Solution
| (AC1.3) Analyse external factors and trends impacting organisations to identify current organisational priorities. Short references should be added into your narrative below. Please remember to only list your long references in the reference box provided at the end of this section. Word count: Approximately 450 words |
| Interest Rates These are defined in CIPD (2024a) as the extra amount paid to saved finances or credit. In an economy having high interest rates, it is cost-intensive for such an organisation borrowing particularly in executing capital projects. For the case of ADNOC, their capital projects include shifting from the current oil and gas to refining sustainable energy. The effect of this is reducing the savings achieved hence their profitability particularly in a long-term basis and also reducing their investments meant for diversifying UAE business practice. Priority– With the increased interest rates, the organisation priority is enhancing efficiency in their capital structuring for avoidance of increased debts costs. An organisation could be going for internal provisions of funding and improving overall stakeholders’ relationship for financing their expansion with reducing fluctuating costs of borrowing. Inflation Rates This is identified as the overall costs incurred in a business environment in sourcing for basic goods and services. According to Gafurdjan (2024), this has a direct implication on the costs of basic needs, available labour and costs incurred in running an organisation operation. For ADNOC, inflation rates impact on cost of energy which affect demand of oil and gas, hence reducing their profitability. Priority– Owing to the changing inflation trend, the best practice would be to improve operational efficiencies by cost-control strategies and investing in technologies meant for streamlining their operations. This can be achieved by investment in AI for enhancing successful predictive management. The organisation would gain from retention of their efficiencies with costs maintained/balanced despite inflation. Social factors For this factor, Nabella et al. (2022) define it as the scope in which business environment demographics and culture impact on organisations sustainability. For example, in UAE where ADNOC operate, the social factor is defined by young employees with varying expectations including sustainability getting engaged. Also, the culture of sustainability by reducing the emissions is a community-based preference positively impacting the organisation success. Hence, as noted in Taherdoost (2021), despite of social factor being relevant for managing organisation risks, likelihood of developing fresh opportunities to enhance development of new energy is instrumental. Priority– Owing to the identified factor, priority need to accelerate application of renewable energy approach inclusive of hydrogen gas energy and carbon emission. This is part of restructuring of their operations. Restructuring would guarantee sustainable operations. |
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