SHELL IN NIGERIA Harvard Case Solution & Analysis

Shell In Nigeria Case Study Solution

Introduction:

In 1956, substantial oil reserves were discovered in Nigeria which appeals Shell, an oil extraction industry giant to commence its operations in the region. The Joint venture between the government of Nigeria and Shell is formed to start-up the operations, almost 95% of the employees of this joint venture consisted of the local Nigerian citizens. Since the commencement of its operations, there were many incidents of spillage which caused a severe adverse impact on the environment of the region. It can be argued that the response of Shell regarding the oil spills is not positive. The company was continuously trying to mitigate the reputational damage by not taking any action which minimizes the consequences of oil spills. In the recent case of the oil spill, Shell was just covering the contaminated land with sand rather than conducting a full process of clean-up.

Shell is obtaining tremendous benefits from the Nigerian oil reserves, and it is the responsibility of Shell to minimize the consequences of accidents arise during their operations. However, Shell is not taking any reasonable steps in mitigating the impact of accidents on the environment; this depicts that Shell as a company has a poor understanding of their moral and ethical duties and responsibility. (The Guardian, 2014)

Analysis:

The main stakeholders involved in the Shell oil spill case are the residents, employees, and management of shell and government. It can be said that all the stakeholders mentioned above have conflicting claims and there is also a gap between the moral and ethical stances of all the stakeholders.The. values of all the stakeholders are in extreme conflict, and there are many matters which are still disputed and unresolved. The main unresolved issue between the government of Nigeria and Ogoni citizens is that they want the operating license to berevoked by the government and the government is not agreeing to do so due to potential loss in exports and unemployment. Furthermore, the government also favors Shell due to potential bribery payments by Shell to the government officials. (Herfel, On the nature of value, 2017)

The values of all the stakeholders are dependent on one another, the value of Shell is to maximize the profits while the value of government is to maximize the level of oil exports and revenue from these exports. The main value of Ogoni individuals is the unlimited availability of necessities available to citizens of any developed country.It can be said that all the values are dependent on each other such as government value is only achieved if Shell achieves its values and the demand of residents will be fulfilled when the government achieves their objective.

SHELL IN NIGERIA Harvard Case Solution & Analysis

Management of Shell The values of management of Shell appears to be intrinsic, the management is just considering themselves as the legitimate stakeholders, in fact there are many other parties as well.
Government The government of Nigeria is also an important stakeholder, the value of the government also seems to be intrinsic, and the government is just considering to improve its performance by increasing the exports without addressing the issues of local residents of Ogoni.
Local residence The local residents are another class of stakeholders, the values of local residents appears to be instrumental, the local residents wants the access to basic necessity of every individual of their community. They also wants from the government to revoke the license of Shell as Shell is causing irrecoverable damage to their environment.

Options:

It can be said that Shell and the Nigerian government has two options regarding the oil spills incident in Nigeria. The first option is to carry the operations as they were going and the second option is to pursue full clean-up process. The option can be said as unethical and illegal, apart from the unethical stance, it also has very adverse financial and reputational consequences for Shell globally. The reputation of Shell will be extremely damaged due to these intrinsic values, and Shell has to face severe fines and penalties from the government of Nigeria due to the immense environmental damage. On the other hand, the second option might be perceived positively by the Nigerian citizens and customers of Shell as Shell can demonstrate itself as an environmentally responsible company and the impaired reputation of Shell can be repaired. However, it might not financially feasible for Shell as the clean-up process can consume substantial financial resources of the company...............

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