We model the hydrodynamics of a shear cell experiment with an immiscible nematic liquid crystal droplet in a viscous fluid using an energetic variational approach and phase-field methods [86]. The model includes the coupled system for the flow field for each phase, a phase-field function for the diffuse interface and the orientational director field of the liquid crystal phase. An efficient numerical scheme is implemented for the two-dimensional evolution of the shear cell experiment for this initial data. The same model reduces to an immiscible viscous droplet in a viscous fluid, which we simulate first to compare with other numerical and experimental behavior. Then we simulate drop deformation by varying capillary number (independent of liquid crystal physics), liquid crystal interfacial anchoring energy and Oseen-Frank distortional elastic energy. We show the number of eventual droplets (one to several) and "beads on a string" behavior are tunable with these three physical parameters. All stable droplets possess signature quadrupolar shear and normal stress distributions. The liquid crystal droplets always possess a global surface defect structure, called a boojum, when tangential surface anchoring is imposed. Boojums [79,32] consist of degree +1/2 and -1/2 surface defects within a bipolar global orientational structure. (C) 2011 Elsevier B.V. All rights reserved.