Gazprom's Challenges: Government Interference Essay.

1.Nominate the case(s) for analysis and presentation from the list that follows this section

2.Prepare a short paper including at least the following

• Organizational challenge, issue or concerns
• Discuss the theoretical framework
• Describe the change process that the organization introduced to address the concern
• Evaluate the outcome/consequence of the change process and
• Make recommendation(s) suggesting what they could have done to secure a better outcome

Please use the Gazprom(Russian Natural Gas Supplier)

An organisation made the strategies to survive in the market for long time. To achieve the objective the organisation faces many challenges. In another ways, it can be said that the problem face by an organisation is also called Organisational Challenges. Government interference is the reason of many challenges like in the case of Gazprom. It is a global energy which sale of gases, condensate oil and vehicle fuel. In this report, the case study of Gazprom has been taken into consideration to analyse the challenges faced by the company due to following the government policy (Gazprom, 2018). In the beginning of report, the challenges face by the company will be discussed. After that, the theoretical framework will discussed and how the company apply change process to reduce the challenges. At the end of the report, the recommendation will mentioned to handle the challenges.

Government interference

The government of Russia has 50.23% share in the organisation that is why the government take most of the decision of the company (Gazprom, 2018). As per the case, it has been analysed that the prices of the products and services of the company is fixed by the government. The government fixed the prices as per the friendly behaviour of government with the people of Moscow. Moscow is the capital of Russia. It can be said that the government fixed the prices as per the condition and situation of the people of Russia. The more interference effect the company; the company suffer from the loss because the Russian government sale the fuel in lower prices which is not beneficial for the company. Government interference is a major issue which is faced by the company (Heinrich, 2017).

Cost strategy

Russian government fixed the price of services for the Russian consumers.  The Russian consumers get services at 20% rate of market price (Gazprom, 2018). When the company wants to increases the prices of the market; the government stop the company to increases the prices because of winning the election.  Russian government stopped the company for raising the prices due to this step the company suffered loss. The cost strategy is not an efficient strategy for the company because its cost of material is high but sale price of the company is low. High cost and low selling prices is also an issue which is faced by the company. Cost strategy is an essential part of the profit but the company price strategy is decided by the government as per the behaviour of the government with the consumers.

Theoretical Framework

Conflict in Organisation

Conflict in an organisation is an issue which is faced by the company. Due to different thinking of the company and government creates the conflict in an organisation. The company is a semi-government company due to which the decision is taken by the company as well as the government. The political parties focused on the strategies which help them in elections and it also affordable by an individual but the company main aim and focus is on high profit. The different thoughts create the conflict in the company.

Current legal Russian Natural Gas

The company follows the rules and regulation of Russia. The company has a competition with the EU just because of following rules and regulation. In the context of legal environment, the company suffered loss because the government restrict the export of gas and set the limit of sale of fuel and gas. Unfair pricing policy helps the company but sometimes it creates the problems for the company. Service price decide by the government for the consumers as per their benefits not for the company (Shaidurov, and Norkina, 2015).

Natural resources and International Law

The company sell the natural resources which affect the economy of the country and it is also a Semi-government Company. Thus, the company has the responsibility to follow the international law for exporting the services like Investments in natural resources has a long term contract; means the company has to stay in the long term agreement. ECT rules are regulated on the trade but WTO is not drafted in the economy (Boyko et al., 2016).

Determine the impacts

The company analyse the strategies to resolve the problems; for this the company analyse its challenges. The company faced the challenges due to 50% share of government. The company has to change its methods and strategies which have a positive impact on the profit of the company (Digilina, Teslenko, and Abdullaev, 2017).

Develop the process and activities

The company change its SAP process for the higher development quality. SAP process helps the company in transfer the product at the time when the product is ready. It also helps the company in changing the production process without any errors which cannot stop the production. It increases the efficiency and productivity of the company (Holten, and Brenner, 2015).

Develop the communication strategy

The company develop its communication strategy. It has been analysed that the company is a semi-government company so that the company has to communicate with the government for the decisions. Thus, the company takes the approval from the central government for the annual general meeting in which the company as well as the government take the decision for the benefit of the company and think better for an individual (Digilina, Teslenko, and Abdullaev, 2017).

Change process

Implement a support structure

The company implement the support structure; employees of the company are the support structure of the company which helps the company in achieving the organisational goal and reducing the challenges which is faced by the company.

After giving the 50% share of the company to government; the company is continuously growing and the share of Russian Domestic Market is doubled. The government helps the company to cover the gap. With the rising cost of Gazprom and delay in investment program the company loss the market share. But increasing the NGP production the company achieve the high market share in the market. Gazprom activities has 8% share in Russia’s gross domestic market (Gazprom, 2018).

The company has to improve its SAP process which helps the company in improving the productivity as well as the efficiency. It also has to improve the communication with the government to reducing the challenges. The company has to decrease its cost so that when the government reduces the selling prices; the company suffer minimum amount of loss. It has to change its cost strategy to reduce the challenges of the company. The company improve its transportation channels so the company can save the huge cost (Rothaermel, 2015).

Conclusion

From the above analysis, it has been concluded that the company faced the problems due to 50% share of government. The company faced the challenges due to the 50% share of government such as government interference in cost strategies and decision making. To reduces these challenges; the company change its process which improve the efficiency and productivity of the company. The company change its SAP process due to which the company can easily transfer its product in other place without any error. It also enhances the communication process which helps the company in interacting with the government. Communication helps in decision making; the company follows the government policies such as current rules and regulation of Russian government for the Natural resources and it also follow the laws such as international laws for delivering the services above the territories. The company is continuously growing after the government hold the shares of the company. But for achieving the success the company has to improve its SAP process and change its cost strategy. Development in transportation channels helps the company in saving cost. It has been concluded that the company achieve success in the near future by reducing organisational changes.

References

Boyko, E. A., Goncharuk, N. N., Dashitsyrenova, A. D., Kostenko, N.A., Sinitsina, O.O. and Shevyreva, M.P. (2016) About the formation of legislation in the field of chemical and biological safety of the Russian Federation. Gigienai sanitariia, 95(8), pp.717-721.

Digilina, O.B., Teslenko, I.B. and Abdullaev, N.V. (2017) December. Industry 4.0: Contents, Problems and Perspectives. In Perspectives on the use of New Information and Communication Technology (ICT) in the Modern Economy (pp. 32-38). Springer, Cham.

Gazprom. (2018) About Gazprom. [online] Available from: https://www.gazprom.com/about/ [Accessed 17/08/18].

Gazprom. (2018) Strategy. [online] Available from: www.gazprom.com/about/strategy/ [Accessed 17/08/18].

Gazprom. (2018) Success stories. [online] Available from: https://www.gazprom-neft.com/career/success-stories/ [Accessed 17/08/18].

Heinrich, A. (2017) Large corporations as national and global players: the case of Gazprom. In Explaining Post-Soviet Patchworks (pp. 97-115). Routledge.

Holten, A.L. and Brenner, S. O. (2015) Leadership style and the process of organizational change. Leadership & Organization Development Journal, 36(1), pp.2-16.

McGuire, D., Todnem B. R., & Hutchings, K. (2007) Towards a model of human resource solutions for achieving intergenerational interaction in organisations. Journal of European industrial training, 31(8), 592-608.

Rothaermel, F.T. (2015) Strategic management. McGraw-Hill Education.

Shaidurov, V.N. and Norkina, E.S., (2015) Law, Imperial Bureaucracy and Russian Jews Beyond the Pale of Settlement in 19–Beginning of the 20th Centuries. Bylye Gody, 37(3), pp. 623-632.