As opposed to grouping employees on basis of their job descriptions, this structure group them in specific segments based on products and services they are producing (AIHR, 2024). An example of the structure is illustrated as follows;

Figure 1: Divisional Organisation Structure Example

An example of organisation using a divisional organisation structure in Saudi Arabia (KSA) is Saudi Aramco. This has different business roles monitoring and supervision by various managers in the entire organisation (Organimi, 2024). The advantages of an organisation using the structure are;

Highly flexible and adaptability– In oil and gas industry characterised by immense disruptions, using the structure ensure the organisation adopt to changes substantially. Divisional structure are similarly free from any bureaucracy which impact effectiveness of making decisions.
Opportunity to innovative and embrace technology– With the freedom of working in departments, Saudi Aramco is very innovative as the employees are always ready to embrace change. This is with a customised customers’ needs in the organisations.

The disadvantages of the structure are;

Lack of Cross-Organisations operations interaction– Operating a divisional structure, individuals are isolated and lower communication effectiveness. According to Gaspary et al. (2020), lack of siloed thinking affect knowledge sharing, innovation and Saudi Aramco operations.
Resources Duplicated– For Saudi Aramco operations, they operate in various departments in both onshore and offshore in oil and gas refining. The duplication of their functions impact on the organisation direction operations.

In summary, the underpinning rationale of use of divisional structure is for both onshore and offshore organisations. This enhance the coordination in the different departments of employees of different diversities.

Matrix Organisation Structure

This structure is characterised by multiple leaders in the same organisation (Indeed, 2022). The rationale of this is to maintain direct interaction among the different departments. This is to ensure innovation is embraced in products and services sourcing. An example of matrix structure is as illustrated in the following;

Figure 2: Matrix Organisation Structure

An example which use the matrix structure is the Saudi Arabian Airlines which operates various regional departments in their matrix with various functional roles.

The advantages of matrix structure are;

Teamwork– With each functional unit being comprised of staff, broad talent pool is attracted in the organisation. The different employees work as a team in executing their assigned functions.

Efficient resources use– In an organisation such as Saudi Arabian Airlines, the matrix structure means that the organisation resources allocated in various functions is appropriately utilised. This is with minimal wastages incurred by recruiting many employees.

The drawbacks are;

Unclear job roles– With the different functions existing in this structure, the roles of the different employees are not clearly stipulated. The situation is dire in the Airlines company as some of the employees work internationally.

Conflicting priority– It is highly likely to have the functions operated by employees with varying assigned roles and functions. As such, understanding their specific functions is a challenge leading to conflicts on roles emerging (Indeed, 2022).

In summary, the underpinning rationale of using this structure is to ensure a successful implementation of large operations. The Airlines is a large scale organisation operating in different countries hence efficient coordination by using matrix structure.

1.2 Organisational strategy; products and services meet customer’s needs

Organisation Strategy

An organisation strategy is defined as a long-term plan guiding an organisation process of allocating their resources for supporting different business activities. According to Fuertes et al. (2020) it offers a guide on an organisation achievement of their objectives. The outcome of organisation strategy is assisting an organisation in meeting their set goals and developing strategic plans. A familiar organisation is Saudi Aramco. The organisation operates as a leading producer of energy and chemicals driving global commerce and enhancing the lives of people globally (Saudi Aramco, 2024). With an upward of 91 years of experience and 73,000 workforce, the organisation pursue a sustainable organisation strategy.

The organisation strategy is informed by the need for providing highly reliable and affordable energy supply. With a primary focus on oil and gas, the organisation also prioritise on low-carbon energy supplies developed for complementing conventional source.

Also, Aramco organisation engage their human resources for developing reliable, affordable and sustainable energy for communities globally. This is while delivering optimum value to shareholders in their business cycle.

Strategic goals and objectives

The economic environment in which an organisation operate inform the need to evaluate market dynamics as core area of their strategy (Fuertes et al., 2020). This inform the need for having strategic goals and objectives which are centered to factors in a market environment. A case example is Saudi Aramco whose strategy is meeting energy demands of global communities. For the purpose of achieving this process, they achieve excellence and appropriate energy sector for enriching their environment and employees. Also, by pursuing research and innovativeness, they support the organisation vision and harness KSA Vision 2030 (Samargandi et al., 2024).

Strategic goals and products/services

Considering Saudi Aramco strategies, link to strategic goals and objectives is guided by economy and business environment operations (Samargandi et al., 2024). For understanding the link, referencing to the Porter’s 5 Forces Analysis is appropriate. This evidenced the scope in which their strategy promote leverage on competitive advantage, buying power and power of suppliers. Hence, Saudi Aramco reinforce their premier upstream oil and gas positioning, optimised stewardship of KSA hydrocarbon resources. Also, their strategy enhance maximisation to long-term value with their upstream strategy focusing on leverage on competitive advantages in production scale.

Additionally, Saudi Aramco which operate in oil and gas sector, they prioritise on offering high quality oil and gas to individual, government and industrial clients. By ensuring a relevant integration, the organisation is able to succeed both locally and internationally. Competing in an international scale, Saudi Aramco distinguish itself in terms of sustainability and market dominance.

1.3 Impact of interest rates, inflation

Interest Rates Increase

The interest rates are identified in Bauer and Rudebuschv (2020) as the extra charges paid by borrowers to their lenders as a substantial amount of the initial capital/resources offered. This means that the interest rates are expressed as a percentage of the entire amount of money which is borrowed or saved in a particular period (majorly annually).

In KSA case, as of April 2024, interest rates were pegged to be at 6.21% contrary to 6.22% annually in past months. Hence, due to the interests rates under a continuous change, they directly influence success of the organisation. As evidenced in Vayanos and Vila (2021), the importance of the interest rates is broadly impacting individuals success in particular economic conditions and spending resources. In a sustainable practice, this directly impact costs of products and services. For the organisation, their ability to attract and retain customers.

Priority– Owing to the increase in interest rates, Saudi Aramco prioritise in expanding their business portfolio in the economy. For the organisation, they are guided by need to get the KSA government support to increase how they are facilitated financially. The public sector organisations in KSA are financially facilitated in improving their practices. This is contrary to reliance to internal capital or their resources to expand business portfolio.

Inflation

Inflation rates are identified in Adaramola and Dada (2020) as cost fluctuations of products and services due to local currencies losing their value. The inflation changes have positive and negative implication to different individuals and organisations. For KSA, in year 2022, their inflation rates are recorded to be at 2.47%. This is a decline from the 2021 0.59%. Further, in the year 2023, inflation was identified to have gone upto 1.6% in January annually contrary to 2023 which was 3.4%. Saudi Aramco operations are impacted by inflation owing to the policies government in KSA initiate for its management.

Priority– For Saudi Aramco, contraction policy need to be initiated intended to reduce their entire budget and resources used in their operation. The outcome of this would be reducing the amount of their budget in different spend categories and reimbursed for their business practice.

Social Factors

This is identified as the factors influencing and shaping people behavioural practices, attitudes and lifestyle. In KSA, this is informed by culture, societal structures and demographic characteristics (Al-Khraif et al., 2020). In modern workplace, there has been significant changes with Millennials and Generation Z forming a significant part of the labour market.

Priority– By engaging Millennials and Generation Z employees, they would be assured of managing their operations in line with modern business environment . The disadvantage of this include immense costs incurred in the process implementation.

1.4 AI use in organisation; impacts work

Generative Artificial Intelligence

Considering the functions of people practice professionals, use of Generative AI is appropriate to ease their operations (CIPD, 2024). This is through assisting people professionals in accessing to HR data, working on job descriptions and readiness for interviews. For instance, in Saudi Aramco, this is used in recruitment and selection with personalised interactions with these candidates enhanced. This is while improving the outcomes of the processes of talents acquisition, resourcing and induction.

Robotics

Through robotic strategies automation, the organisations are able to fully modernise their operations (Mukherjee et al., 2022). The use of robotics is for empowerment of their staff by offering enough time an energy for strategic decision making strategy. Further, this make sure appropriate and successful human link and prioritising on employees success in managing their health and wellbeing. In regard to scope of adoption, CIPD (2024) highlight upto 14% of modern business environment are being replaced by robotics. As the organisations are transitioning into the future best practice, upto 40% of all people practice professionals would be altered.

Use in Organisations

For Saudi Aramco case, use of Generative AI is contributing to revolutionising of their practices (Aguinis et al., 2024). The organisation would achieve in terms of streamlining their operations intended to enhance creativity and customising operations in oil and gas sector. Taking into account of the risks, there is a likelihood of reputation of the organisation being affected and taking advantage of teaching other. This would contribute to Saudi Aramco achieving an improved efficiency and performance with less costs incurred in the process. Also, for challenges, by embrace of robotics, wrongful actions would be allowed particularly when wrong programming is evident.

Working practices

With Saudi Aramco operating broad business portfolio both onshore and offshore, the different assigned tasks would be successfully automated. The application of the tool would lead to staff capability improved evidenced by how they are managing the customers and overall business outcomes. The challenge of this approach include failure to embrace other technologies which would have been relevant for the organisation. Also, there is no personal touch with the operations due to over-reliance with AI in their operations.

Considering the Robotics, these are used in Saudi Aramco for improving how fast they implementing their functions in terms of quality and level of control. The limitations of the robotics is inefficient in being adaptable and not flexible hence issues with successful roles implementation.

2.1 Charles Hendy’s Model and David Rock’s SCARF Theory

Charles Handy Model

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