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Management Structure Of Saudi Aramco Oil And Gas Company

Explain Management Structure Of Saudi Aramco Oil And Gas Company.

Saudi Aramco is a national petroleum and gas cooperation based in Dhahran. The company has an estimated value of $ 6 trillion, making it the most valuable gas and oil cooperation globally (Kokal and Al-Kaabi, 2010, p. 68). In this paper, three issues are addressed; the management structure of Saudi Aramco Oil and Gas Company, roles and responsibilities of two divisions within the organization and how the corporation is contributing to the local community.

Management Structure Of Saudi Aramco Oil And Gas Company

According to AL Yousef and Stevens (2011, p. 6901), this organization uses its management structure to establish an effective strategic direction and also ensure that it have a competing edge in the market. Further, the governance structure helps Saudi Aramco to build brand image and positive reputation among the customers, business partners, and suppliers.

Saudi Aramco is fully owned by the government of Saudi Arabia and stewarded by a board of directors which encompasses professionals from varied sectors (Anderson, 2014, p. 60). The leadership team is mandated to oversee the business affairs, formulate strategies for mitigating risks, and assess the organization opportunities. Henry and Springborg ( 2010, p. 120) ascertain that the management board includes the company’s CEO, the president,  head of leading Saudi academic institution, government ministers, senior individuals in the oil industry and professionals from the financial industry. The board of directors sets professional standards that are adhered by cooperate management members who ensure that auditing practices are conducted in an ethical and independent manner (Ross, 2011, p. 6).

According to Anderson (2014, p. 61), an auditing body also forms an important component in the management structure of this company. This body operates independently in a process that is monitored and endorsed by the board of directors. The mandate of the auditing body is to ensure a robust and confidential review of the organization operations and offer a transparent and clear reporting channel. Under the auditing team, the company integrates its workforce in its management structure in order to anchor a strong cooperate values and build a future-oriented mind for maximum profits (Fattouh, and El-Katiri, 2013, p. 110). The employees are guided by codes and guidelines formulated by the board of directors as they navigate the global operations of the company. Ross (2011, p. 7) alludes that the organization uses these policies as its benchmark and compass against which it evaluates its performance as well as  that of suppliers, affiliates, consultants and joint ventures based in Saudi Arabia and other countries globally.

ROLES AND RESPONSIBILITIES IN TWO DIVISIONS OF SAUDI ARAMCO OIL AND GAS COMPANY

Kokal and Al-Kaabi (2010, p. 70) affirm that a supplier team that operates under the cooperate governance members is also part of the management structure of Saudi Aramco company. The team undertakings are guided by codes formulated by the board of directors in an aim of ensuring that the values and ethical standards of the organization are maintained across its supplier network. Further, the supplier team is mandated to ensure that the company maintains long-term mutual benefits with stakeholders and create a delivery channel of commitments made by the organizations to its target customers (Mellahi, Demirbag, and Riddle, 2011, p. 410). 

The majority of companies in the gas and oil industry operates by segmenting duties and responsibilities to different divisions in the aim of heightening effectiveness by optimizing on human resource. Each of these segments is made up of competitive elements that influence its performance. This section will address two major divisions of Saudi Aramco Company. These segments include:

  1. Oil supply, planning and scheduling division.
  2. The research and development sector.

OIL SUPPLY, PLANNING AND SCHEDULING DIVISION

This segment is concerned with the management of oil, gas and refined products in the aim of ensuring that customers need are meet in the most cost effective way that is consistent with the technology. Ross (2011, p. 7) ascertain that this division has a primary role in ensuring that hydrocarbon inventories and systems are well governed so as  to maintain a good reputation in the market which is vital in winning customers’ loyalty (Anderson, 2014, p. 66). Further, the segment has a responsibility of optimizing profits by reducing the operational costs involved in supplying oil to the target market. The company strives to use highly advanced technology with the ability to transport huge volumes of oil in a cost effective, safe and time sensitive manner.

According to Saudi Aramco oil supply, planning and scheduling division integrates various segments such as supply refined products and NGL Terminal in order to guarantee optimum and efficient delivery of hydrocarbons to the customer in Saudi Arabia and other target markets globally (Ross, 2011, p. 9). The functioning of this division is aided by the operation coordination center video wall that gives a real time update of the key operations in the company. For instance, the video wall technology provides real-time information on material flows, customer demands, and inventory position. Additionally, the technology permits the oil supply segment to respond promptly to the needs of the market and thus, build a strong competing edge for market shares. Henry and Springborg (2010, p. 122) ascertain that over the past decade the company has been adjusting its oil supply operations to ensure that the undertaking is consistent with changes in technology.

Saudi Aramco board of directors has mandated this segment the role of planning supply networks that optimize profit through the employment of unparalleled visibility into all components of the supply chain (Saudi Aramco). In this regard, the company is able to expand its product portfolio, heighten globalization and fluctuate the needs of the customers. The organization makes these undertakings possible by integrating its operations with the world’s best data solutions such as the SAP which helps in identifying and managing inventory shortages (Fattouh, and El-Katiri, 2013, p. 114). Further, the planning segment has a role of developing optimal oil production plans that are consistent with the inventory shortages, supply cycles, and product frequency. According to Henry and Springborg ( 2010, p. 130), the triple point of supply and planning division enables enterprise-wide visibility into all components of the supply network and guarantees strong profit optimization capabilities that drive error free planning and boosts productivity.

The oil supply, planning, and scheduling division has also the responsibility of identifying upcoming problems, evaluating their impacts, and formulating strategies designed to take corrective actions of transforming inventories and altering production timeframes (Saudi Aramco). These mandates are made possible by effective compliance and control that supports highly accurate estimation of different parameters such as unplanned shutdowns and challenges in the oil transportation system. Umbach (2010, p. 1225), alludes that the planning division integrates segments such as procurement, production, and replenishment scheduling in order to compare optimum inventory levels based on presently available chain management procedures.

The responsibility and roles in this division are designed with an aim of maintaining the market share of the company, especially in the global market. Muralidhar (2010, p. 67) affirms that this segment of oil production and supply is highly competitive and companies in the industries must formulate unique marketing strategies in order to increase their market control and thus, optimize profit margins. Saudi Aramco Oil and Gas Company employs product differentiation, highly advanced technology, strong brand image, and huge market share as it strengths in the production and supply operation (Umbach, 2010, p. 1225). These strengths enable the oil production and supply division of this company to compete effectively for market share. 

Saudi Aramco oil and Gas Company uses this segment to develop measures and strategies designed to satisfy dynamic customer needs and therefore, maintain a strong a brand image. According to Saudi Aramco, the company established the research and development sector with a primary role of developing unique technologies significant in achieving its set objectives such as increasing oil discovery and heightening reservoir recovery by 20-percent. This division integrates technology team, laboratory specialists, and field professions in order to conduct in-house research and development (Muralidhar, 2010, p. 68).  Umbach (2010, p. 1228), alludes that this division has a responsibility of collaborating with leading global institutions and companies in developing new concepts that can aid the company in minimizing operational costs or increasing the market share. For instance, this division introduced the idea of Resbots that paved the way for increased recovery rates and better management of the reservoir.

Saudi Aramco affirms that this segment also has the responsibility of developing measures aimed at satisfying short, medium and long-term needs of the customers. In this regard, the division has the roles of desulfurizing crude oil, managing carbon releases, and investigating clean fuels. For instance, the segment administers a program of deploying and testing cutting-edge technology that heightens operational efficiency, reliability, and safety. Jaffe and Soligo ( 2010, p. 25) ascertain that this division applies a high level of expertise and ingenuity in formulating innovative concepts aimed at increasing the accessibility of its products to the customers and thus, enable it to compete effectively with other companies spending substantial capital in research and development.

According to Muralidhar (2010, p. 66), the primary responsibilities of the research and development division is to develop breakthrough solutions for the present and speculated challenges facing the company. Saudi Aramco Oil and Gas Company uses this segment to conceptualize technological ideas that are critical in maintaining an accessible, affordable, and sustainable energy to the customers while scaling down greenhouse gas emissions (Mellahi, Demirbag, and Riddle, 2011, p. 408). The research and development sector is highly competitive with the majority of companies in the gas and oil industry spending a substantial amount of resources in developing strategies aimed at optimizing their profit margins through the implementation of cost-effective solutions to challenges in the energy sector. 

Saudi Aramco Oil and Gas Company has made numerous contributions to the welfare of individuals living in Saudi Arabia. First, the organization has a unique environmental master plan to minimize environmental pollutants associated with the burning of hydrocarbons. Umbach (2010, p. 1229) ascertains that Saudi Aramco is the leading organization in minimizing CO2 and sulfur emission. According to Jaffe and Soligo (2010, p. 26), Saudi Aramco company has set up numerous community outreach programs designed to foster a healthy, safe and vibrant locality for rampant future development and progress. These programs have a primary objective of motivating individuals to become more engaged and active members of the locality. The company strives to create public awareness on important issues and inspires locals to contribute positively to economic and social development (Saudi Aramco).

Saudi Aramco has made tremendous steps in advocating for a healthy community through the establishment of John Hopkins Aramco Healthcare (JHAH) (Spence, 2011, p. 92). The company uses the healthcare unit to enhance and support the health of their employees, dependents, and retirees. JHAH offers numerous preventive and wellness programs designed to enhance the quality of medical care experience for all members of the community. According to Umbach (2010, p. 1230), the healthcare unit uses highly advanced technology such as urology surgical system to better patient care and treatment.

The company also contributes to the wellbeing of individuals in the locality by providing a subsidized home ownership program for their employees. Over the past six decades, the organization has financed more than 65, 000 new residents that incorporate energy efficiency, and green technology (Tordo, 2011, p. 100). Saudi Aramco also conducts periodical safety awareness campaigns aimed at cultivating safe driving habits through instilling skills, building emergency response capacity, and developing strategies that depress unsafe driving. Additionally, the company has spent substantial capital in implementing projects with the aim of improving the infrastructure of the local area. For instance, the company completed the Thuwai project and other two flood control channels (Muralidhar, 2010, p. 65).

Based on the literature reviewed in this paper, it will be worth for the company to increase the amount of capital it allocates for research and development particularly in oil processing and transportation technology. New discoveries will aid the organization in differentiating its product a strategy that will be significant in maintaining customer loyalty and brand image reputation. Further, the organization should ensure that the technology applied in oil production is environmentally friendly so as to minimize adverse impacts to the ecosystem.

The management structure of any company has substantial positive impacts on the success of the organization. Saudi Aramco should strive to in-cooperate professionals with wide range of experience in the oil and gas industry in its leadership. These experts will be vital in implementing and conceptualizing key strategies that aid the company in competing effectively in the global market.

Saudi Aramco management structure is formulated with clear missions and targets that guide the operations of the cooperation. From the literature, the company undertakes its activities in a segmented manner in which each of the division has its unique roles and responsibilities. Companies in the oil and gas industry compete for market share through these divisions which steward major operations in the organizations. The environment influences the success of the oil and gas industry significantly. In this regard, the majority of companies undertakes various activities that contribute to the safeguarding of the ecosystem and enhancing the well-being of individuals in the community.

References

AbdulKarim, A., Al-Dhubaib, T.A., Elrafie, E.A. and Alamoudi, M 2010, Overview of Saudi Aramco's Intelligent Field Program. In SPE Intelligent Energy Conference and Exhibition. Society of Petroleum Engineers.

AL Yousef, Y. and Stevens, P 2011, “The cost of domestic energy prices to Saudi Arabia’, Energy Policy, vol. 39, no. 11, pp. 6900-6905.

Anderson Jr, I 2014, Aramco, the United States, and Saudi Arabia: A study of the dynamics of foreign oil policy, Princeton University Press, Princeton.

De Graaff, N 2011, ‘A global energy network: The expansion and integration of nonâ€Âtriad national oil companies’, Global Networks, 11(2), pp. 262-283.

Fattouh, B. and El-Katiri, L 2013, ‘Energy subsidies in the Middle East and North Africa’, Energy Strategy Reviews, vol. 2, no. 1, pp. 108-115.

Henry, C. and Springborg, R 2010. Globalization and the Politics of Development in the Middle East (Vol. 1), Cambridge University Press, Cambridge.

Jaffe, A. and Soligo, R 2010, ‘State-backed financing in oil and gas projects: In Global energy governance’, The new rules of the game vol. 2, no. 1, pp. 1-48.

Kokal, S. and Al-Kaabi, A 2010, ‘Enhanced oil recovery: challenges & opportunities’, World Petroleum Council: Official Publication, vol. 2, no. 1, pp.64-70.

Losman, D 2010, ‘The rentier state and national oil companies: An economic and political perspective’, The Middle East Journal, vol. 4, no. 3, pp. 427-445.

Mellahi, K., Demirbag, M. and Riddle, L 2011, ‘Multinationals in the Middle East: Challenges and opportunities’, Journal of World Business, vol. 46, no. 4, pp. 406-410.

Muralidhar, K 2010, ‘Enterprise risk management in the Middle East oil industry: an empirical investigation across GCC countries’, International Journal of Energy Sector Management, vol. 4, no. 1, pp. 59-86.

Saudi Aramco, viewed 28 July2016, <https://www.saudiaramco.com/en/home.html: >.

Spence, D 2011, ‘Corporate social responsibility in the oil and gas industry: The importance of reputational risk’, Chi.-Kent L. vol. 1 no. 3, 86, pp. 89-100.

Tordo, S 2011, National oil companies and value creation, World Bank Publications, Washington

Umbach, F 2010, ‘Global energy security and the implications for the EU’, Energy Policy, vol. 38, no. 3, pp. 1229-1240.

Ross, M 2011, ‘Will oil drown the Arab Spring: Democracy and the resource curse’, Foreign Affairs, vol. 4, no. 1 pp.2-7. 

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