The aim of this essay is to provide an understanding of the critical issue of Rio Tinto in the context of business and management. The essay gains the understanding of internal and external factors that impact on the organization as well as its decision-making process. In addition to this, the essay analysis the domestic and international factors that affect the structure and strategy of the business. At the end, the essay provides useful recommendation and conclusion related to the critical issues of Rio Tinto related to business and management.
Rio Tinto is the world largest mining and metal company in the Australia. There are various issues that has been faced by the Rio Tinto in context of management and business i.e. anti-union behavior, failures in the health and safety of workers, increased the use of precarious workers, poor relationship with the communities of business, irresponsible activity related to politics, failure to respect the rights of indigenous people and lack of transparency in the business (Industriall global union, 2016). These issues impact on the overall environment of business and management of Rio Tinto. All issue has been impacted by the climate of the business. Rio Tinto constantly implementing new strategies and engineering techniques that will aim to reduce the environmental impact on business as well as management (Cheney et al., 2010).
Some internal and external factor impacts the business and more challenging than other. On the other hand, the business works to improve internal and external factor to make the grow the economy and decrease the level of spending (Oliveira and Martins, 2011). The internal and external factors that affect organization and their decision-making system can be described as below-
Organizational structures- Organization structure is an internal factor that will affect the day-to-day operations of the Rio Tinto. The organization structure affects the decision-making system of Rio Tinto and enhances the performance of the business through creating a specialized department within the organization (Ford and Richardson, 2013). The people who involve in a different department can manage various responsibilities in those specialized areas.
Environmental Forces- The environment forces affect the ability of business function. There are various environmental forces that are related to the external environment of business i.e. customers, government, economy, public opinion and competition (Eweje et al., 2012). These factors influence the marketing decision-making system of Rio Tinto. On the basis of these environmental factors Rio Tinto decisions related to the purchasing, manufacturing, research and development, technology and many more.
Risks confronting the firm – Rio Tinto work to reduce the risk that damages the operations of the business. There are various kinds of risks that affect the business decision-making system such as- innovation risk, cyber security risk, growth risk, productivity risk and risk related to cash optimization and many more (Wong et al., 2011). The decision of management involves risk and uncertainty that will affect the rational judgment of the business.
Organization and business practices– Organization and business practices of Rio Tinto are restoring trust in their business. The business practices increase credibility positive essays towards change for the organization effectiveness. There is a link between the organization effectiveness and positive business practices in the organization (Manzoor, 2012). In addition to this, the business decision is always influenced by the organization and business practices because it will affect the future financial and human resources. The better business practices improve the decision-making process and increase the relationship between organization members.
Organizational functions of diverse firms – Organization function of Rio Tinto can be thought as the different department like human resources, marketing, information technology that will impact the organization structure. Therefore, there is a link between effective organization function and effective organization structure (Wong et al., 2011). With the help of various organization function of Rio Tinto, the business uses multiple perspective analysis to take decisions. In addition to this, organization function is helpful for short term decision to solve the various problems that are raised due to the action of employees.
The business that is doing on international basis is not same as doing business at the domestic basis. In the present context, there is a requirement of new skills and new knowledge acquire about the country in which business the organization is operated (Islam et al., 2011). There are some factors of domestic and international organization affect the structure and strategy of business in an effective way, which can be described as below-
Market analysis- It is a domestic factor that can provide an understanding of the needs and wants of the customers of business. With the help of market analysis, organization strength, weakness, opportunity, and threats can be identified that are the specific factor for Rio Tinto. Market analysis is helpful to formulate the strategies to develop a competitive advantage (Cerrato and Piva, 2012). The strategy follows the structure of market analysis and the market structure support the strategy of the business.
Different culture – One of the biggest international factor of Rio Tinto is the different culture in different countries that can influence the structure and strategy of the organization. It is difficult to develop a business strategy for the internal business because the taste and preference of the different culture customers are different for goods and services (Czinkota and Ronkainen, 2013). In addition to this, a different culture is very challenging to initiate and implement the strategic and structure change in the organization. Strategy and structure is a headline on the company’s story.
Cyclical Change- Cyclical change is a domestic factor of the Rio Tinto that can be referred to the ups and downs of the economy. Cyclical change can formulate the long-term goals that sweeping the strategic change that can strain the structure of the organization (Brock and Birkinshaw, 2013). Cyclical impact on the domestic business strategy and structure is stronger as compare to the international business.
Different political system- The different political system is cover in the international factor of the organization. It is necessary to understand the political system of the country in which it operates its business. Different countries have different rules and laws that are applied to the business (Daniels et al., 2013). Therefore, different rules and regulations of the government affect the strategy and structure of the organization. In addition to this, the different political system can affect the business strategy and structure because the government is liable to protect the interest of public and government also influence the economic environment.
From the above discussion, it can be recommended that the organization should proactively set up with the decision-making structure of the business. In addition to this, the organization should develop the strategy that will help to increase the organizational effectiveness. It is recommended to Rio Tinto that it should create the specialized department to increase the decision-making process in the business.
From the above discussion, it can be concluded that critical issue of Rio Tinto affected the climate of overall business and management. The essay analyzed that political factor was affecting the business because government protected the interest of the public. Additionally, the essay described that environmental forces were helpful to make the decision related to manufacturing system, marketing system, and technology system of the organization.
Brock, D.M. and Birkinshaw, J. (2013). Management and International Review. Germany: Springer Science & Business Media.
Cerrato, D., and Piva, M. (2012). The internationalization of small and medium-sized enterprises: the effect of family management, human capital and foreign ownership. Journal of Management & Governance, 16(4), 617-644.
Cheney, G., Christensen, L.T., Zorn, T.E., and Ganesh, S. (2010). Organizational Communication in an Age of Globalization: Issues, Reflections, Practices. USA: Waveland Press.
Czinkota, M. R., and Ronkainen, I. A. (2013). International marketing. USA: Cengage Learning.
Daniels, J.D., Radebaugh, L.H., and Radebaugh, D.P. (2013). International Business: Environments and Operations. Australia: Pearson.
Eweje, J., Turner, R. and Müller, R., (2012). Maximizing strategic value from megaprojects: The influence of information-feed on decision-making by the project manager. International Journal of Project Management, 30(6), 639-651.
Ford, R.C. and Richardson, W.D., (2013). Ethical decision making: A review of the empirical literature, Journal of Business Ethics, 19-44.
Industriall global union (2016). Rio Tinto: The way it really works. Retrieved from: https://www.industriall-union.org/rio-tinto
Islam, M.A., Khan, M.A., Obaidullah, A.Z.M. and Alam, M.S., (2011). Effect of entrepreneur and firm characteristics on the business success of small and medium enterprises (SMEs) in Bangladesh. International Journal of Business and Management, 6(3),289.
Manzoor, Q. A. (2012). Impact of employees motivation on organizational effectiveness. Business management and strategy, 3(1), 1.
Oliveira, T. and Martins, M.F. (2011). Literature review of information technology adoption models at firm level. The Electronic Journal Information Systems Evaluation, 14(1), pp.110-121.
Wong, C. Y., Boon-Itt, S.,and Wong, C. W. (2011). The contingency effects of environmental uncertainty on the relationship between supply chain integration and operational performance. Journal of Operations management, 29(6), 604-615.
Wong, E. M., Ormiston, M. E., and Tetlock, P. E. (2011). The effects of top management team integrative complexity and decentralized decision making on corporate social performance. Academy of Management Journal, 54(6), 1207-1228.
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