(Solution) Oakwood International 5CO01 Assessment ID / CIPD_5CO01_23_01

The first structure is used in Saudi Aramco which is Hierarchical. Saudi Aramco is the leader in Saudi Aramco oil and gas sector (Aramco, 2024). This is as a leader in the production of energy and chemicals driving global commerce and enhancing living standards of international populations. The organisation hierarchical structure is illustrated in the following;

Figure 1: Saudi Aramco organisation structure

The advantages of use of hierarchical structure include;

Improved career development– By use of the hierarchical structure, which is detailed, it is possible to improve overall career. According to CIPD (2024), employees are able to move from one level to the other which is associated with better pay and benefits.

Increase in loyalty– With clear flow of authority from the top, employees are able to become loyal to their leadership. This is while being committed to their functions (Saputra & Mahaputra, 2022).

For disadvantages, they include;

Costly– As evidenced in their structure (figure 1), the structure is defined with a set of levels. For their entire levels, maintaining them is a cost-intensive practice.’

Reduced decision making success– In the overall hierarchy, multiple stakeholders would be engaged which limit effectiveness of the decision which is made. The decision on employees remuneration and different support (Joseph & Gaba, 2020).

Rationale of Hierarchical Structure

The McKinsey 7-S model can be used to demonstrate rationale of adoption of the structure (Chmielewska et al., 2022). The model is inclusive of hard factors which are strategy, structure and systems with soft elements being shared values, skills, style and staff. The identified factors are interrelated. By embracing the identified factors, they work in collaboration to assist leveraging on competitive advantage. This is with best systems and shared values embraced appropriately. Also, for skills and strategy, hierarchical structure leads to improved career growth. This is with the entire command structure being appropriately planned.

Structure 2- Exxon functional organisation structure

Exxon is an oil and gas based organisation in KSA. It is a major competitor for Saudi Aramco involved in refinery of oil and gas sector (Wagner III & Hollenbeck, 2020). The organisation operates by application of functional structure with different departments working in collaboration. The structure is as illustrated in the following;

Figure 2: Exxon Organisation background

The advantages include;

Motivated and satisfied employees– By use of a functional structure, improvement of the scope of the employees satisfaction in their roles is enhanced. This is noted by Chmielewska et al. (2022) as due to lack of forceful attitude for the employees to execute their functions.

Optimum use of resources– With the departments being independent, there is an assurance of utilising all the resources allocated for them.   The outcome of this is reduced wastages of resources.

The disadvantages include;

Low productivity– Since the structure has many departments which could lack required collaboration, failure of one employee would lead to the entire organisation failure. This is since coordination is not effective hence less performance.

Unmet goals– The expression of the employees in terms of their expectations, feelings and needs is limited and not detailed. This means that the organisation will lack an understanding of all their employees expectations hence not attained.

Rationale of Horizontal Structure

Galbraith’s Star Model is appropriate to evidence importance of horizontal structure (Galbraith, 2021). This is owing to its relevance for developing an organisation holistic and detailed practice. The structure is similarly elaborate and guided by strategy pursued by the organisation (Artavia Muñoz, 2023). With less staff in different departments, using the structure guides in recruiting, development and retention of best employees.