Critically Evaluate The Concepts And Theories Of Strategic Management And The Relationship Between Strategy, Stakeholder Aspirations, And Governance

Company Overview

Every organization requires a proper structure in order to have a disciplined system that helps to compete in the highly competitive industry. A good organizational structure earns talented employees as well as huge profits. The top management of a particular company gets supported by the identification of the talent needs in the company. The structural planning helps to ensure that there are enough resources and workforce in the company which can accomplish the organizational goals (Lee, Kozlenkova and Palmatier 2015). It is highly important that the responsibilities of the organization are clearly defined among the members of the company and people have their job descriptions and duty outlines. The importance of a good organizational structure is far –reaching. It helps to generate better communication among the employees.

However, for this, the flow of information needs to be transparent which a key factor for an organization. The organizational structure must be designed in a way that the individuals in the departments try to coordinate with other officials. The clear reporting relationships make it easier for the managers to supervise those staffs who are lower in organizational level. A right organizational structure guarantees that the company has right people in their team (Chiu, Chang and Lee 2015). The completion of projects efficiently is also increased enhancing the capabilities of the team members. There are certain management functions which require greater emphasis. A lack of well-structured organizational hierarchy also lacks sufficient human resources. Hence, in order to progress fast and smoothly, organizations need to develop well –structured team and hierarchy of members. I am the accounts manager of L&D and Sales /Logistics units of Almarai who is provided with the responsibility of finding the issues for poor communication and collaboration and resolve them as soon as possible. The present report will begin by giving an outline of the company Almarai. It will analyse the internal and external environment and find out the area of issues. It will conclude by giving recommendation on how the issues can be resolved by applying certain methods and strategic ways.

Almarai is the leading food and beverage manufacturer and distributor in the Middle East. This is also considered as the world’s largest vertically integrated dairy company. It is a Saudi –based conglomerate which is listed on the Tadawul stock exchange. The key people of the company are Georges Schorderet (the CEO of Almarai), Sultan Al Kabeer (chairman). The founders of the company are Paddy McGuckian and Alister McGuckian. The company has the annual revenues of almost 10 billion.  The company was started in 1977 and since then the quality of the products is high in range (Almarai.com 2018). The product quality is the main factor the engage customers for long and the simple equation of delivering better quality food to customers is known to the company. The Board of directors and the senior management takes care of all the decisions and they have engaged their dynamics in farming, manufacturing, and distribution. Skilled employees are needed for the advancement of product quality and business advancement. The quality check-up and controlled mannerism is the key deliverance from the company. Headquarter of the company is in Riyadh, Saudi Arabia (Almarai.com 2018). The company is active in five categories like dairy, bakery, juice, poultry and infant nutrition. The company is focusing on the education and excellence of employees and that ensure the productive nature of the company.  

Business Case

It has been found from the company literature that the Almarai Company had started with only 350 cows holding the hands of its founders. Over the past three decades, the company has expanded significantly. As of now, the company possesses more than 200,000 cows around the world and has earned the position of world’s biggest integrated dairy company. In the year 2009, the company has partnered with Pepsi Co. and has also acquired many large businesses. In the year 2012, few representatives were invited by the company from international press as well as from the financial leaders of Saudi Arabia (Almarai.com 2018). They visited the 60 miles wide main facility of Almarai Company that is located in Al Kharj. The Al Kharj facility consists of the juice and dairy processing operations and also the bakery facility. The first infant nutrition factory of the region is also located here. An innovative California model is used by the company to run the huge dairy productions in the driest regions of the world. In the Gulf Region, there are more than 55,000 retail stores of the company. The company has been credited with the award of ISO22000. It has also received the ISO- 9001-2000 across all the divisions of the company such as farming, processing, procurement, distributions, supply chain and others.

Since, the organizational structure of a company is the key contributor for the smooth development of the company, it has to be maintained properly. The Almarai Company has the functional type of organizational structure in the L & D and sales and Logistics units. Although there are various advantages of this type of structure, the disadvantages are also high and creating communication and collaboration issues in the units. A functional organizational structure is a type of structure that is divided into few smaller groups which is based on some special functional areas including finance, IT or marketing. This type of functional departmentalization allows for greater operational efficiency. This is because the employees with shared knowledge and skills are separated and grouped by the function. However, this type of structure has in many ways benefitted Almarai but the disadvantages are also threatening. The different functional groups of the company are facing difficulty in communicating with each other. Consequently, this is decreasing innovation and flexibility within the organization.  In Almarai, the organization is divided into various groups by their areas of specialty.  The particular areas are sometimes called ‘silos’. These ‘silos’ or areas are disconnected from each other and the top management is also consisted of few functional heads. Hence, communication is only possible when the department heads of each of the functional department come into contact with each other.

There have been many advantages of functional type of organizational structure which is reflected in the increased operational efficiency of the employees of Almarai. Due to the functional type of organizational structure, the specialist groups can operate independently along with the management which acts as a cross communication point between the functional areas. The departmental issues are resolved fast with the help of shared skills and knowledge of the groups. However, this type of organizational structure has led the Almarai Company to suffer from poor coordination and communication issues across the functional departments. The departments have lack of understanding and focus more on their own aims and goals rather than fulfilling the overall objectives of the company. The communication is somewhere rigid and slow to respond to few particular environmental changes. When the company tries to respond to environmental changes or fall in some problems, the innovation is stifled down among the functional departments because there cannot be any innovation without collaboration. The specialization has narrowed the viewpoints down and there is a lack of overall perspectives.

I have been informed about the structural deficiencies via emails from few of the responsible managers of the company. They have found that there are symptoms of structural deficiencies and need to be mitigated as soon as possible. The mails evidenced that there is a significant issue that will take heavy toll on the well –being of the Almarai Company. The symptoms are as follows:

• Slow decision making – The decision making in the departments of the organizational has been found to be slow. Hence, a divisional decision-making needs to be fostered in order to enhance the innovative to the spirit in the company.
• Lines of communication is unclear – The employees are seen to be bypassing the standard chain of the commands. Few of the employees think that their voices are not heard properly and conveyed to the management directly. They are feeling that they cannot talk about their concerns or suggestions to the president or the vice president
• Territorialism- Due to lack of communication and collaboration among the departments the territorialism is also becoming paralyzed. The employee resource disagreements and the budget show that there is a rift in the organizational structure.
• Unequal Distribution of work – It has been found in the L & D unit of the Almarai Company, that the distribution of work is unequal. In one part of the company, employees are overloaded with tasks, in other part employees struggle to find sufficient task to stay busy.
• Low Productivity- Since productivity is the key metric to measure the success of an organization, it has also determined that Almara is suffering through poor communication, constraints in employee empowerment and motivation and also inefficient resource allocation issues. The productivity of the organization has decreased up to 40 % in a year due to inappropriate organizational structure.

The redesigned structure will be associated with the norms and regulations of the company at different levels. The functional type of organizational structure will be completely changed and in that place, there will be divisional type of organizational structure. The divisional structure is a type of structure which allows the functional groups of the organization work under a division. These divisions will correspond to either the geographies or the products. Each of the divisions will contain all the necessary resources and functions in order to support the product line or geography such as the IT, marketing and finance department. The divisional structure will be useful for the Almarai because the failure of one division will not threaten the other departments. The Almarai Company will be divided into multidivisional structure and the subsidiary companies will also be benefited by using the parent company brand name. The collaboration problem will be easily resolved when there will be clear communication among the members of the divisions. The product and geographic divisional structure will be characterized as follows:

• The product departmentalization- A divisional structure which is organized by the product departmentalization suggests that the operations related to the products and services of the company will be controlled and conducted under one manager. Separate works will be done by separate divisions.
• The Geographic departmentalization- The geographic departmentalization will involve the groups which are based on geography and operate geographically. It is important because it will examine the brand responses across regions and invites flexibility in the product offerings and marketing strategies. This approach is also known as localization.

The Almarai Company will be highly benefitted by this new type of organizational structure because this type is perfect for those brands which have a wide variety of product offerings. The whole organization will be controlled by the central management although most of the decisions will be left autonomous.

It is well known that organizations are the entities that which exist for a particular purpose. This purpose is to fulfill the core objectives. There are few people connected with those objectives and help to ensure that those tasks are fulfilled properly. Individual members are given specific responsibilities and decision making tasks who are supposed to make plan, coordinate, direct and control the business operations of the organizations. Organizations are the open systems which convert the inputs into the outcomes. However, the environmental factors also influence the functions of an organization. It is also equally considerable that the basic issues faced by the organizations are mostly related to the organizational structure, interdependence and relationships. According to the socio-technical model developed by the Tavistock institute, in any organizational system, technical aspects or the task aspect are interrelated with the social or human aspects (Fairfield 2016).

This concentrates on the relationships between the management structure of the organization and the technical process of conversion. Hence, it can be deduced that the structure of an organization matters a lot for the smooth continuation of the business operations. According to Lee, Kozlenkova and Palmatier (2015), organizational structure comprises of tangible and regularly happening features which support to structure the behaviors of the organization’s members. It provides a framework for the functions and activities which are required to attain the organizational goals. An organizational structure also defines and clarifies the way the operations must be grouped and unified together. It dictates some specific roles, authorities, power and responsibilities among the members of the hierarchy. Hence, the organizational structure can be referred to as centralized, functional, divisional ad matrix processes.

The functional structure is nothing but the most common structure where there are no divisions but only departments with department heads. The functions may differ from one organization to another. However, communication and coordination issues are always present in the functional structured organizations. The divisional structure is a type of structure which allows the functional groups of the organization work under a division. These divisions will correspond to either the geographies or the products. The centralized structure is another type of structure that completely controls the decisions and activities of the organization, the subsidiaries and other regional units.

The company headquarters are given the responsibility who are also responsible for defining the policies, targets, procedures and budgets to be followed in order to help the tasks get accomplished (Koufteros, Peng and Peters 2014). It has been found from many empirical studies that by using the centralized structure, the divisional activities can be maintained and at the same time the functional specialist can also be provided proper guidance. On the other hand, the decentralized or the divisional structure is a type of structure that provides autonomy to the divisions, strategic units if business and also to the subsidiaries so that the desired results are achieved.

The functional organizational structure has been evolved by F.W. Taylor when he worked as a foreman.  According to the views of Koufteros, Peng and Peters (2014) , the fictional organizational refers to the type of organization that is separated into a number of functions which includes the production , finance , personnel , sales office and other research development. The different functions are performed by expert people. Studies support that since, there is no direct controller or boss above the head of the employees, it becomes difficult to achieve the coordination and smooth workflow. Since the workers work under different bosses, there is difficulty in achieving proper discipline. Johnson, Leenders and McCue (2017), are of the opinion that the morale of the workers starts going downwards. The employees who are non-supervisory, feel uncertain about whim they should turn to get advice when fallen in some problems. Hence, action cannot be taken immediately because the control is divided among others. Leadership conflicts also may arise due to the equal rank of people in the same department.

According to Santos, Pache and Birkholz (2015), the large companies which serve a variety of customer bases or operate in a good number of geographic regions are the most benefitted by the divisional structure. It is a kind of decentralized organizational structure where each division works as a separate company and offer various profits for the company as suggested by Johnson, Leenders and McCue (2017).  However, it is not that it is an ideal organizational structure because like other types of organizational structure, it also has its own pitfalls but is better that the functional structure in many ways. The first and most important advantage of the divisional hierarchy is self –sufficiency. In this type, there is the scope for the divisions to operate separately like an individual entity.

According to Savery (2015), the separate management structure helps to make the decisions quickly without any such need for communication or approval from other divisions. Each division is sufficient with their own equipment. Resources and supplies that supports a more autonomous process of operations.  Another advantage of the divisional structure is that; a high degree of specialization is incurred in the workforce. In this type of structure, the workers can work efficiently and cooperatively focusing on some of the specific projects which helps the division to accomplish its goals. The managers get proper knowledge of the queries and problems of the workers and at the same time grow good sense off teamwork.

Hence, it can be said that the divisional organizational structure will be beneficial for the Almarai Company because it will reduce the communication and collaboration issues in the organization and promote it towards a better future.

The internal structure of Almarai is based on the regional food companies. In the Middle East, the foundation and the manufacturer opportunities are limited in case of the beverage industry. The distribution of the food and GCC states, along with Egypt and Jordan regions are under the accession of Almarai. 85% of the 42,700 employees have completed the online training and the company has 400 operational efficiency projects in 2017. There is an additional 5% improvement in fuel efficiency and the company become ranked in 33 positions in 100 most innovative companies (Dixon 2014). Global trend, religion trend and retail trade changes are important and all these decisions are made by the administrative department. Innovation creativity and from farm to table process encourage better packaging and gain better distribution also for the formulation of the product lining.

The success factor of the company and the world-class marketing opportunity is starting with advanced processing plants. The distribution expertise and reinforcement of innovation are formulated through the process. HH Prince Sultan bin Mohammed bin Saud Al Kabeer, the visionary chairman of the company transforms the traditional diary market and deliver a rapid increase in the domestic market. The process of infant nutrition is the innovative internal structure that formulates the process for the development of the business in case of the infant engagement. The company is engaged with 50,000 shareholders thus distribution and marketing channel is strengthening through the process.

As mentioned earlier that the organization is observed to face significant amount of issues in managing its operation owing to two different aspects which are the communication and the collaboration. For a service industry organization these are significantly important aspects. The presence of effective communication inside the organization makes sure that the organization is able to manage the employees, resources and the flow of operations in the desired manner (Benzer et al.2017). At the same time for food industry organizations, the communication helps in building a good reputation among the customer which earns good share of customer loyalty for the organization. Apart from this the collaboration is also a significantly important aspect for the organizations in making sure that they be able to conduct the operations in the effective manner.

The diversified customer demands of the modern food industry are observed to be taken care by the effective team work from the part of the employees and in doing so the collaboration proves to be of great significance. The mentioned organization with the functional organizational structure was not able to get it (Alexiou, Khanagha and Schippers 2018). Hence the application of the divisional organizational structure is desired for the organization where the flow of the communication and the collaboration among the different parts of the organization will be better as desired for a company operating in the food and beverage industry. The implementation of the divisional structure will help the organization in having a better scope in the execution of the company’s wish of expanding the business to outside of its current operational area. The restructuring needs to be done following the divisional structure where there will be visible presence of the different lines of divisions for the organization.

 As it is observed that the organization is currently having different departments like the farming, procurement, supply chain, distribution, technical research and development and processing, the collaboration and the effective communication among these departments are observed to be absent (Ilin et al.2016). The current organizational structure is observed to make the flow of the communication and the information limited to only inside the department. Whereas the organization was facing significant amount issues cases of emergency and as there was not any sort of productive communication among the different departments, the organization was observed to suffer. The implementation of the divisional structure will make sure that the departments be able to fix their performances and responsibility in the best way possible and along with that the overall communication of the organization across the various departments get improved (Streseet al.2016).

The organization is in need to be restructured in the format where the various departments like farming, procurement, supply chain, distribution, technical research and development and processing will be considered as divisions and the managers will have the power to take decisions regarding the operations of their respective departments. With the interest and planning of business expansion on the pipe line, the organization will be restructured in such a way where the subsidiaries or the different branches of it will experience the presence of the mentioned departments in their regions (Van der Voet 2014). This will help the organization to have a structure which will help in the rapid growth of the organization. However, the implementation of the structural will be difficult in terms of the bulk investment and the labor issues, yet the restructuring will be significantly helpful for such a large and dynamic organization.

The organization needs to monitor the improvement of the restructuring through the eyes of the managers and the employees. The real condition of any organization is best known by the managers and that is the main reason behind the recommendation of the fact that the evaluation of the success of the implementation of the plan needs to be conducted with fruitful comments of the line and divisional managers (Ashkenas et al.2015). The conduction of the frequent general meetings with evidential reports on the progress of the restructuring will be the only possible path for the evaluation and monitoring.

As it is a structural change, the impact of it is expected to be significant for the organization. Now in such cases, the intent of the employees, managers and divisional supervisors are observed to be the major focus of the organization. In order to implement the structural change without any sort of significant issues, the organization is in need to introduce the rewarding policy for the specific departments and the employees of it. As the improvement in the implementation of the structural change will depend on the people inside the organization, hence their acceptance of the change and the progress with it is much needed for triggering.

Conclusion 

Therefore, from the above discussion it can be concluded that structural planning helps to ensure that there are enough resources and workforce in the company which can accomplish the organizational goals. It is highly important that the responsibilities of the organization are clearly defined among the members of the company and people have their job descriptions and duty outlines. The importance of a good organizational structure is far –reaching. It helps to generate better communication among the employees. A lack of well-structured organizational hierarchy also lacks sufficient human resources. Hence, in order to progress fast and smoothly, organizations need to develop well –structured team and hierarchy of members. The present report has well demonstrated an outline of the company Almarai. It has analysed the internal and external environment and identified the area of issues. The organizational structure of the company needs to be changed. It has also recommended on how to change the current organizational hierarchy and implement a new strategy.

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