Management Strategy and Policy - Aramex - Research Paper Example

? of the of the Number Management Strategy and Policy Research Introduction Aramex is a Jordon based global logistics and transportation service providing company (“Aramex Jordan”). It offers a variety of services such as express mail, freight forwarding, logistics and domestic distribution services. It was established in the year 1982 by Fadi Ghandour, who is also the current CEO of the company (“Aramex: Background”). The major product and service offerings of the company are International, Express, Domestic Express, Freight Forwarding, Logistics, Shop & Ship, and Catalogue Services. The net revenue of the company in the financial year 2011 was $701.29 million, which reflects a reflecting a strong financial situation of the company. Aramex is a publicly traded joint stock company registered under United Arab Emirates laws and its shares are traded in Dubai financial market. The company is currently headquartered at Amman, Jordan and has its business wings spread all over the world. The organizational structure of the company is well defined and is managed along two tracks - 1) by service 2) geographically, with the help of, country managers, regional senior managers and cross?functional country?based‘Aramexteams’ that is providing harmonization of all Aramex services on a modified basis to Aramex customers (“About Aramex”). The organizational structure of the company is presented below: - Organizational structure of Aramex and how it impacts the design and implementation of Strategy Figure 1 – Corporate management Structure of Aramex (Source: Aramex, “Sustainability Report 2006” 8) The above chart clearly points out about the departments or divisions of the organization. In addition, the chart also sheds light on the way Aramex is carrying out and managing its business functions. Presently the company has 4 major departments namely marketing, IT (information technology), finance and the operations departments. Each of the departments is being headed by the VP’s (Vice Presidents). From the organizational chart it has also observed that the company has appointed VP’s in different location. Most of them are responsible for managing the operation of the allotted areas. The structure followed by the company is therefore clearly divisional structure. However, these VP’s do not report to any of the departmental heads, rather they directly reports to the CEO of the company. Apart from them, other business heads such as the chief technology officer, chief marketing officer, group financial controller, Sr. VP finance and CFO, VP logistics and ground operation, Sr. VP cargo, VP express, chief strategy office, vice president, as well as the in front managing director. Hence, it is obvious that the company has been able to streamline its business process with this organizational arrangement. On the contrary, if the arrangement wouldn’t have been appropriate the performance of the company was sure to be negatively impacted. However, the financial results of the company clearly points out that the company is doing well in the market place. The flat and decentralized management structure of the organization is one of the key drivers of success for the company. The simple and flexible structure of the organization has allowed them to empower the employees of the organization and also make decision pertaining to the enhancement of the company’s service offerings irrespective of the location of the organization and the level at which they are operating (Aramex, “the age of entrepreneur” 4). Nevertheless, a number of studies reveal that the organizational structure has a strong impact on the design, formulation and implementation of the organizational strategies. Organizational strategy and structure are highly related as the organizational strategy of a company helps them to describe, identify and build the organizational structure. This is the reason why the organizational structure of a company is based on the outcome of the analysis of the strategy and objectives of the organization. In the other way round, companies often designs their strategies on the basis of their organizational structure. Such companies have a belief that a strategy should be implemented properly in order to get the best results and the implementation is greatly dependent upon the structure or the arrangement of the organization. In the context of Aramex, the organizational structure or the organizational arrangement affects the design and implementation of the strategies. Although a number of impacts are visible but the two major ones are presented below: - One of the impacts of organizational structure of Aramex on the design and implementation of strategy come in the form of reduces effectiveness of the operation and productivity. The productivity as well as the effectiveness of the operation is getting affected by the centralized organizational structure. On the other hand, a decentralized arrangement would have provided the company with better results. This statement is supported by a number of researchers and scholars around the world. Eminent author such as Gupta carried out a study on the relationship between organizational structure and strategy design and implementation process of SBU’s, and found that decentralized approaches provides better results and greatly increases the effectiveness of the operation irrespective of the strategic context. Echoing this statement, Drazin and Howard put emphasis on the fact that proper strategy structure alignment is obligatory for proper designing and implementation of the stagey (Smit 16). Another major impact of the organisational structure on the design and implementation of the strategies is related with the flow of information. It has been observed that each of the department heads directly reports to the CEO and most of the major strategic decisions are taken by the CEO. As a result of that the flow of information within the organization is not streamlined. The CEO has to address or notify any major changes to every department heads individually. This approach also increases the time and at times also increases the cost of information flow. On the other hand if the management structure would have been decentralized, the outcome was sure to differ. Hence, if Aramex had another hierarchy of 2 – 3 people reporting to the CEO, rather than each department heads doing it the company could have achieved greater efficiency. Problems that Aramex may face in the future due to their existing organizational structure The analysis of current organizational structure of the company has clearly shown that it is negatively impacting the efficiency of the company. Along with that due to decentralized arrangement, the company is also not being able to enhance the operations and improve productivity. Much like the skeletal structure of human being, the organizational structure is also responsible for determining the shape that the organization is going to take. From the perspective of the organizational structure, it determines or portrays about the reporting relationships or how the teams within the organization are arranged. Apart from that the organizational structure also reveals the culture, leadership type and functions of the company to a great extent. However, the organizational structure often becomes one of the major causes of concern for the organization (Lloyd, “Organizational structure can be underlying cause of workplace issues”). In the similar way, the organizational structure of Aramex can be a cause of concern for the company. Certain limitations or flaws have been identified after thorough analysis of the organizational structure of the company. Hence, the two major problems that the company may face in the near future are described below:- Barriers in Decision Making: - Due to the presence of a number of hierarchical levels, the decision making time of the company may increase. Since, a particular decision or a stagy has to pass through a number of levels before it gets accepted, the decision making time gets increased. Moreover, in Aramex the decision is made centrally, but the notification reaches the line managers lately. As a result of this, the implementation process gets delayed to some extent. Another major chance of the negative impact on the company due to its organizational structure is that arrangement may delay the approval of a strategy. This is principally because of the presence of a number of department heads in the same hierarchy. The organizational chart of the company clearly portrays that around 10 people are residing in the same hierarchy that includes chief technology officer, chief marketing officer, group financial controller, Sr. VP finance and CFO, VP logistics and ground operation, Sr. VP cargo, VP express, chief strategy office, vice president and front managing director. As a result of this the time needed to get acceptance from each member and to implement those time is a time consuming business. Low Employee Morale and Performance Lax: -Apart from causing barriers in decision making the organizational structure of Aramex can also affect the behaviour and attitude of the employees towards the work. Although this issue is not prevailing, but in the near future it can be a bigger cause of concern for the company. The impact of organizational structure on the attitude and behaviour of the people staunch from different sources. In addition, the way reporting relationship is structured determines the decision maker within organization. In Aramex, the decision making is done by the CEO of the company. However, the proposal for a decision or the strategy comes from the VPs who heads different department of the organization. As a result of that the intended work flow processes affects the people involved in making decision and also people who are responsible for putting the decision or strategy into practise. Moreover, another major reason behind organizational structure impacting the behaviour and attitude of the employees is because of the fact that it is directly linked with the promotion of the employees. Employee rewards such as the pay increase and promotion to next level in the hierarchy is directly associated with employee morale and behaviour (Moore and eHow, “The Effects of Organizational Structure on Behavior”). However, due to fewer hierarchy levels, the employees of the company in the near future may feel that the scope of growth in this organization is less and that can negatively impact the morale and employees. This is the reason why organizational structure is considered as a radical control factor of the organization. The analysis of the organizational structure of Aramex has clearly revealed that it has been designed in such a way that design and formulation of the strategy is done by the VPs of the organization and is approved by the CEO. Even at times the decision is solely made by the CEO of the company without the consent of the subordinates. Therefore the credit of problem solving and decision making remains with the senior management of the organization. As a result of this employees who are actually performing the work may feel that there is a lack of recognition and it can result in low employee morale. Apart from that the centralized arrangement of the organization along with rigid policies may be a cause of lax performance of the employees of Aramex. This is because too rigid policies may send negative messages of suspicion and distrust. Therefore in order to sustain and fulfil its objectives, Aramex needs maintain an organizational structure which is much less rigid. In addition, rapid embracement of the employees is also necessary (Aramex, “Learning Grassroots Logistics: An Aramex White Paper on the “Deliver Hope to Gaza” relief campaign” 15). Stakeholders of Aramex and example of how the company can be regarded as Ethical Being a globalised company, Aramex has a large number of stakeholders (“Relationship between organizational structure and strategy implementation?”). The company give prime importance to four of its stakeholder groups which are the customers, the employees, the shareholders and also the members of the communities in which the company carry out its operation. The company proactively connects with its stakeholders for the foremost purpose of understanding the needs of each group of stakeholders and in turn the company seeks to put together those findings in the decision making process of the organization. Stakeholder management is also an important activity of the company’s sustainability strategy. This approach of the company also highlights the dedication and commitment of the company towards the transparent and continuous engagement and representation about the fact that the company is not only accountable to its shareholders and customers but is also committed towards the employees and also the society in which it operates and serves. In order to maintain a cordial relation and strengthen the relationship between the company and its stakeholders the company has initiated several programs. The priorities of the company towards its stakeholders are presented below: Stakeholder Engagement process Priorities Employees ? Operational meetings ? functional meetings, Station meeting, and also regional meetings ? brainstorming sessions ? Performance appraisal of individuals ? Surveys ? Social events of the employees ? conferences of the annual leader ? Online communications ? Internal alliance tools ? Education, Training, and workshops ? Development through executive education, internal training, as well as workshops ? sharing of knowledge ? Ownership and empowerment of work ? progression opportunities based on performance ? creating healthy work environment ? Maintaining strong corporate values culture, and reputation ? Job security and safety ? providing best and competitive salary along with several benefits Customers ? Individual feedback meetings ? Online communique forums, like live chat and social media ? outlets and branches ? get in touch centers ? client service surveys ? stipulation of tailored services that cater to the needs of consumers ? Superior quality service and reactive customer support ? Cost-efficient resolution offering value for money ? On-time delivery ? privacy and safety Business Partners and Investors ? Ongoing transactions negotiations, and service provision ? Long-term association with Aramex ? convenience to fresh business endeavor with Aramex ? Offering more value to associates ? conservation of ethical significance Shareholders ? General Meetings ? Quarterly income Reports Annual Reports ? Press releases ? Online section for ‘Investor Relations’ ? straight contact in the course of the Investor Relations Office ? More than average return on investments ? efficient and effective governance ? exceptional corporate reputation ? long-term and Sustainable growth ? High transparency and integrity ? Outcomes and efforts Community ? Opinion from the employees, consumers and their families, local communities directly or indirectly. ? Investments as well as active participation in the community so as to address the specific issues of the community in which the company operates. ? Creation of job opportunities offering competitive wages, and hiring local people ? Ensuring traffic lessening and road safety ? managing noise within the environment ? enclosure of the marginalized communities ? Responding to the emergency situations or disasters and encourage individual contribution towards disaster relief. THE ENVIRON MENT ? Initiation of the awareness campaigns and providing internal environment training to the associated members ? The company is in talks with the NGOs to proactively and continuously respond to the inquiries or any concerns. ? The company is also in the process of collaborating with the networks and institutions for the purpose of protecting the environment. ? Increased environmental consciousness ? Reduction in Carbon foot-print ? Regulatory compliance (Aramex, “Annual Report 2010”) The above programs or the approaches of the company have made evident how Aramex is concerned for the society in which it operates. In addition, the company is also concerned about the preservation of the environment. Apart from the business angle, the company also has another side which reflects the strong moral values and ethics of the company. Although a number of examples can be presented that reflects the value of the companies. In this project, only two instance or example about the company will be provided that describes the ethical side of the company. One of the examples reflecting the enthusiasm of Aramex towards ethical business practices lie in their business policies, principles and several other actions. The company is continuously tackling issues pertaining to corruption and bribery. The company has also signed a United Nations Global Compact in order to ensure transparent business. Apart from that Aramex has also issues an ethical guideline policy which strictly mentions about the prohibition of corruption and bribery. To further reinforce the ethical practice, the company has predefined the financial controls and policies. Moreover, most of the financial factors are now monitored by the company itself (Aramex, “Management Approach” 27; Aramex, “Annual Report 2011” 27). Another example portraying the ethical behaviors of the company is their financial reporting system. The financial reporting system of the company is based on IFRS (International Financial Reporting System) in order to meet the requirements and standards set by IASB (International Accounting Standard Boiard). Aramex maintains high transparency in financial reporting which reflects their commitment towards behaving ethically. Furthermore, along with maintaining robust internal control against corruption, the company has recently initiated training pertaining to ethical business practices (Aramex, “Annual Report 2010” 23). Recommendations That Would Enable the Company to Deal with the Problems and Challenges Created By the Chosen Strategies The analysis of Armex’s internal polices, ethical guidelines, organizational structure as well the internal and external business environment of the organization (to some extent) has made it evident that the organization is currently facing or may have to deal in the near future with a number of challenges. Some of the major challenges identified in the study are related with the organizational structure. Due to its centralized arrangement of the management structure there is hardly any involvement of the employees in the decision making process. As a result of this the employees of the company sometime feel contemptible and deprived. The low morale of the employees is also caused due to this matter. The study also revealed that since the promotion and reward of the companies are directly associated to the organizational structure it has high importance. However, the matter of concern is that the company has less number of hierarchy levels and has presence of a large number of people in the same hierarchy. This may cause frustration in the minds of the employees as they may doubt growth opportunities. Another problem identified, which the company is facing is related to the management of operation. It has been observed that the company has often failed to manage the operations. A number of customer complaints have been found about the inability of the company to handle and process bulk orders (“What problems do you have with Aramex?”). This may be due to their manpower shortage bin the operations department. In order to satisfy the objectives and fulfil the organizational goals, it is necessary that the organization takes appropriate steps to deal with these challenges. The recommendations for Enable the Company to Deal with the Problems and Challenges Created by the Chosen Strategies are as follows: - Modifications in the Organizational Structure: - One of the recommendations to the company by which they can effectively deal with the existing challenges is making slight modifications in the organizational structure of the company. The company makes centralized decision and as a result of which the decision making power remain within the hand of the upper management. Therefore, the company is recommended to make decentralized arrangement. This approach will help the company to make effective decision in comparison with the existing system. Moreover, engagement of the employees in the decision making process will greatly help the company to satisfy the employees and increase their level of motivation and commitment towards the work. Apart from making decentralized approach, the company is recommended to increases the hierarchy levels of the organizations and reduce the number of employees in a single hierarchy. One of the major benefits of this approach is that the doubt of the employees over the career prospect will be expunged. The decentralized decision making and increasing the level of hierarchy will also help in streaming the internal communication of the organization. The total time for communication a strategy or a decision in the entire organization will reduce to a great extent. Enhancement of the Operation System: - A number of customer complaints pertaining to the incapability of Aramex to handle and process large orders have been observed. Customer often complaints about the order overload and hence customers are not able to transfer or dispatch their products to the destination. This issue is not only dissatisfying the customers but is also severely affecting the revenues of the company. A lost customer causes huge financial losses to the company. Furthermore, it often happens that a satisfied customer becomes a positive word-of-mouth promoter for a company. In the similarly way a highly dissatisfied customer may act as a negative word-of-mouth promoter for a company. Therefore, in order to deal with this issue the company is recommended to make their operating more efficient. The company should also increase their manpower in the operations and logistics department. This will allow the company to accept and process bulk orders. Apart from that the company can also third party vendor to look after the excess orders. This approach will also assist the company in satisfying and catering to a large base of customers and can also aid in increasing customer loyalty. Transparent representation: - It has been observed that organizations with transparent and efficient structure are able to perform better in the market place. Therefore Aramex is recommended to make their organizational structure more transparent. Furthermore, the changes in the organizational structure may not be accepted by the employees and can offer strong resistance. Hence for this purpose, the company is recommended to communicate the intended changes in the organizational structure to the employees. This will greatly reduce the chances of resistance to change from the employees. In addition, the company is also recommended to notify the benefits of implementing these changes as this can be beneficial in retaining employees. Conclusion The study was related to the organizational structure of Aramex and the problems company is facing due to its current organizational structure. The analysis of the organizational structure of the company revealed that they are following a divisional structure. However, the major problem is that the number of hierarchy levels is comparatively less than other companies. As a result of this, companies in the near future may doubt their growth opportunities. Moreover, due to centralized decision making involvement of the employees is less and decisions are made by the senior management or the CEO. Hence the company is recommended to increase their hierarchy levels and reduce the number of employee in one hierarchy. Furthermore the company is also recommended to follow decentralized decision making. Thus, the only inference is that organizational structure is crucial towards the success of a company. Works Cited “About Aramex.” Aramex. Aramex International, 2013. Web. 31 May 2013. “Aramex Jordan.” Wfalliance. World Freight Alliance, 2013. Web. 01 June 2013. “Aramex: Background.” Wamda. n.p., n.d. Web. 01 June 2013. Aramex. “Annual Report 2010.” 2010. PDF File. Aramex. “Annual Report 2011.” 2011. PDF File. Aramex. “Learning Grassroots Logistics: An Aramex White Paper on the “Deliver Hope to Gaza” relief campaign.” 2010. PDF File. < http://www.aramex.com/content/uploads/100/55/35297/Gaza%20white%20paper-%20Jan%2017.pdf> Aramex. “Management Approach.” 2008. PDF File. Aramex. “Sustainability Report 2006.” 2006. PDF File. Aramex. “The Age of Entrepreneur.” 2010. PDF File. Lloyd, Joan. “Organizational structure can be underlying cause of workplace issues.” Jobdig. JobDig, Inc., 2013. Web. 31 May 2013. Moore, Marcia. and eHow, “The Effects of Organizational Structure on Behavior.” Ehow. Demand Media, Inc., 2012. Web. 31 May 2013. “Relationship between organizational structure and strategy implementation?” Wiki. 2013 Answers Corporation, 2013. Web. 31 May 2013. Smit, P J. Strategy Implementation: Readings. Cape Town: Juta and Company Ltd, 2000. Print. “What problems do you have with Aramex?” 248am. n.p., 2008. Web. 31 May 2013. < http://248am.com/mark/interesting/what-problems-do-you-have-with-aramex/> Read More