There are several types of business organizations that possess various types of organizational structure and decision making process. It is impossible to understand the decision making process of an organization without evaluating the context of that organization. Contextual factors like organizational goal, environment, organizational culture plays crucial role in the decision making process of an organization (Ardern et al., 2014). Rio Tinto is a British Australian mining and metal company. It was founded in 1873. It is known as one of the oldest and largest mining company in the world. The core business of Rio Tinto is to extract minerals, but Rio Tinto also known for refining bauxite and iron ore. Rio Tinto’s operation has covered six continents, but the organizational management has mainly focused on Australia and Canada. The below mentioned article has articulated the effect of contextual factors on the decision making process of Rio Tinto (“Global home”, 2017).
Rio Tinto is considered as one of the oldest mining organization in the world. It preserves the history of one hundred forty four years. The management of Rio Tinto is running their business successfully in United Kingdom and Australia and in six other continents. It has joint headquarters in London, United Kingdom and Melbourne, Australia. Recently, the organizational management of Rio Tinto has unveiled a new and efficient organizational structure to improve the quality of their service and performance. Recently, the whole structure of the Rio Tinto has been revised under its new chief Jean-Sebastian Jacques. According to the CEO of Rio Tinto, although Rio Tinto provides remarkable service, the new organizational structure has been introduced to strengthen the global network of the organization. The primary objective of the organizational structure is to use their assets to improve their performance and encourage the innovation for the betterment of the organization. Being a leading mining organization in the world, Rio Tinto has a large work force and a strong executive team. There are many successful, experienced as well as talented people in the team who will be beneficial for the growth of the organization. The main motive of this team is to work together to achieve the organizational structure. There are mainly four products groups, such as- Aluminum, Copper & Diamonds, Energy & Minerals and Iron Ore. This group is led by experts who possess huge experience in resource fields. Management of Rio Tinto always tries to provide quality service. They are known for embracing new techniques and strategies to maintain the quality of their product and services. Rio Tinto is renowned name in the world of mining industry (O’Brien and Gunay, 2014).
Although Rio Tinto is the largest organization in mining industry, there are many competitors that are giving tough competition to the Rio Tinto. Some major rivals of Rio Tinto are- BHP Billion Limited, Anglo American PLC (Cooper-Thomas et al., 2013). Due rise of these major competitors, the management of Rio Tinto is facing various challenges every now and then to achieve the desired target. BHP Billion is also a renowned name in the mining industry. It is considered as one of the largest natural resource company. Like Rio Tinto BHP Billion also have product groups like aluminum, copper. It deals with potash, uranium, coal. Another major rival of Rio Tinto is Anglo American PLC. Although, the name of the organization is Anglo American PLC, it has never been American. It is one of the leading names in producing copper, coal. It is one of the biggest coal miners and exporters. The growth of these industries has led the organizational management of Rio Tinto to face various difficulties. There are various other external factors that influence Rio Tinto, such as- economic, socio-cultural factor, technology factors, legal factors, environmental factors.
The rapid growth of raw materials price puts a significant impact on the organizational structure of Rio Tinto.
The mining industry often faces various social barriers as it is considered as one of the villain for the environment. It leads the organization to face various challenges.
The innovation of new technologies has greatly influenced the growth of the Rio Tinto. To maintain the organizational development and achieve the desired target the organizational management of Rio Tinto needs to embrace the new techniques.
Mining industry often faces difficulties due to legal issues. Legal factors have influenced Rio Tinto significantly.
Being a mining organization Rio Tinto often faces various challenges due to environmental factors. Several natural calamities may lead the organization to face an awful occurrence.
In Spite of being a leading organization in mining industry, there are many risk factors that the Rio Tinto is suffering from. Some of them are as follows:
The biggest challenge for the mining organization is the locality and the people around the society. According to many people in the society, mining organizations are villain. According to them these mining organizations are highly responsible for global warming and other environmental pollution. It leads the organization to face social barriers. This is considered as the major risk for Rio Tinto (Li et al., 2014).
Lack of transparency is another major risk for Rio Tinto. It is important for the mining organization to maintain transparent relation with their stakeholders and locality around the organization to avoid many future risks. The impression of the mining industry on the society is very poor. Lack of transparency may lead the organization to meet an awful consequence (Mzembe & Meaton, 2014).
Being a mining company, high rate of energy consumption is another biggest risk for Rio Tinto. The management can prevent this risk by choosing a proper source of energy.
Poor selection of suppliers can be major risk for Rio-Tinto. It may lead the organization to face an awful consequence.
Being a mining industry Rio Tinto often faces many social and legal issues. It is considered as one of the major challenge for Rio Tinto.
It is often evident that pressure groups portray mining industries as a villain for the environment and they organize social awareness campaigns. Rio Tinto, being a leading organization often faces such issues. This is one of the major challenges for Rio Tinto (Fleming & Measham, 2015).
Rio Tinto is primarily based on four product groups, such as- Aluminum, Copper & Diamonds, Energy & Minerals and Iron Ore. These product groups are led by experts who possess a huge experience in mining industry. These groups play crucial role in development of Rio Tinto. The development of the organization is highly dependent on the function of these groups. There are various functions of each group: Aluminum group is mainly focuses on production of high quality bauxite. The primary objective of this group is to maintain safety and make profit. Iron Ore group mainly concentrates on world-class iron ore operation of Australia. The objective of this group is to generate high quality Iron Ore. Copper & Diamonds is combination of two businesses. This group aims at making huge profit. Rio Tinto has concentrated on producing energy to provide sufficient energy to other groups. This group plays significant role in development of the organization as it provides sufficient energy to the organization so that other groups can function properly (Weiner et al., 2014). To achieve the organizational target, the management of Rio Tinto believes in employee engagement. The organizational management encourages its employees to provide their best performance to establish a better future for the organization. The management of Rio Tinto appreciates its employees for achieving short term goals. It motivates them to work hard to achieve organizational goal. The organizational management maintains healthy communication with their employees to monitor the performance growth of the organization. It often organizes training program for the employees where the management directly interact with their employees and define the organizational strategies and objectives (Bice, 2014).
Rio Tinto is also renowned for refining iron coal. The management of Rio Tinto highly believes in diversification. They have not restricted the growth of the organization. Instead of being a leading name in the mining industry it has started its operations in refining coal and bauxite. It helps the authority of Rio Tinto to make huge profit. By this unique strategy of diversification Rio Tinto has paved the path of success (Wasserstein & Lazar, 2016). On the other hand, Rio Tinto is associated with various social campaigns to help the society, such as- education campaign for the poor children. The organizational management of Rio Tinto is aware of the fact that the effect of mining industry on the society is unavoidable. Hence, it tries to prevent the harmful effect of mining industry by taking some remarkable initiatives like elimination of green house gas, zero garbage policy and so on (Norman, 2015).
This organizational structure and risk factors and environmental forces play crucial role in the decision making process of Rio Tinto (Kolling, Wittmann & Rushworth, 2014). The organizational management consider these context while constructing any organizational strategy or making any decision. It helps the organizational management to take the right decision which will be suitable for the growth of the organization. The management of Rio Tinto can identify their rivals by analyzing the environmental forces of the organization. It will give a vivid picture of the strengths and weak points of the major competitors. Thus, Rio Tinto management can establish their strategies accordingly to defeat their rivals. By analyzing the risk factors of the organization, the management will be able to make strategies that will help them to earn the social license to run the business successfully (Van Solinge & Henkens, 2014). The organizational management is aware of the fact that the effect of the mining industry on the environment is unavoidable. The management of Rio Tinto tries to avoid the risk by implementing many strategies that can be helpful for the locality and local people. They have taken many CSR initiatives to maintain healthy relation with the society and earn the social license as this license is highly required to run any mining organization successfully. To avoid the risk of power crisis, they have taken an initiative to produce energy into their organization so they can supply sufficient energy to their own organizations. The contextual factors play crucial role in the development of any organization as the organizational managements depends on these factors while taking any decision. Organizational management of Rio Tinto always focuses on this issue to maintain the organizational reputation. It helps the management to realize the loop holes of their system and their strengths and weakness. The management can set their objective according to their strengths and weakness. The major challenge for the mining industry is to save the environment from the effect of the mining industry. Rio Tinto has taken several steps to prevent the environmental pollution by using innovative techniques and strategies. The contextual factors put a significant impact on the organizational structure. It helps the organizational management of Rio Tinto to introduce many new technologies into their organization (Perlaviciute & Steg, 2014).
As per the previous discussion, it can be concluded that the contextual factors like environmental factors, risk factors, organizational structure plays vital role in decision making process and organizational strategy. These factors are highly responsible for the development of the organization. Rio Tinto is one of the leading mining industries in the world. It has many risk factors and environmental forces that have influenced the organizational strategies and decision making. The management of Rio Tinto always considered these factors while establishing organizational strategies. To avoid social barriers and earn the reputation in the society the organizational management has taken some notable steps that are beneficial for the society as well as for the organizational reputation. It is always important for every organization to play the role of a responsible citizen by providing some efficient support to the society that can enrich the social, cultural and financial structure of the society. Although being a business organization making profit is the primary objective of the organization, Rio Tinto has played the role of responsible citizen as well by providing support to the society.
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