-75%
Solution
- Organisation structures
An organisation structure can be defined as a system outlining the manner in which specific activities are directed for the purpose of achieving the set organisation goals. The activities which are put into account in the structure include and not limited to the rules, roles, and responsibilities. According to Miller (2021), by having the structure, work flows in the entire organisation allowing people in working collaboratively within their individual functions for management of different tasks.
Types
Hierarchical organisational structure- Saudi Aramco follows a hierarchical structure similar to other large enterprises. According to the NI business (2015), there is a clear hierarchy in this organisation, starting from the top management and progressing all the way downward to the lowest level of personnel. At Saudi Aramco, there is a clear chain of command that begins at the CEO level and ends with the lowest-level regular employees. Deciding at a lower level allows for better control and synchronisation.
The organisational structure of Saudi Aramco has the advantage of establishing a distinct line of command and making sure that everyone is aware of their specific responsibilities. Miller (2021) points put that having all decisions made in one place ensures consistency and command of activities. Disadvantages include lower-level employees’ potential stunted creativity and adaptability due to a lack of input opportunities and autonomy. Some potential solutions that Saudi Aramco may explore to circumvent the constraints of hierarchy include encouraging a culture of innovation and giving lower-level employees greater autonomy.
Reason underpinning
Saudi Aramco utilises a hierarchical structure as it is a large oil and gas company that requires coordination across its extensive global operations. According to Kumar (2023), the clear lines of authority and top-down decision-making in a hierarchical structure allow the leadership to efficiently direct strategies and monitor activities throughout Aramco’s vast divisions and diverse roles. Having one central point of command and control lends itself well to ensuring smooth collaboration between the many technical, scientific, and industrial departments involved in Saudi Aramco’s complex processes. The consistency and standardised processes inherent in a hierarchical system also suit the regulated nature of Aramco’s operations.
Functional Organisation- This type of structure groups employees based on their specialised functions and expertise. The finance, operations, marketing, and human resources divisions are all considered distinct functional units inside the organisation (AIHR, 2024). Each department consists of experts who focus only on their specialised functional areas. For example, all marketing tasks are handled by the marketing department, all financial tasks by the finance department, and so on. This structure facilitates specialisation and ensures functions are handled efficiently by experts.
The main advantage of a functional structure is that it allows for specialisation within each function. Employees are grouped by their specialised skills and expertise. For example, all marketing employees work together within the marketing department. This streamlines operations since marketing experts can focus solely on executing marketing tasks efficiently, without interference from other functions.
However, this structure has some disadvantages. One potential downside is that it can lead to silos between functions. With an intense focus on their specialised tasks, departments may operate independently without coordinating well with each other. This makes it difficult to address issues that require cross-functional collaboration.
Reasons Underpinning
The reason for using a functional organisation structure in an organisation such as Google plc. is enhancing the manner in which the organisation operate efficiently. This is by categorizing different employees in line with their specialist skills areas and experiences. Also, through the use of functional organisation structure, it reduces the confusion amongst the employees which would be the case for the hierarchical organisation structure. This is with the different specialists provided with an opportunity for prioritising on their work functions and internal development.
- Connections of Organisation Strategy
An “organisational strategy” is a long-term plan for how an organisation will be structured. Included in this are matters such as market positioning, resource allocation, and strategies for achieving success in the long run (Personio, 2023). Organisational strategy, guided by Porter’s Five Forces model, aims to gain a competitive advantage in the market. Researching industry competitiveness, customer and supplier bargaining power, dangers associated with substitute products, and entrance hurdles is essential for developing a strategy that will boost profit and longevity in a competitive market. According to Porter’s Five Forces model, a company’s strategic plans can help it gain an advantage in the market (Mind Tool, 2022). By focusing on these goals, organisations can increase their prospects of success and growth. Creately (2024) argues that having clear objectives and strategies is essential as they provide direction, unity, and a measure for success.
Products- The marketing and product strategies are often based on larger strategic objectives as evidenced by Hansen and Juslin (2019). By ensuring that products are in harmony with the organisation’s comprehensive goals and vision. It enhances brand consistency and placement in the market. Companies that work together have a higher chance of meeting customer needs, capitalising on market possibilities, and differentiating themselves from rivals.
Services- The strategic aims and objectives of an organisation influence its service development, delivery, and enhancement. Anderson (2021) asserts that when services are in sync with strategic objectives, businesses may better meet consumer demands, increase value proposition, and differentiate themselves from rivals. This harmony is closely related to customer happiness, brand loyalty, and success in the marketplace.
Customers- The strategic aims and objectives of a firm are closely tied to its customers in terms of customer segmentation, satisfaction, and retention. Taking the effort to understand what consumers want and need will help businesses provide better products, services, and promotions (LinkedIn, 2022). Brand loyalty, increased revenue, and a competitive edge are all outcomes of this kind of alignment.
- Identifying organisation priorities
The acronym “PESTEL” refers to a strategic framework for analysing the many socioeconomic, technological, environmental, political, and legal factors that have an impact on a company’s operations and decision-making (CIPD, 2023).
External Factors
Global warfare
Saudi Aramco faces geopolitical challenges, such as uncertain politics, boundary disputes, and strained diplomatic relations, which could disrupt oil production and delivery (Manfred Häfner et al. 2023). Market stability, investment decisions, and procedures are all affected by these issues. Increasing demand for oil as a result of rising geopolitical tensions drives up prices, which in turn boosts Saudi Aramco’s income and profitability in the near term. In contrast, when geopolitical tensions rise, it can cause disruptions in business, an increase in security worries, and market instability.
Guidelines for environmental protection
To meet waste management regulations, conservation standards, and emissions standards, Saudi Aramco must adhere to environmental constraints that need technological advancements and sustainable practices. The business’s reputation, investments, and operations are all affected by these rules (Aramco (2022).
Positive impacts- If stringent environmental rules globally drive investments in cleaner technologies and programs to decrease emissions, Saudi Aramco might be branded as an innovator in sustainability and attract environmentally conscious investors.
Negative Impacts- The necessary investments in capital and changes to operations to satisfy these criteria may cause expenses to increase and profit margins to decrease.
Emerging trend
Renewable energy sources are becoming more popular. Aramco must shift its focus to cleaner energy options if it wants to ensure its long-term viability in the face of rising renewable energy adoption, which is altering the energy landscape, impacting the company’s investment plan, and reducing Aramco’s market competitiveness.
Beneficial Effects- Although switching to renewable energy sources may have some immediate expenses, the long-term advantages to Saudi Aramco’s finances, reputation, and the environment more than justify them.
Disadvantages – The transition to renewable energy sources will necessitate substantial investments in research and development and infrastructure, which could reduce short-term profitability (Carbon collective, 2023).
Top Priorities
Following an analysis of external factors and tendencies, Saudi Aramco has set its sights on three main areas:
Reorganisation- A reorganisation of departments is necessary to establish a distinct renewable energy and environmentally friendly technology unit with its own set of objectives, priorities, and a management team. This means that initiatives to generate greener forms of income will get more support and funding.
Contraction- To make room for advances in renewable energy initiatives and technology, it may be necessary to contract out some oil and gas assets. This will help us make the switch from fossil fuels, which we just cannot afford to continue using.
Restructuring- Saudi Aramco has to restructure its operations and transition away from petroleum and coal to environmentally friendly technology and renewable energy if it wants to satisfy environmental regulations and ensure its future.
1.4 Different scales of technology
As Saudi Aramco’s operations expand globally; technology use has escalated tremendously as evidenced by Aramco (2023). On the positive side, new digital solutions have boosted efficiency across the organisation. Technologies like artificial intelligence, automation, and predictive analytics are optimising processes in exploration, extraction, refining, and more. Employees also benefit from technological learning and development opportunities. However, with great scale comes great risks—increased systems come with vulnerabilities like hacking (Ivezic, 2024). Additionally, some roles may be displaced by automation over time, requiring workforce preparation. Overall technology progress offers promise if accompanied by strategic planning for its pitfalls to ensure secure, seamless operations.
Types of Technologies Used
- Artificial Intelligence
This is currently regarded as a popular technology which has increased in its popularity in the modern business environment. This is as organisations are transitioning from traditional operations to more modernised operations in their business environment. As one of the largest companies in the world, Saudi Aramco’s people operations are complex requiring sophisticated technological tools. HR professionals leverage artificial intelligence extensively – AI chatbots and virtual assistants handle basic queries and tasks freeing up professionals for higher level work (Aramco, 2022a). AI is used to thoroughly screen resumes and applications, identifying top candidates efficiently. During recruitment, AI aids in skills testing and assessments. Additionally, AI based training programs are personalised to each employee’s strengths and developmental areas. Analytics derived from companywide AI also help HR strategise where to focus efforts regarding compensation, retention and succession planning. Therefore, AI has transformed HR service delivery at Saudi Aramco.
Impacts on Employees- At Saudi Aramco, AI is changing the way employees are hired and the skills they need to succeed as further evidenced by Aramco (2022a). More complex data analysis, information technology, and AI development positions are emerging as a result of AI, even as other mundane ones are becoming mechanised. The ability to collaborate with AI technologies and get the most out of them depends on employees’ commitment to lifelong learning.
Impacts on working practices- AI automates dangerous and monotonous activities, making Saudi Aramco workplaces safer. It changes how workers work and collaborate. AI-powered systems increase decision-making using data. AI processes and monitors activities, freeing up workers to solve complicated problems and provide value.
- Smart Gas Detectors
Saudi Aramco utilises Smart Gas Detectors to continuously monitor various oil and gas facilities for hazardous leaks and changes in atmospheric composition (Aramco, 2022). These Internet of Things-enabled devices detect combustible, toxic and oxygen-deficient gases in real-time, alerting workers to any safety issues immediately via Bluetooth connectivity and automated alerts.
Impacts on employees- The Smart Gas Detector enhances employee safety and peace of mind by rapidly identifying any gas leaks or changes in air quality at worksites. This allows for quick evacuation and mitigation actions if needed, reducing health and functioning impacts. It also improves work processes and productivity by eliminating potential delays and disruptions from gas-related incidents.
Impacts on the working practices- By detecting issues early, Smart Gas Detectors allow work to continue uninterrupted and efficiently. These support optimising production and delivery of oil/gas products. Data gathered aid research into plant/equipment upgrades, helping improve work processes, extract more resources, and model future innovations.
2.1 Theories and Models in organisations
Organisation Culture Theory
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