-80%
Solution
- Divisional and matrix structure
Divisional Organisation Structure
As opposed to using a structure based on job descriptions of employees, this structure categorise employees on basis of products/services offered (Gaspary et al., 2020). An example of divisional organisation is evident in McDonald organisation;
Figure 1: McDonald’s organisation background
For example, Saudi National Bank (SNB) operating in Saudi Arabia (KSA) banking sector (SNB, 2024). Being the largest financial powerhouse, SNB has been working towards progressing in achieving vision 2030. The strengths of structure are;
Increased flexibility– With modern business environment characterised by immense changes and disruptions, using the structure enables successful change.
Embrace in technology– Divisional structure has different professionals working in active collaboration. The outcome of this is increasing sharing of knowledge and skills hence being innovative and tech savvy.
The drawbacks of divisional organisation structure include;
Limited cross-functional team working– The embrace of the structure lead to employees being isolated with a seamless communication affected. In SNB case, the employees play different roles hence reduced collaboration.
Duplicated job functions– As illustrated in figure 1, the different departments have duplicated functions hence immense resources used.
The rationale of using this structure is to enhance the large scale operations of an organisation in different sectors. SNB for example operate in the financial and real estate sector informing need of having the functional structure.
Matrix Structure
This type of organisation structure (Cimini et al., 2020) include different departments having their leadership and reporting to a single leader at the top (see figure below);
Figure 2: HSBC Matrix Organisation Structure
An organisation using the matrix organisation structure is HSBC bank. The strengths of use of the structure include;
Increased teamwork– Through the use of the matrix organisation structure, it brings together individuals who have different skills and knowledge. The outcome of this is increased organisation team-based working.
Efficiency in resource allocation– Considering HSBC Bank example, matrix organisation structure means broad talent pool is attracted. Efficient resource use reduce amount of wastages in an organisation.
The drawbacks of the structure include;
Confusion in assigned roles– With multiple departments in place to report to, confusion arises on the reporting structure and scope of engagement. This lead to confusion in execution of assigned functions.
Conflicting priorities– In this structure, the different departments have their roles conflicting with each other. The outcome of this is creating ambiguity in job functions implementation (Chión et al., 2020).
The underpinning reason for using the structure is to ensure there is a clear allocation of job functions to different employees. This is when an organisation has multiple employees with essential qualifications to occupy the job functions.
- Organisation strategy
Focusing on Saudi National Bank (SNB) operating in Saudi Arabia (KSA) banking sector, their strategy which is advancing the country and reinforcing their position on the global financial map. Also, by virtue of the organisation being the largest institutional and specialised financial institution in KSA, they are involved in supporting the Kingdom landmark deals and huge projects (SNB, 2023).
Link with organisation strategic goals and objectives
A core organisation strategy includes market research intended to understand the features of the environment and what has positive and negative influences. According to Trzeciak et al. (2022), based on the economic landscape such as competition and readily available financial resources, an organisation is able to attract their customers. The organisation strategy is aligned by their varying needs. In SNB for example, ensuring availability of financial resources for achieving KSA Vision 2030. This strategy is linked to their goals and objectives of being the financial institution of choice in the country. This is with an increased value proposition for gaining loyalty in their workplace. Further, they are best positioned to implement research and development opportunities to serve the varying needs of the country and their sector of operations.
Strategic goals and products/services
Also, taking into account of the economic landscape and implementation strategies, the link of strategic goals is evident. According to Gomes et al. (2023), for appreciating the link, Porter’s 5 Forces Analysis is relevant for use. This is employed in identifying the extent I which an organisation strategy is influenced by factors such as buyer and suppliers power, industry rivalry and achievement of best practice. The SNB bank strategy of ensuring that they achieve vision 2030 and increase access to financial services for KSA citizens is ensures their customers satisfaction. This is with loyal customers for the organisation who are willing to return back developed. Today, SNB offers the best and broad portfolio of banking services offered to their customers.
The customers satisfaction is core in the SNB organisation strategy. This is achieved by identifying the customers’ needs and customising their services to meet the specific needs. This is while managing their overall costs of operations in their business environment. In order to distinguish themselves from the other players in the banking sector, the organisation offer unique and aligned with high-level quality services. This is the situation in SNB as customers satisfaction and loyalty is enhanced leading to sustainability in their practices.
- Impact of interest rates, inflation
The PESTEL Analysis Tool is relevant to evaluate the different factors impacting an organisation strategy (Matović, 2020). The tool enhance evaluation and development of appropriate insights on achieving their strategy. The factors are;
Interest rates
The interest rates are identified as what is charged to borrowers or offered in the form of savings set as a particular percentage of principal amount (Bauer & Rudebusch, 2020). Having the interest rates reviewed within specified period guarantee individuals and organisations of positive gains economically. When the interest rates are low, this means less profitability and even losses being incurred in their operations. Taking into account of the current situation in Saudi Arabia (KSA), the interest rates have increased in the last year to approximately 5.7% monthly. This positively impact on the organisations in the country active operations in their economy. This is since Bhattacharya et al. (2022) identify the interest rates as impacting profits accrued in the market and availability of resources for executing their operations. When this occurs in a longer period of time, it lead to increased costs of goods and services with purchase power declined.
Priority– As a consequence of the increase in interest rates level, SNB would need to have their prioritisation on expanding. Expansion approach need to be guided by necessity to get facilitation from the government of KSA to increase how they do financially.
Inflation
This is defined by increased costs of goods and services informed by currency of a country depreciating (Bilbiie & Känzig, 2023). For business persons and also the banking sector, the inflation has a positive implication. SNB business environment has the inflation rate being 2.4% in Saudi Arabia representing a positive increase in the amount. Considering SNB organisation case, they are found to directly influence policies that are put forth by KSA government to manage inflation levels.
Priority– Owing to the prevalence of inflation rates, the priority for SNB would be to implement contraction policy as core area of their practice. By embracing the practice, government spending rates and monetary policies by the country central bank to manage inflation rates. Considering provision of financial services, they lower overall costs with 20% in their spend levels.
Social
A major social factor in the modern business environment is increased number of Generation Z joining workforce (Benítez-Márquez et al., 2022). This is while at the same time actively engaged in enhancing global changes in the business environment. Operating in the banking sector, the organisation is forced to recruit 40% of their employees to include Generation Z.
Priority– The priority need to include process of restructuring their resourcing strategy. The rationale of this is ensuring they are accommodating all generations. The disadvantages of this entail cost intensive and not necessarily having positive growth implication.
- AI Impacts work
Generative Artificial Intelligence
Amongst people practice professionals, Generative AI is a relevant tool to formulate new job roles which are impacted by their profile, keywords and past roles (Liu et al., 2023). Further, through an embrace of Generative AI, there is a possibility of setting job roles informed by context and draft of personal interaction among various candidates. The findings of the report is that use of Generative AI leads to 20% increased acquisition of talent, resourcing and induction.
Robotics
Considering the people practice professionals, robotics are relevant for aiding a successful automation. It is identified in Shimoda et al. (2022) to harness empowerment of various HR teams to allocate sufficient time and energy in strategic decision making strategy. Further, the popularity of this strategy is fostering appropriate and relevant human link and prioritising on overall employees wellbeing. In supporting the use of robotics, Shuaib et al. (2020) highlight approximately 20% of entire people practice professionals replacement by use of robots. For improvements, 50% of all jobs are enhanced through the application of robotics. The scope of the robotics use going into the future will entail 40% replacement of the people practice functions.
Use in Organisations
Through successfully embracing Generative AI, the entire organisation areas are revolutionise their practices (Gupta et al., 2024). The start entail streamlining the entire operations intended to improve creativity and personalised operations, banking service are efficiently provide. The drawbacks of the Generative AI include fraudulence practices an impacting SNB reputation as a brand in KSA banking sector.
The appropriateness of use of robotics is ensuring successful SNB in pursuing tasks automation. This has a direct implication for SNB improved efficiency and performance with entire costs of practice reduced. Further, the limitations of this entail their application in SNB being affected by programming process.
Use in Working Practices
With SNB having many departments and operation areas tasked with various functions, Generative AI improve different tasks automation. The different assigned job roles are prioritised and easily implemented with time saved in their roles implementation (Brynjolfsson et al., 2022). The challenge entail reduced creativity and innovation embrace. The rationale of this is that SNB lack a more individualised approach when using Generative AI.
Considering robotics, these directly impact workplace and improved quality control level in their operations. The negative implication of this include lacking adaptability and flexibility and as such impacting SNB meeting expectations as part of their operations.
- Charles Handy’s Model and David Rock’s SCARF
Charles Handy Model
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