Executive summary This report is aimed at understanding the problems faced by organizations in international trade.

The organization that I have chosen is Shell. This report is made by investigation from the organization's staff. though there are many problems that they face as petroleum industry is very dynamic, but in this report we focus on the problem that they face due to the subsidies that the government gives to the public. Shell is growing in India to provide the customers with high quality petroleum. Introduction. SHELL Shell is an dutch based company which globalized from the origin of Netherlands. Merging with royal dutch company and it started its business at 1907. It does business in many countries worldwide. At present shell is operating in 90 countries with 44000 petrol stations providing 3.1 million barrels of oil equivalent every day. Shell is keen on producing high quality petroleum products and innovate. They are also in the business of selling energy , domestic gas , financial service and lubricants. It is one of the largest company in the world. Shell in india In india shell is operating in petrol, gas and lubricant business. They have invested about 850 million us dollars in india. Which is one of the biggest fdi made in india. At present only shell as gained the license of running petrol stations being a multinational foreign company. 340 million $ was their profit in the year 2003. In the year 2004 shell came into india by licensing for about 2000 petrol stations. About 200 petrol stations are running at present. The first petrol station was set up in bangalore.But due to improper response form the business and franchise owners many of the petrol station have closed down temporally. Shell is generous about providing the same quality of petroleum and service which they operate internationally, to attain a sustainable development in integrating with the economic and environmental and social considerations for decision making process. They consider the needs of the stakeholders in both long term needs and short term needs. Shell involves in environmental and social impact addressing it properly. None of the indian private and public petrol stations can match the standards of shell for the product and service they provide. In india shell sells two kinds of petrols unleaded and super unleaded. One kind of diesel called unleaded diesel with fuel economy. The quality of the petrol and diesel is comparatively high and superior compared to other indian petrol companies. The prices are fixed high at a average percentage of 15%. shell run their business with honesty , integrity and respect for the people. The employment opportunity given by shell is so diversified in nature by giving employment opportunities even to women and andi capped people by creating an suitable environment for them. Each of the petrol stations costs about 5 million $. the petrol station is integrated with r&d department. The safety measures are high for the man power and the environment. High end technology equipments are used for safety and filling petrol. At present shell is trying to expand their petrol stations in every states. Problem statement. Subsidy given by the government to the public in petroleum products is the biggest problem which is faced by shell. The price given by the government is way cheaper than what shell does. Most of the customers market is driven by the other government companies like bharath petroleum, hindustan petroleum and indian oil. Less no of petrol station running in india is another problem faced by shell. The price difference between shell and other companies in chennai as on april 1st.

shell petrol Petrol unleaded diesel 78 80.5 62

Substitute companies 69.55 72.27 43.95

Historical background of the problem. It was the same when shell came into the business during 2004. The prices between shell and government companies was the same. Later on right when the prices of crude oil started increasing the government came into a position to provide subsides to the public. At present the government provides more subsidy for diesel than petrol. This is done because the whole countries product and commodities pricing is based on the transportation cost recurred by heavy veichles and others. At times the prices may go higher than what prevails in the market because of the sudden increase price of the crude oil, but as of in government companies the prices wont change within a short period no matter how much the crude oil prices increases. The production cost is not the same between both companies. As shell produces a higher quality petrol and diesel the cost is higher for one reason. Due to the devastated problem faced by shell. The government as cut some taxes for which the fdi international companies has to pay as default. Players who contributed the problem. 1) The central government was the primary player by giving subsidy. 2) The state comes in as a secondary player by giving more subsidy to the public. 3) Investing in high quality petrol products is the third problem which they create by them self. 4) The prices set by the gulf countries which kept increasing. The awareness about the quality is not promoted in a higher level as required. As far as in the other few countries the government do help the private sellers if subsidy given to the public. The political system support was not favorable to these kind of problems during those period when every thing changed and even now. Alternative solutions to alleviate the problems. There are many options to solve the problems which they face. To increase the revenue they can merge in the other business products of their own such as lubricants with the so called available resource as petrol stations. Sell their refined oil to other countries where there is more advantage in getting high price than selling in india itself. Increase the no of petrol stations at good suitable locations. Reduce the quality of the petrol according to the other companies where they provide in second tire quality. Alternatives being implemented Shell can introduce the lubricants and other products which is a product of shell in the petrol stations. This will help them to increase their revenue. As the prices doesn't matches with the other companies in india. They can focus on refining it and selling it to other countries like srilanka where there is a proper match with more benefits. At present the no of service stations in india is within 100 which is too low. Shell has to increase the outlets in more places with an proper advantage where more business can be done. If needed shell can reduce the quality to the second tire rather than investing more on it to achieve high quality and sell it ( act local to do business ). Reference

shell.com(india), articles. Interaction with the senior employees in shell chromepet and padi petrol outlet.