SHELL REFINING COMPANY MALAYSIA : 2015 MARKETING ANALYSES

Executive Summary 
1.0         Company Background & Objectives 
2.0         Situational Analysis 
2.1               Market Analysis
2.2                Target Market 
2.3               Market Demographics
2.3.1                     Consumer Segments 
2.3.2                     Business Market Segments 
2.3.3                     Behaviour Factors 
2.4              Market Needs 
2.5              Market Trend
2.6              Market Growth
3.0      Company Analysis (SWOT ANALYSIS)
4.0      Competitor analysis
4.1              Financial Performance 2014
4.2              Organization Size
4.3              Market Share
4.4              Comparative Product Quality
4.5              Growth
4.6              Available Capital & Resources
4.7              Image & Positioning
4.8              Marketing Strategic Partner
5.0      Marketing Elements
5.1              The Products
5.1.1                        Refinery Products
5.1.2                       Crude Oil
5.1.3                       On The Road
5.1.4                       Fuels
5.1.5                       Oils & Lubricants
5.1.6                       Solution For Business
5.2              Price
5.3              Distribution Channels
5.4              Promotion
6.0      Marketing Strategy
6.1              Mission
6.2              Marketing Objective
7.0      Implementation & Control

Conclusion
References



1.             COMPANY BACKGROUND AND OBJECTIVES

SRC is the supplier for Shell Malaysia products, was formed in 1960 and is a public listed company with 49% public participation.
At its plant in Port Dickson, its produces a comprehensive range of petroleum products, most of which are consumed within Malaysia. In 1999 the Company completed its RM 1.4 billion investment in Malaysia's first Long Residue Catalytic Cracking (LRCC), a medium-sized simple refinery complex refinery capable of processing 125 kbpd (thousand barrels per day). The LRCC has quadrupled the refinery's LPG production and doubled its motor gasoline. It has also enabled the refinery to manufacture propylene for the first time - a highly valued feedstock for the petrochemical industry.

2.             SITUATION ANALYSIS

2.1         MARKET ANALYSIS
As the background of this paper suggests that SRC main products are petroleum, petrochemical, and diesel with the new diesel processing unit called ‘Hijau’. Then, we will explore in depth the surrounding matters related to these products. To start let us define the business terms of ‘downstream’ as it is the business of SRC. (Strategic Report, 2014, 2014,p. 8) Shell definition of ‘downstream’ is refining and marketing activities for oil products and chemicals.  Refining includes manufacturing, supply and shipping of crude oil. Marketing sells a range of products including fuels, lubricants, bitumen and liquefied petroleum gas (LPG) for home, transport and industrial use, chemicals produces and markets petrochemicals for industrial customers, including the raw materials for plastics, coatings and detergents. Downstream also trades Shell’s hydrocarbons and other energy-related products, supplies the Downstream businesses and provides shipping services. Additionally, Downstream oversees Shell’s interests in alternative energy (including biofuels but excluding wind).

Bloomberg had been cited saying (Oil continues slump as global glut expands, 2015, para 3) “Oil has renewed its slump after losing almost 50 per cent last year as US crude stockpiles expand to the highest levels in more than three decades, even as drillers idled the number of active rigs to the fewest since 2011. OPEC maintained its quota at 30 million barrels a day in November, resisting calls to curb output amid surging supply from shale producers”.

This by far the reason with Shell Refining Company Malaysia (SRC) reported (Shell Refining Company FY2014 Results Impacted By Falling Oil Prices, 2015, para 1) that the company announces revenue of RM14.3 billion YTD Q4-2014, but with impairment loss of RM461.The revenue registered is 3% lower than the same period in 2013. It also posted after-tax loss of RM 1,188.7 million in 2014 compared to an after-tax loss of RM155.9 million in 2013. Losses were mainly due to fall in oil price.

“In 2013, comparatively, the company recorded a stockholding gain of RM95.5 million, which resulted in operational losses of RM251.5million. The refinery processed 37.9 million barrels of crude oil, and this is higher by 1% as compared to 2013”, as stated in Shell 2014 Report (Shell Refining Company FY2014 Results Impacted By Falling Oil Prices, 2015, para 2).

Amir Bakar the Managing Director of the Shell Refining Company (Federation of Malaya) Berhad said that,  (Shell Refining Company FY2014 Results Impacted By Falling Oil Prices, 2015, para 4-6), “ “The Company will continue to pursue operational excellence, proactive margin improvement and cost effectiveness whilst maintaining a strong Health, Safety and Environment performance”.
In lieu to the turbulence scenario and commitment given by the SRC and Shell Malaysia top management, thus any information about customer will be leveraged on how to serve and feed their needs.

2.2    TARGET MARKET
Below is the Target Market as stated in the global Shell report (Strategic Report, 2015, p.40) globally and by Shell Malaysia locally:
Ø  Retail, Lubricants, Business To Business, and Chemicals

2.3    MARKET DEMOGRAPHICS

Shell Refinery Company under Shell Malaysia has customer consist of Consumers end users and Business Markets as following:

2.3.1   CONSUMERS SEGMENT –
(“Shell at Glance”, n.d., para 4), there are 1,000,000 retail customers served daily with more than 950 geographically Retail Station in Malaysia, where else (Strategic Report, 2015, p.40) close to 43,000 Shell-branded retail stations in over 70 countries at the end of 2014. More than 100 years’ experiences in fuel development and in recent years have concentrated on developing fuels with special formulations designed to clean engines and improve performance. Shell V-Power brand in more sell in more than 60 countries.
Shell products is for fuel automobile consumption and suit to all type of person that can drive with ‘quality and safe driving’ in their mind
2.3.2   BUSINESS MARKETS SEGMENT-
Shell Malaysia provides its products for industrial and commercial customers in Malaysia and aviation industry. They are big size companies. In Malaysia Shell has appointed nationwide approved agent.
On the other hand globally Shell Global was reported stated (Strategic Report, 2015, p.40) “Our Business to Business (B2B) activities encompass the sale of fuels and speciality products and services to a broad range of commercial customers.
Shell Aviation fuels more than 7,000 aircraft every day at approximately 800 airports in around 40 countries and Shell Malaysia served 175 aircrafts daily… for industrial machinery in the manufacturing, mining, power generation, agricultural and construction sectors.

(“Shell at Glance”, n.d., para 4) 600 types of lubricants made for various sectors in Malaysia alone. Further explained by Shell Global “Across approximately 100 countries we make, market or sell technically-advanced lubricants not only for passenger cars, trucks and coaches but also for industrial machinery in the manufacturing, mining, power generation, agriculture and construction sectors   (“Strategic Report”, 2015, p.40).
In manufacturing (“Shell at Glance”, n.d., para 4) 125,000 barrels are produce in refinery production daily in Malaysia. It has also enabled the refinery to manufacture propylene. At Global scale (“Strategic Report”, 2015, p.40) “….plants produce a range of base chemicals, including ethylene, propylene and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide and ethylene glycol. We have the capacity to produce nearly 6 million tonnes of ethylene a year”.
2.3.3   Behaviour Factors
For consumers, since the price is determined by floating managed system and as under controlled goods items then it is meaningless to compare in terms of price. The only thing is which one can suits their preference based on their preference. Thus, Shell should take advantage of being the pioneer leader as established worldwide companies may attract customers easily.

           2.4  MARKET NEEDS

Consumer, be it the industries and consumers are aware of the green house effects. As such technological driven is at its utmost driver to affected petroleum and petrochemicals industry over the future. Thus the cheapest, renewable, and safest products are required.

(Strategic Report, 2014, p. 5) “In the long term, we expect demand for energy to continue to rise as populations and prosperity increase. Billions of people across the developing world need better access to energy to improve their lives.

(Strategic Report, 2014, p. 8) “Such levels of investment in R&D enable us to advance technologies that help us access new resources and better meet the needs of our customers and partners….As in 2014, in 2015 we continue to focus strongly on technologies that support our various businesses and reduce the environmental footprint of our operations and products”. This by far is meant to reduce CO2 emission as the global related authorities have set priority to use more LNG then gas.

           2.5  MARKET TREND

REFINING AND PETROCHEMICAL MARKET TRENDS
Industry refining margins were higher on average in 2014 than in 2013 in the key refining hubs of the USA and Singapore, and were little changed in Europe. In particular, margins improved in the USA where increased domestic crude oil and natural gas production lowered oil acquisition costs (relative to international prices). Some demand growth, especially around the summer driving season in the USA, also contributed to higher US Gulf Coast margins. In 2015, increased demand for middle distillates is expected to be a key driver of refining margins, supported by demand for gasoline in the middle of the year.

In Chemicals, industry naphtha cracker margins increased from 2013, particularly in Asia where there was less cracker capacity available. US ethane cracker margins were high relative to naphtha cracker margins in other regions due to ample ethane supply. The outlook for petrochemicals for 2015 is dependent on the growth of the global economy, especially in Asia, and developments in raw material prices.
Source: (Strategic Report, 2014,p. 15)  

           2.6  MARKET GROWTH

Shell has projected the global gas and oil demand and supply as stated in their report (Shell, 2015, p.14) Reflecting the economic conditions described above, global oil demand rose by 0.7% (0.6 million barrels per day (b/d)) in 2014, according to the International Energy Agency’s (IEA) January 2015 Oil Market Report. The IEA repeatedly revised down its oil demand growth estimate for the year from 1.4 million b/d in early 2014. Demand grew in emerging economies, while remaining almost flat in advanced economies.

On the non-OPEC supply side, the US Energy Information Administration
Reported that another year of continued supply growth in the Lower 48 US states: in 2014 supply grew by some 1 million b/d year-on-year. As a consequence of somewhat reduced demand growth and strong non-OPEC supply growth, oil prices fell from about $110 per barrel (/b) in mid-2014 to $75/b just ahead of the November OPEC meeting at which the members decided to maintain their production at 30 million b/d, rather than to reduce their production to balance non-OPEC supply growth. The market interpreted this decision as an increased risk of oversupply and oil prices further declined to lows of around $54/b in December.

3.               COMPANY ANALYSIS
At the moment 90% of refined products produced by SRC are sold in Malaysia (“SHELL MALAYSIA DOWNSTREAM – REFINING”, 2014, p. 5).

SRC gets its raw supplies for refinery from Malaysia (40%) far east Australia & Africa (32%), and Russia (28%) (“SRC REFINERY INTAKE _ SOURCES OF SUPPLY”, 2014, p. 16).

Meanwhile, SRC next data is SRC’s Turn Over by Products as produced for June 2014 :

Gas Oil – 44%, Motor Gasoline – 38%, Jet Fuel – 9%, LPG – 4%, Propylene – 2%, HCO – 2%, TOPS – 1%

Source: (“SRC TURNOVER PRODUCTS”, 2014, p. 17)



SWOT ANALYSIS

                  STRENGTH
1.      (“Highlights”, n.d., para 3-5) “With over 900 service stations, Shell has the leading market share in the petroleum retail business in Malaysia. Our fuels are tailored to improve engine and environmental performance…..Shell is the only petrol retailer in the country to offer premium fuels through Shell V-Power Racing and Shell Diesel with Fuel Economy formula….In Malaysia, we make and sell more than 600 different lubricants for the automotive sector, heavy-duty transport, food processing and power generation. We are the lubricants market leader in Sabah and Sarawak”

2.      PROJECT HIJAU diesel –  big capital to swift operation.“Known as Project Hijau, SRC last year constructed and commissioned a 6,000-tonne/day diesel processing plant at the refinery, the company said in its 2013 annual report (Robert, 2015, para 4-5). In an effort to improve refining margins at Port Dickson, SRC last year constructed and commissioned a 6,000-tonne/day diesel processing plant at the refinery, the company said in its 2013 annual report (OGJ Online, Sept. 29, 2010).

3.      R&D - Shell Global. (2015, para 9), “Such levels of investment in R&D enable us to advance technologies that help us access new resources and better meet the needs of our customers and partners”…. Shell Global,“As in 2014, in 2015 we continue to focus strongly on technologies that support our various businesses and reduce the environmental footprint of our operations and products”.

                 WEAKNESS
1.      An erosion of our business reputation - Shell Global. (2015, para 9), “would have a negative impact on our brand, our ability to secure new resources and our licence to operate – Our challenge is to ensure that all employees and contractors, more than 100,000 in total, comply with these Principles and Code. Failure – real or perceived – to follow these Principles, or other real or perceived failures of governance or regulatory compliance, could harm our reputation”.

                   OPPORTUNITIES

1.    Infrastructure world class – Malaysian Government has tremendously fully support by providing good policies on Oil & Gas and petrochemical industries. A good governance of long term vision by Malaysian Government has uplifted the industries. To compete with the oil refining and storage hub in Singapore, Petronas plans to build a RM60 billion Refinery And Petrochemicals Integrated Development (RAPID) complex in Pengerang, Johor by the end of 2017 (“Refining, Storage and Transit”, 2014, p.6). In short the player has been supported by the Malaysian Government.


2.    Tax incentive for Petrochemical industry - MIDA. ( n.d., p.8)  A corporate tax rate of 25% applies to both local and foreign-owned companies in Malaysia. A wide range of tax incentives is also available to these companies. These incentives are constantly reviewed by the government to ensure that companies in Malaysia maintain their competitive edge.

3.    Incentives for Manufacturing Companies, MIDA. ( n.d., p.8) :

• Pioneer Status: Income tax exemption of 70% or 100% on the statutory income for five years; or

• Investment Tax Allowance: Investment tax allowance of 60% or 100% on the qualifying capital expenditure for five years. The allowance can be utilised to offset against 70% or 100% of the statutory income.

• Reinvestment Allowance: Reinvestment allowance of 60% for 15 years on the qualifying capital expenditure. The allowance can be offset against 70% or 100% of the statutory income.

• Accelerated Capital Allowance: An accelerated capital allowance consisting of an initial allowance of 40% and an annual allowance of 20% is available for three years after the reinvestment allowance period.

Incentives for High Technology Companies

• Pioneer Status with a tax exemption of 100% on the statutory income for five years; or

• Investment Tax Allowance of 60% on the qualifying capital expenditure for five years which can be offset against 100% of the statutory income.

Incentives for Strategic Projects

• Pioneer Status with a tax exemption of 100% on the statutory income for ten years; or

• Investment Tax Allowance of 100% on the qualifying capital expenditure for five years which can be offset against 100% of the statutory income.

Pre-packaged Incentives

·                     Customised packages that cover tax and non-tax incentives.

·                     Incentives to Strengthen Industrial Linkages

·                     Incentives for R&D

General Incentives
• Industrial Building Allowance, Tariff Related Incentives, Tax Incentives for Small and Medium Enterprises to register patent and trademarks.

Incentives for Growth Above and below:
Among the business organisations foreign investors can approach for assistance is the Malaysian International Chamber of Commerce & Industry which represents business communities from about 40 countries.

                   THREATS
1.       Future competition locally – Oil & Gas operator in Malaysia are subject to be given contract by Petronas based on Act 1974. There are many Oil and Gas contractors nowadays in Malaysia. (“Marginal Oil Fields Development”, 2014, p.3) over the past few years, Petronas has initiated Risk Sharing Contracts (RSC) for marginal oil fields development replacing the Production Sharing Contract PSC)…Petronas had identified between 25 and 27 to be awarded to RSC contractors for development. As of January 2014, four RSCs were awarded and successes have been achieved from some of the contract areas, namely the Berantai Field which first achieved gas production in October 2012, while oil gushed forth from the Balai Cluster in November last year (“Marginal Oil Fields Development”, 2014, p.3). This will limit Shell Malaysia capacity in producing oil and subsequently lower SRC production.

2.       Government run companies – (Strategic Report”, 2015, p.9), “Today, these government-run companies control vastly greater quantities of oil and gas resources than the major, publicly held oil and gas companies. Government-run entities have access to significant resources and may be motivated by political or other factors in their business decisions, which may harm our competitive position or hinder our access to desirable projects.

3.      (“What can it actually do?”, 2014, No. 11) “It has mentioned in its 2013 Annual Report that the challenge is coming mainly from the complex and mega refining capacity surge in the Asia Middle Eastern region….This is changing the supply-demand balances in such a way that refining margins are under pressure.

4.      Oil Price drop – due to oversupply and low in demand with SRC reported (Shell Refining Company FY2014 Results Impacted By Falling Oil Prices, 2015, para 1). But on the other hand, SRC will benefit as the raw material of oil supply become cheaper.

4.    COMPETITOR ANALYSIS
The competitive analysis process presents 3 Petronas main downstream public listed companies, they are Petronas Dagangan Berhad, Petronas Gas Berhad, and Petronas Chemicals Berhad as the combined producers for Petronas petroleum/petrochemical and gas products and main competitors for Shell Refinery Malaysia. Keys analyses are as below :
4.1  Financial performance 2014

Petronas Q4 FY performance - (Khairul, 2015, para 6) “PetDag’s plummeting net profits in 4Q14 — down a whopping 99% due to the oil price slump –dragged down its entire FY14 financial results and doesn’t bode well for Petronas”.
Shell - (Shell Refining Company FY2014 Results Impacted By Falling Oil Prices, 2015, para 1) The revenue as reported in 2014 is “The revenue registered is 3% lower than the same period in 2013. It also posted after-tax loss of RM 1,188.7 million in 2014 compared to an after-tax loss of RM155.9 million in 2013. Losses were mainly due to fall in oil price”.

4.2  Organization Size

Ø  Petronas – (Khairul, 2015, para 6) “PetDag’s retail business also includes the largest petroleum retail network in the country, with over 1,000 Petronas petrol stations and 725 Kedai Mesra convenience stores nationwide”.
Ø  Shell - (“Shell at Glance”, n.d., para 4) “there are 1,000,000 retail customers served daily with more than 950 Retail Station in Malaysia”.
4.3   Market Share

In terms of market share Shell has 36% while Petronas 31% in Malaysia and the rest are others (Intan, 2014, para 15-16).

Meanwhile Petronas has 70% of share in Juet Fuel segment and the rest is including Shell (Intan, 2014, para 35).

4.4  Comparative Product Quality

In Malaysia, Petronas Dagangan Berhad is the main arm for Petronas. It is the main competitors for Shell Refinery Comapany of Malaysia. Christopher (2011, para 2) Malaysia's own oil company, Petronas. Does it gives the best car fuel consumption?”. He further describes (Christopher, 2011, para 4)… “Judging from the typical long queue of cars at Shell and Petronas fuel pumps, it appears that Shell and Petronas are the two most popular petrol brands in Malaysia”. This is the scenario people giving comparison on both giants.

Petronas is the main player in Malaysia retail oil & gas finish products, this is due to its capability to sustain by backed by the Malaysian Government. Nevertheless Shell stick to its strategy and positioning to be the leader based on cost and quality and being the oldest company with good R&D. (INTERIM REPORT FOR THE THREE MONTHS ENDED 31 MARCH 2014, 2014, p. 18) Refinery margins are expected to be continuously under pressure. Operational and product quality will continue to remain the refinery’s key focus area to maximize margin opportunities.

4.5  Growth

RHB Research Institute says Shell has been expanding at the rate of 20 to 30 stations per year….“This implies a relatively less aggressive appetite versus PetDag’s 40 to 50 stations per year. “It remains to be seen if PetDag can eventually dethrone Shell’s leading position in the retail market,” it says in a note to clients (Intan, 2014, para 21 – 23).

4.6  Available Capital and Resources

Ø    PETRONAS - in combined has many plants for refinery production in many location, they are 2 in Melaka 93,000 capacity (bbl/d) and 126,000 capacity (bbl/d), Kertih 40,000 crude distillation (bbl/d).
Ø    Shell - The Company's oil refinery at Port Dickson produces a comprehensive range of petroleum products with its completed RM 1.4 billion investment in Malaysia's first Long Residue Catalytic Cracking (LRCC capable of processing 125 kbpd (thousand barrels per day). SRC also has the completed RM850 million investments on new diesel processing unit “Hijau”.
4.7         Image & Positioning
Both Shell and Petronas has been shaping the Oil & Gas industries in Malaysia. Stiff competition between the two giants has not giving much competitive advantage upon each other. The only thing is that Petronas is a National Petroleum company and backed by the Government.

Petronas is set to be the Market Leader in petroleum oil & gas industries. It always be the proud national Oil & Gas company for Malaysia, while being global payers it also trying to reach its customer by the slogan “MESRA”. At the same time Petronas also wants to secure its place in the technological primary as it invested in Formula 1 Racing.

Same with SRC, while also involved in technological advancement in Formula 1 Racing, it on the other hand will maintain itself as the cost leadership and being the oldest in the countries will bring a high quality R&D for the benefit of its customers with its premium and known quality products.



4.8   Marketing Strategic Partner
Ø  Petronas - – (Khairul, 2015, para 7) “It also has international partnerships with various Formula One racing teams for its retail and lubricant businesses, including its current partner the Mercedes AMG Petronas Formula One team”.
Ø  Shell – Shell has many strategic partner including ;
(‘The history of Shell's technical partnership with Ferrari”,n.d., picture 2012 500 not out) Shell’s technical partnership with Scuderia Ferrari reached a new milestone in 2012. At the Singapore Grand Prix the teams celebrated 500 Formula One races together – an incredible achievement marked with a specially designed ‘Shell 500 Races’ logo on the rear wing of the F2012.
5        MARKETING ELEMENTS
5.1       The Product
Shell Refining Company has listed its main products (“REFINING PROCESS”, n.d., para 1 – 6) as below:

5.1.1 Refinery Products
Shell Refining Company (SRC) produces the following petroleum products:
Ø  Liquefied Petroleum Gas, or "LPG", Propylene, Gasoline, or Petrol, Jet Fuel, or Avtur, Gasoil, or Diesel, and Sulphur.
                    5.1.2 Crude Oil
SRC also produces a number of petroleum components which can either be sold or processed in the refinery.
Petroleum products are made from Crude Oil. There are many types of crude oil which come from many different sources around the world.
Selection of the right crude oil is a key part of the refining process. The decision as to what crude oil, or combination of crude oil, to process depends on many factors including; quality, availability, volume, and price.
Shipping costs (or "Freight") are another important element in crude oil selection and are determined by the size of the cargo and the distance from the supplier to the refinery.
SRC has many finish products. (“Products and Services”, n.d., bla  bla bla) stated that SRC supplies to  Shell Malaysia is divided into 2 categories. The categories and products & services are :

                   5.1.3   On the road
CARD – These cards are for the cashless, convenient, and secure way to buy fuel and other motor-related products. They are:

Ø Shell Card for Businesses, Bonus Link, Shell Citibank Credit Card,
Shell easiGO American Express Prepaid Card.

5.1.4        FUELS of which are Shell FuelSave and Shell V – Power.

                  5.1.5  OILS & LUBRICANTS, of which are produced for :
Ø Cars, Motorcycles, Trucks and heavy duty vehicles, Shell  Lubricants Authorised Distributors, and Shell LubeMatch.

                   5.1.6 Solution For Business

Ø  Shell Aviation
Every day at over 800 airports across more than 40 countries, Shell Aviation provides fuel for around 7,000 aircraft, refuelling a plane every 12 seconds. Shell Aviation’s customers range from the private pilot to the largest global airlines.

Ø  Shell Bitumen
Shell Bitumen provides sustainable and cost-effective bitumen solutions for professional, trade and home-based needs.

Ø  Shell Chemicals
Shell Chemicals companies operate around the world, making and supplying a range of petrochemicals that are used by our customers to make many different materials and end products.

Ø  Shell Global Solutions
Shell Global Solutions helps improve its customers' business performance by providing leading-edge energy consulting and innovative technology.

              5.2     PRICE

Malaysia’s retail fuel products are part of controlled goods. 2015 onwards there will be no more subsidies due to global price drop, means it will be managed under floating system mechanism. “New prices are fixed according to a managed float system, which is based on the monthly average world price of crude oil. The move was followed by a 4 sen decline in the price of RON95 from RM2.30 to RM2.26 per litre for the month of December” (Fiona, 2015, para 4).

As such Shell will continuously looks at its cost operational efficiency in order to mitigate any further losses amidst the uncertainties in oil price drops. It means its price will be based on the current price’s float system mechanism.


5.3    DISTRIBUTION CHANNELS
Kotler & Keller (2012, p. 437) describe marketing channel or distribution channel as a sets of interdependent organizations participating in the process of making product or services available. “With over 900 service stations, Shell has the leading market share in the petroleum retail business in Malaysia. Our fuels are tailored to improve engine and environmental performance. On the other hand the distribution of petroleum products once blended and tested they can then be delivered to the customers through ship, pipeline, road tanker, and rail car” (Product Distribution, n.d., para 18).

         5.4    PROMOTION

Shell Malaysia has many promotion events and programs, they are (“Events and Promotions”, n.d., para 1-5) :

Ø    Shell Helix Gift with Purchase, Shell Win Free Fuel, Shell Online Survey, Shell Fuel save College Competition 2014, and Target One Million. Other program has been realised in the past was Shell’s Pump and Stand to Win RM500,000 contest. Chai Lee, (2011) “At Shell, we believe in rewarding all of our loyal customers regardless of which products of ours they purchase. By the end of November, we would have rewarded more than 23,000 Malaysians for simply filling up with Shell”.


6            MARKETING STRATEGY

Although downstream operations has been reduced due to oil price uncertainty, nevertheless 20% given as strategic measures by Shell Global to cut cost has not prevent SRC from moves forward in 2015 in a quest to supply Shell Malaysia. Current Petronas growth is expected will surpasses Shell as the Market Leader in the near future, as such it is unadvisable to compete. Thus Shell alternative strategy will be the market cost leadership.

6.1 Mission

(“Our Mission”, n.d., para 1) it will “manufacturing and supplying oil products and services that satisfy the needs of our customers”.

6.2  Marketing Objective

(“Our Objectives”, n.d., para 3) Shell is committed to deliver sustainable excellence in business performance by focusing on meeting their customer requirements.

By far Shell Malaysia had decided, according to Annual General Meeting June 2014 (Shell Malaysia, 2014, p. 1), SRC will optimise refinery capability and stretch its processing constraints by continuing with the following measures:

Ø  Processing cheaper crude with Hijau.
Ø  Increase upgrading of fuel oil to gas oil.
Ø  Drive improvement in energy efficiency.
Ø  Continue to improve with strategies and initiatives that target cost and capital efficiency.


7            IMPLEMENTATION & CONTROL

Below are the keys to regulates implementation :
1.      “Implementing energy efficiency measures in our operations” (Strategic Report, 2014 p. 50).

2.      “….there is always the possibility that a new technology brings with it environmental impacts that have not been assessed, foreseen or determined to be harmful implemented” (Strategic Report, 2014 p. 54).

Below are the keys to regulates control :
1.    “To improve returns and control costs during this period of low prices, we have also reduced our potential spending on organic growth by $15 billion for 2015-2017” (Strategic Report, 2014 p. 5).

2.    Parts of our Downstream activities are subject to price controls in some countries. From time to time, cultural and political factors play a role in unprecedented and unanticipated judicial outcomes that could adversely affect Shell. If we do not comply with policies and regulations, this may result in regulatory investigations, litigation and ultimately sanctions.  (Strategic Report, 2014 p. 10)

3.    SAFETY – “Sustaining our licence to operate depends on maintaining the safety and reliability of our operations. We manage safety risk across our businesses through controls and compliance systems combined with a safety-focused culture.” (Strategic Report, 2014 p. 50).

CONCLUSION
       SRC will focus on cost leadership by providing its customers with quality product, less emission, and financially objective.

REFERENCES:


Chai Lee, (2011) Positive outlook on Shell as marketing initiatives roll out. Retrieved From http://www.theborneopost.com/2011/10/07/positive-outlook-on-shell-as-marketing-initiatives-roll-out/

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Events and Promotions. n.d. para 1-5. Retrieved From http://www.shell.com.my/products-services/on-the-road/promotions.html

Fiona. 2015. para 4.  How Much Are Malaysians Really Paying For Fuel? Retrieved
From https://www.imoney.my/articles/malaysian-petrol-price-compared-to-other-countries



INTERIM REPORT FOR THE THREE MONTHS ENDED 31 MARCH 2014. 2014 p. 18 (PDF). Retrieved From (Federation%20of%20Malaya)%20Berhad_Amended%20Financial%20Result%20for%20Q1%20of%202014.pdf

Kotler & Keller 2012, Marketing Management: Global Edition. Pearson Education Limited.

Marginal Oil Fields Development. 2014. p.3. Retrieved From http://www.msiamarineandoffshore.com/indprof/mmoid/mmoid_editorial.pdf


Our Mission. n.d. para 1. Retrieved From https://www.shell.com/src/about-src/vision.html

Oil & Gas Report .2015. (PDF) Retrieved From   http://www.msiamarineandoffshore.com/indprof/mmoid/mmoid_editorial.pdf

Oil continues slump as global glut expands. 2015. Bloomberg. Retrieved From http://www.themalaymailonline.com/money/article/oil-continues-slump-as-global-glut-expands

Product Distribution. n.d. para 18. Retrieved From https://www.shell.com/src/about-src/refining-process.html

Product Distribution. n.d. para 18. Retrieved From https://www.shell.com/src/about-src/refining-process.html

Refining, Storage and Transit. 2014. p.6. Retrieved From http://www.msiamarineandoffshore.com/indprof/mmoid/mmoid_editorial.pdf

           refinery.html

REFINING PROCESS. n.d. para 1 – 6. Retrieved From https://www.shell.com/src/about-src/refining-process.html

Shell Refining Company FY2014 Results Impacted By Falling Oil Prices. 2015. Retrieved From https://www.shell.com/src/news-and-library/2015/Shell-Refining-Company-FY2014-Results-Impacted-By-Falling-Oil-Prices.html

SRC REFINERY INTAKE SOURCES OF SUPPLY.  2014. p. 16. (PDF) Retrieved From      
            http://s00.static-shell.com/content/dam/shell-new/local/business/src/downloads
            /pdf/ibm_q114_investor_presentation.pdf

SRC TURNOVER PRODUCTS. 2014. p. 17. (PDF) Retrieved From https://s00.static- 
            shell.com/content/dam/shell-new/local/business/src/downloads/pdf/src-                            
            annual-report2013.pdf    

Strategic Report: Dec 2014. Royal Dutch Shell. (PDF) Retrieved From http://reports.shell.com/annual-report/2014/servicepages/downloads/files/entire_strategic_report_shell_ar14.pdf


What can it actually do?. 2014. No. 11. Retrieved From                                             
           http://www.themalaymailonline.com/money/article/stock-watch-shell-refining-company     
           -bhd-when-will-it-stop-burning-cash
   
Prepared By : ram's Apr 2015

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