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Reply to my first classmate: NAWAF

  In 2020, Saudi Aramco underwent organizational change by restructuring its downstream businesses (Dhahran, 2020). This led to a new operating model that reorganized downstream operations into commercial units: fuels, chemicals, power and pipelines, distribution and terminals all grouped in the fourth unit. The fuels unit comprised refining, trading, retail and lubes. The company’s downstream reorganization aimed at enhancing its competitiveness and supporting the vision of becoming the global leader in pre-eminent integrated energy and chemical company. The reorganization was also influenced by the company’s urge to consolidate its downstream business to improve the control of its subsidiaries.

      The reorganization goals were to help the company strengthen its industry leadership in sustainability, reliability, efficiency, and safety (Dhahran, 2020). The downstream reorganization strategy focused on expanding growth opportunities in the hydrocarbon chain to widen the company’s earnings, provide resilience to oil price volatility, and maximize the increasing demand for petrochemical products. The organizational change was assessed and evaluated by determining whether the reorganization goals had been achieved.

       Saudi Aramco used quantitative metrics to evaluate the organizational change. The organizational change goals were based on quantitative aspects, making the quantitative approach the most appropriate metric. The company’s goal was to create more growth opportunities and additional sources of earnings. These goals were achieved through increased profits that the company recorded in the first three quarters of 2021 (Abuljadayel, 2021). The organizational change measures should be selected by considering key factors to lead to challenging and achievable goals. They should be appropriate and fair to avoid mixed signals and lead to accurate and useful data (Cawsey et al., 2020). Saudi Aramco organizational change measurement was based on financial success.

         Quantitative metrics are considered the best change measurement approaches. They are usually based on the data that can be analyzed to give accurate results.  However, they ignore the aspects of qualitative aspects such as opinions and subjective characteristics that should also be considered in the measurement of change. Saudi Aramco’s quantitative metric was based on the financial data used to measure the company’s financial performance in 2021.

          It is recommended that Saudi Aramco should revise its quantitative metric to a customized balanced scorecard model. The model focuses on the organization strategy and vision by considering different aspects, including financial shareholders, customers, employee learning and growth and internal business processes (Cawsey et al., 2020). The model improves communication, facilitates alignment and ensures the structure is included in the business strategy. Using this model to measure the change in Saudi Aramco improves the understanding of the organization’s reorganization structure. It shows that change can be measured at the organizational and departmental levels. The financial success realized by the company in 2021 is an illustration of giving every individual in the company a common goal of measuring change. As such, it can be said that a balanced scorecard effectively connects individual employees’ goals to organizational goals.

 

References

Cawsey, T. F., Deszca, G., & Ingols, C. (2020). Organizational change: An action-oriented toolkit (4th ed.). Thousand Oaks, CA: Sage Publishing. ISBN-13: 9781544351407

Abuljadayel, F. (2021, October 31). Saudi Aramco tops Apple, Google to be world’s most profitable company in Q3. Arab News: https://www.arabnews.com/node/1958451/business-economy

Dhahran. (2020, July 14). Aramco announces Downstream business reorganization to enhance performance and support. Aramco: https://www.aramco.com/en/news-media/news/2020/aramco-announces-downstream-business-reorganization-to-enhance-performance-and-support#

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Reply to my second classmate: MOHANNAD

Artificial intelligence (AI) has emerged as a top technological priority of organizations over the past few years, largely fueled by the availability of big data and the emergence of sophisticated techniques and infrastructure. The number of organizations implementing AI grew 270% in the past four years and has tripled in the last year. While there is much excitement about the potential business value that AI can deliver, organizations that are beginning to adopt AI solutions are facing numerous challenges which prevent them from realizing performance gains Organizations, therefore, need to invest in complementary resources to be able to leverage their AI investments.

There are many ways to measure the impact of Change Management. Some commonly used metrics include user adoption, utilization, speed of adoption, perception surveys, training delivery, user competency, behaviors, etc. It can easily be overwhelming to decide what works best in your situation. It is also difficult to pinpoint a desired set of metrics without having a clear picture of the type of change and organizational context.

Benefits

1. Focus: business metrics can help you focus on a particular aspect of your business to the exclusion of all others. For example, you can keep a continuous measurement of gross margin which can reflect whether target margin is being achieved. However, it can bring disadvantages if customer satisfaction is ignored. The project might be making a healthy profit at a cost of losing the customer base. The tight focus of metrics helps you filter out non-essential measures, but they may sometimes cause ignore important factors.

2. ​​Forecast Metrics

Some metrics are based on forecasts, such as project productivity. These metrics provide a measurement of how well you are meeting expectations.

3. Subjective Metrics

Even though the diligent application of metrics according to numerical standards, some metrics retain an element of subjectivity. For example, a common metric is customer loyalty. It can be assessed through surveys and direct feedback from customers when they buy. These methods are subjective because they are anecdotal. The advantage is that this gives an idea of how good business is at keeping customers.

Disadvantages

1. Standardized

Metrics are generally standard for all industries, whereas each business has to be designated its own customized metrics for proper evaluation. For example for a particular project with short life gross margin metric can serve the purpose of evaluation which cannot be a proper evaluation measure for a project having a long-term purpose.

2. Simplicity

The purpose of metrics is to put complex financial matters into data form for easy validation. However, sometimes this simplicity can serve as a drawback since it may ignore related concerns. For example, a project might be showing better financial performance than that of its competitor's but if it is due to the competitor's poor performance it'll deliver a misleading picture.

3. Over-Reliance

Sometimes over-reliance on standardized business metrics by benchmarking them can put to negligence towards uniqueness and demand of the particular project to give a complete picture of that particular project.

Understanding what complementary resources need to be developed and implementing them is imperative in the quest of realizing performance gains from AI. In other words, it is time to examine how organizations build an AI capability. Managers can overcome these difficulties by having a planned approach towards change implementation, using proper communication methods and tools, creating a broad consensus by pulling everyone on board, and by overcoming employee resistance by providing them more information about the benefits of the change.

 

References

Artificial intelligence capability: Conceptualization, measurement calibration, and empirical study on its impact on organizational creativity and firm performance

PatrickMikalef, ManjulGupta, 2021

The Cost and Benefit Study and Projection of Privatization Effectiveness: The Case of Metrology Corporation Malaysia Sdn. Bhd. (Mcmsb)

Murni Izyan Hussain,Mohamed Sulaiman, 2020

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