study of three different perspectives on Shell' s activity, which sorts the core of this paper, includes the Shell CEO, a local Nigerian SPDC staff and a Shell investor.

We analyze each one of the initiatives taken by shell in this area and the participance of government and/or other MNCs for the reason that and reason behind inability and/or success of them. We examine the challenges faced by such initiatives and especially the GMOU approach, in the light of organisation culture (Brooks, 2009) of Shell, underdevelopment of the oil-rich Niger-delta and the hostility towards Shell and its own properties for the reason that region. We would also observe that weaknesses of the more aged models lead to the necessity to newer ones. We assess different leadership ideas from the context of three different stakeholders - CEO, employee and trader. We argue that there surely is a limit to which such initiatives would improve the overall situation of the spot without adequate support from Nigerian federal government in conditions of ensuring legislation and order maintenance and enactment of procedures- normalcy should be regained for the MNCs to use in your community. We'd also analyze the way the political instability effects Shell business in Nigeria.

Introduction and conversation of Theories and Models from the Literature

Response to articulation of the problem

The immediate pass on of the news headlines about the catastrophe brings injuries to Shell image aside from long lasting ecological impact, seafoods safe practices, endangering the ecosystem, contamination of underground water in Niger-delta. The sociable impact of this disaster multifold by the constant media attention and sometimes over-estimated destruction from the local people. Targeted attacks on Shell from multimedia and sociable activist groups get worse the situation. From a local Shell employee point of view; we can discuss the original stress from his/her context is multi-fold- first his/her environment becomes polluted and directly affected; next he/she being a Shell worker would become a targeted episode from hostile categories and in extreme situations like Ogoniland might lead him/her jobless. This brings about stress and reduced drive. Technological disasters, like Bonga Engine oil field comes with an easily identifiable primary responsible get together (Gill et al, 2012); here which was Shell and ths became an instantaneous attention of blame, anger, agitation and hostility leading to harm on its properties and staff. Media and federal government apart from others also form a part of this attack, as we observed in this case. Similar situation we've observed during the BP Essential oil spill this year 2010 in North America. Communication plays an integral role in a cross-cultural context (Brooks, 2009). Because of cultural diversities the same message might be recognized in a different way by two different person. Instead of finding this as a specific event/accident it will have observed in the view of totality- universalism vs particularism (Brooks, 2009). Shell had a need to pay attention in restricting the snowballing aftereffect of marketing attention on the impact of the challenge - although petrol not reach the Nigerian shore, Shell requires it restricted the spill 80 kilometres away from the shore, but residents demanded the oil contamination has damaged the coastal ecosystem and polluted their environment. True evaluation of actual impact and contamination of the rumor spreading was essential.


As Shell CEO

Since 1990 oil-sector in Nigeria made a dramatic change form joint-ventures towards production-sharing which seems more profitable for the company (Frynas, 1998) and then for the government as government does not need to invest in exploration of oil-fields. At the same time this arrangement may bring negative impact on communities as federal government doesn't have much bargaining-power, this might lead to mismanagement of oil-revenue in the favour of MNcs. The lack of a stable civilian federal also led to Shell to exploit the vulnerabilities and disregard the sociable responsibility, in a recent court hearing within the Hague Shell accused the law and order situation and sabotage prevented these to take proper maintenance of their infrastructure which resulted in oil-contamination in agricultural-land. We have to consider that such technological disasters would happen and attention to be given to handle the situation and mitigation ideas. Continuous meetings with communities and federal government authorities needed looking to reach a consensus on the mitigating actions, involvement from all stakeholders would be wanted to address the condition from a all natural point of view. Shell would committed to protect its brand-value and everything stakeholders interest and comply to all necessary adjustments and laws enforced.

As Shell Investor

An awareness of foreign cultural characteristics can help make a director during his/her assignments overseas or for managing a widespread global team, in the similar situation Shell is Nigeria. This social awareness potentially reduces cultural distress and improves social relations with stakeholders. Though SPDC employs huge volume of Nigerians but it carries a American organisational culture this not gratifying the stakeholder theory needs. That is evidenced by Shell's CA and CD initiatives which Shell imposed on the neighborhoods without any participation from them. Local professionals have to be aware of socio-cultural context and only then it would improve the romantic relationship with its all stakeholders and reduce hostility and targeted problems on Shell. Shared-leadership (Jackson and Parry, 2008) is the key theme of the GMOU model where ethnic groupings determine which project to take and Shell takes on its role by providing technology and financial supports (Amadi and Abdullah, 2011). Shell would indulge more GMOU which really is a relationship among Shell and a group of neighborhoods, offering microcredit, medical care, education, infrastructure development. The primary difference of this approach against the CA and Disc is the relationship with all stakeholders- cultural groups, Federal government, other MNCs operating the site and international organisation. The ethnic categories being part of the traveling body and initiator of the assignments have the accountability and ownership of the project in their area. This reduces hostility and spreads the purpose of Shell in lasting community development. These attempts offer Shell to keep up the balance as mentioned in the stakeholder theory between its stakeholders and itself. Discussing House's path-goal theory (Brooks, 2009) Shell's supportive and community's participative role alongside one another makes GMOU the best option model in this framework. The GMOU component creates Intrapreneurs by means of cluster development mother board (Amadi and Abdullah, 2011) which due to the engagement of the areas can bring the long lasting development in this region thus fulfilling both local people's needs and create a far more favorable environment for MNCs.

As Shell employee

Though the GMOU model has launched a radical differ from the previous models in conditions of partnering the areas and project accomplishments (Aaron, 2012), but the challenges remain the same- by means of widespread poverty, problem, lack of federal enactment of regulation, sabotage and targeted strike. Corporate public responsibility more-or-less remains as a term in Shell guidelines but areas received little part of the benefits in exchange o huge business comes from the Niger-delta. Shell's propensity of dealing with the oils-pills and related situations as case structured and tool transactional approach to handle them failed. Also the lack of maintenance of age-old oil-infrastructure and poor quality and environmental criteria worsen the situation. Shell could have used a transformational procedure (Brooks, 2009) aiming at overall development and eradication of poverty and problem in the region but a MNC by itself can do that, event the GMOUs is not sufficient, authorities has to play its role here. .

An Examination of the Various Methods to Leadership

Examination of various approaches

Freeman's Stakeholder theory, argues that culture gives business the legitimacy, power and success and if organisation doesn't value this in a liable manner business is going to lose (Amadi and Abdullah, 2011); Shell has made huge benefit from its business in Nigeria since 1937, even though it has considered several initiatives for social development, CA, Compact disc and the recent GMOU, but world deemed this inadequate due to many reasons, lack of partnership is one of these. Transformational leaders (Brooks, 2009), who stocks the perspective and instills trust, pleasure and respect one of the supporters would be beneficial to manage the problem and account the national culture of Nigeria. Nigeria being a highly masculine modern culture having high power difference and less individualism, plans could have been devised suiting the framework, keeping in mind the highly individualistic culture of Shell source (Netherlands) contrary to the collectivism (Brooks, 2009) of Nigerian ethnic groups. Transformation control is more holistic, dynamic and hence would be more effective in this complicated situation in Nigeria than the transactional model. A transactional head, who poses the characteristics of inspiring, setting up high anticipations and using of symbols, would be beneficial in the framework of Nigeria where symbolism is deep rooted in their sociable as well as religious life. Shell tried to take this a 'unique' circumstance and needed the transactional procedure which failed as time passes. The female command attributes (Brooks, 2009) which Charismatic leaders symbolize; personal attention, considering individuals, would have been beneficial in this framework. Shell needs at the moment leadership to protect the Shell brand-value and reputation; at the same time inspire shared purpose among the ethnic categories and created determination towards SCD and therefore increasing trust among its stakeholders. Fiedler's Contingency theory (Brooks, 2009). Where leadership tendencies interacts with the favorableness of a predicament to determine efficiency. We can dispute in the context of our problem in Nigeria that this situation is exclusive and are definitely more advantageous than others and, as a result, require different conducts.

What would I really do in this case

Motivational theory (Jackson and Parry, 2008) is necessitated when the existing leadership fails to fulfill the several needs; good examples being what should we be doing? the need for interpretation and the necessity for safeness (e. g. will we be Acceptable if we do that?). Situation of oil-spill in Nigeria helped bring these questions to SPDC management to answer and work in very brief timeframe. Stakeholders are individuals who construct market leaders through the functions of attribution, projection, transference and idealization. Based on these constructions market leaders are selected, and their influence is accepted. I would follow this process to choose the right authority style for this situation- I would see this as part of the holistic problem not just a particular situation. Remember the key reason of the failure of the CA ad Disc approach I would took the bottom-up methodology which created the duty and togetherness one of the communities into the SCD tasks. The CA jobs were more of an impromptu solution looking to manage the immediate brand-value, whereas CD is seen as more participative, well developed to address the most burning issues of the localities. Still it lacks the all natural approach all party engagement.

Alternative resolutions

Referring to occurrences in Ogoniland from where in 1993 Shell was pressured to withdraw operation; considering the aftermath of alleged Shell engagement in the governments tough way of curtailing down the agitation (Frynas, 1998) and taking into consideration the huge settlement that Shell was required to pay in future no such proposal must be completely averted. Using coercive power to persuade stakeholders [cultural groups in this case who have been protesting environmentally friendly impact of Shell business in Ogoniland] wouldn't work in the framework of Nigeria. Participating in some kind of unethical activities is fatal and might lead to severe outcomes to Shell brand-value internationally. Transformational approach with female management (Brooks, 2009) might be beneficial.

Shell CEO

Leadership and it's really style is important to international professionals when they are operating in another country (Brooks, 2009). Power-distance, bureaucracy and nationwide culture performs key role here. As a Shell CEO I'd exercise my authentic power to persuade the stakeholders that the situation is under control and we are committed to our sustainable community development initiatives since many years. Using the information powerbase I would participate all stakeholders towards more GMOU projects to ensure overall development of the areas which would reduce hostility and targeted harm on Shell infrastructure. Using the expert powerbase we would assist federal agencies to build environmental policies to control and regulate the MNCs procedure in this area is complaint. I would use drive to my stakeholders - a Nigerian shell worker may be determined by extrinsic rewards [pay hike, facilities], shareholder would be determined with a dividend announcement. Local organizations would be determined by arranging ongoing money towards GMOU tasks.


Nigerian Shell-employee

As a Nigerian Shell employee my first determination would be doubt avoidance (Brooks, 2009), keeping in mind the sabotage/hostile activities against Shell staff and property. My motivation would rewards - extrinsic rewards (Brooks, 2009) in the form of additional health facilities for my children, extra, job-security; or intrinsic ones - the honor of being part of Shell which partcipates in many cultural development projects in my region. I would like SPDC management to utilize connection capacity to a) engage more GMOU initiatives which would enhance the infrastructure of my localities thus reduces hostility, b) assist government to devise stringent policies/guidelines which the MNCs need to follow to carry out business in this area- thus safeguarding the environment and address air pollution issues, c) ensure rules and order in your community thus ensure hostility is restricted. I assume that GMOU in long-term would ensure sustainable development in my region, because these SCD jobs are now-a-days viewed as core Shell practices and motivated by the communities (Amadi and Abdullah, 2011) and the MNCs' existence can increase the widespread poverty, problem and underdevelopment.

Shell Investor

Uncertainty avoidance (Brooks, 2009) would be the main goal of an entrepreneur because doubt and getting rid of brand value of Shell could have a negative effect on my investments. Following stakeholder theory we perceive supervisor as a cultural communicator/facilitator, employees within a flexible work force who need communication and interaction and the spot where we operate an inseparable part of our business, because if we do not maintain the balance with this environment we can't maintain our success. Complying to triple important thing reporting (Jackson et al, 2011) aiming people, planet and profit. I would demand Shell to evaluate sustainability by financial environmental and communal aspects. I would use the genuine power to embed these in SPDC decision. Using interconnection and referent ability I'd encourage the GMOUs to achieve success in reaching their goal in the holistic cooperation with authorities, areas and other MNCs.



We have seen that Shell, from its dedication towards the ecological community development, got several initiatives since 1960 until 2011. Prior initiatives failed anticipated to many reasons, which presents the need of GMOU strategy which until proves to become successful. We identified pursuing deficiencies of the previous approaches which resulted in its failing -




Participation of local communities

Gender imbalance

Top-down development approach

We also have figured despite political instability and hostile environment Shell is wanting to continue business in Nigeria; cause of this could be

Inadequacy for AUTHORITIES to issues environmental and other policies to regulate Shell and other MNCs in his region brings an opportunity for MNCs to use and perhaps exploit the areas.

MNCs providing excuse of the so-called hostile environment when it comes to compensation comes from their poor procedure and maintenance.

High income expectation from the oil-rich Niger-delta helps Shell continue steadily to operate here

Analyze findings

In the prior section we have shown the root-causes of failure. Here we assess each to determine how their blend led the previous CSD initiatives of Shell, towards inability in Nigeria

Ownership - all the previous models CA, Compact disc, failed because of the fact that Shell decides which job for taking and where to make investments for development without any involvement/consulting with local people. If Shell managers thought of setting up a university it was arranged, if he/she decides to set up medical center it was establish without proper other layout which are needed to run the center. Shell was also willing for quick-wins rather than sustained constant development programs.

Transparency - prior models lacks accountability offering opportunity of abandoning the project among and/or possible opportunity of financial scam. Sometimes the necessity of your pilot project to do the feasibility analysis omitted by Shell citing reason of financials. GMOU imposes accountability, transparency. CA and Compact disk were not considered as a core-business of Shell in Nigeria and therefore it experienced obvious priority causes and financial issue (Amadi and Abdullah, 2011). CA was characterized by Shell giving something to the communities whenever it feels so.

Collaboration - Shell taken notice of earn quick-results to keep its goodwill and an operable situation, insufficient the presence of any mainstream government led umbrella-initiative (Aaron, 2012) these sporadic effort though having good interest and passion were bound to fail. The look and implementation of the CA initiative was completely done/controlled by Shell (Amadi and Abdullah, 2011) with no participation from neighborhoods.

Participation of local neighborhoods - in the early initiatives used by Essential oil MNCs lack participation of administration and local regulators, leading to circumstance of insufficient a driver of constant and sustainable progress (Aaron, 2012). Although MNCs were eager despite government drive no such initiative achieves its desired end result. CA, CD concentrate on traditional corporate culture restricts its possession, impact and sustainability of results (Amadi and Abdullah, 2011). In some cases it can be argued that CA assignments originates more agitation because one project [medical center or college] in a single particular region might create enmity in a few other region where this task was nto done.

Gender imbalance - most initiatives were male dominated and resulted almost no participation of feminine associates from the locality. GMOU model ensures proper gender balance in the travelling committee.

Top-down development strategy - CA and CD initiatives were identified by the ethnic groups as imposed (Amadi and Abdullah, 2011) on the community. Having less participation from local people determined the destiny of such initiatives at its start. Dis-organisation has happened as we observed in the CE's circumstance whose strategy towards company change though was well devised lack of communication and cooperation made him unsuccessful and his approach was seen by the stakeholders as CE's approach (Pye, 2005)


Shell originating from a cultural history which shows, Hall's low-context culture, where "Everything you say is exactly what you imply" (Brooks, 2009, p290). While in Nigeria affected traditionally by an extremely opposite culture; where connections do subject and age/experience has unquestionable obedience. Charismatic control (Brooks, 2009) is more prone to success in such a scenario rather than a transaction authority approach. High power distance is a quality in Nigeria on the other hand a leaner composition Shell poses. The deep-rooted values and fundamentals and taken-for-granted assumptions (Brooks, 2009) makes the difference when diverse cultures meet to conduct business. Through their professional activity, professionals play an important role in contemporary society (Brooks, 2009), cultural intelligence is the word which leaders need to mould their plan within an environment aside from his/her own. Cultural intelligence in such circumstance has an essential role to experiment with in MNCs working worldwide in diverse local cultures. Business will not happen in vacuum (Parry and Jackson, 2007) and company need showing interest to show that their commercial cultural responsible is not few nice words in their global quest nonetheless they also indicate it. Triple important thing reporting (Jackson et al, 2011) could be used to ensure organisation comply to its environment and focused on its all stakeholders, not only to shareholders.


Ethics of leadership is seen from three perspectives (Parry and Jackson, 2007) moral persona, ethical values inserted in the objective, morality of the ethical processes in which company and stakeholders collaborate in an effective business. It shows the value of the assimilation of the ethnic and ethical values into the business mission of the MNC where region it runs. Politics instability may be conducive for successful procedure, though discovering the Shell constant interest in conducting business in Nigeria, from its profit-success, contradicts that argument (Frynas, 1998). In recent times developing countries, India and China; appeals to increasingly more international direct investment, company must make careful decision. Managers appointed to these new locations should be culturally clever and pays careful attention and respect towards nationwide culture (Brooks, 2009) of the new business region. We are able to conclude that though MNC has its part to learn as it pertains to development; China is very stringent in this aspect, MNCs need to spend certain part of their earning for development initiatives; but overall government authorities need to ensure satisfactory infrastructure [e. g. travelling, electricity] exists and sufficient policies and law can be found to enforce stringent environmental measures. Holistic development of the spot should be influenced by government with proper proposal with local people whereas companies need to experience their role in profit-sharing.


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