Organizational performance and success are some of the most critical concerns for an organization’s management. Investors and stakeholders expect that their investments will yield profit resulting from the success of various business activities. During business operations, consideration of barriers and opportunities is crucial in shaping business activities and performance expectations. The success of a business is significantly influenced by geography, politics, institutions, economics, culture, and business environment.
The physical space or geography of a business plays a critical role in its growth and development. The location dictates the ease of access to business resources, customers, and transportation networks. An organization must be able to easily access raw materials at an affordable cost to maintain a high-profit margin. Aramco’s location poses transportation and operational challenges that significantly affect business operations (Parker 177). The business location should allow for ease of access to transport, infrastructure, and raw materials for better organizational performance.
Government and politics dictate the terms of involvement within a certain industry. Political stability within a certain geographic location promotes business activities as opposed to regions experiencing political instability. For Aramco, politics play a huge part in the organization’s decision and in the allocation of resources to the company (Parker 178). Government laws and regulations shape the social, economic, and physical environment of a business through enacting policies and regulations that can have either a positive or negative impact on the business.
Economics and distribution of resources such as money determine the extent of business economic activities and the organization’s performance. The cost of production and investments influences an organization’s financial performance. In the Parker reading, huge government spending on new technology and business investment plays a significant role in Aramco’s growth and development (Parker 174). Investment in new technology and processes facilitates business financial performance.
Cultural influences such as people’s beliefs and attitudes affect organizational operations and consecutively performance. Aramco’s efforts to engage locals and in the promotion of sustainable growth and development practices were hugely a result of influence by cultural attitudes on the natural resources and the environment (Parker 176). Consideration of cultural beliefs and practices is crucial for organizational success. Positive organizational culture should also be ensured within the organization for the achievement of goals and objectives.
Environment plays a huge role in shaping organizational activities. The impact of business activities on the environment must be considered even before the start of a business. Aramco has put in place efforts to reduce negative environmental impacts and facilitate sustainable practices to ensure the long-term success of the company (Parker 177). Organizational activities such as the exploitation of oil have significant effects on the environment. Environmental impact assessment of business environment must be conducted to come up with measures to mitigate negative effects.
In Parker’s reading, all these factors significantly affect the organization’s operations. The geography and environment of the organization provide opportunities for innovation, growth, and development, while political influence and institutions help in shaping decisions and guide the development of the organization’s resources. The local community culture and attitude help in shaping an organization’s reputation and relationship with investors and stakeholders. The company’s economic performance is subject to the demand and actual market price of oil which are dictated by the state of the national economy in Saudi Arabia (Parker 171), and thus, a huge factor in the organization’s financial performance.
In conclusion, external business factors such as politics, geography, institutions, culture, and environment play a critical role in the development of Aramco. Despite the complexity of these factors, there is an interrelation between them. These factors shape the company’s challenges and opportunities and have a huge impact on decisions, operations, and the continued success of the organization. Thus, organizational success and financial performance is subject to all these factors.
Work Cited
Parker, Chad. “Aramco’s Frontier Story: The Arabian American oil company and creative mapping in postwar Saudi Arabia.” Oil Culture, edited by Barrett, Ross, and Daniel Worden, U of Minnesota Press, 2014, pp. 171-188.