Business Issues and the Contexts of Human Resource

This document discusses the various factors that impact an organization's business and its HR function. It explores the forces shaping the HR agenda and compares different tools for analyzing the business environment. It also explains the key stages in strategy formulation and implementation and the role of HR. The case study focuses on Saudi Aramco, the seventh largest oil company in the world.

BUSINESS ISSUES
AND THE
CONTEXTS OF
HUMAN RESOURCE

Table of Contents
INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................3
Assess a range of different factors which impact on an organisation’s business and its HR
function.......................................................................................................................................3
TASK 2............................................................................................................................................3
Analyse the forces shaping the HR agenda.................................................................................3
Compare different tools for analysing the business environment...............................................5
Explain the key stages in strategy formulation and the implementation and the role of hr........7
Hr’s contribution to business ethics and accountability..............................................................8
TASK 3............................................................................................................................................9
Evaluate business performance and the role of hr in business planning and the change
management agenda....................................................................................................................9
Assess and utilise different sources of business and contextual data for planning purposes .....9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
There are various types of forces that are having a huge impact in the working of a
company, these forces can be both external and internal. The external forces are the one that
impact the business environment and influence its operation from outside. Here comes the role of
the management as they have to make sure that they are all set for the upcoming challenges. The
HR manager is responsible for providing the best learning environment in the organisation,with
the help of good approaches. The approaches that are being taken by the human resource
manger of the company must be both creative as well as innovative as this will lay the ground
work for them and it will also have a high impact as they will be getting motivated to work more
and more effectively and efficiently. The organisation taken for the completion of this report is
Saudi Aramco. Saudi Aramco was founded in 1938 and they are serving their products and
services worldwide. Saudi Aramco is having more than 79,000 employees working for them and
they are the 7th largest company in the world in terms of revenue. They are also the second
largest proven crude oil reserves and largest daily oil production for an oil producing company
in the world.
This report will discuss about the contemporary business issues and the main external factors
that will affect the organisation and have impact on the HR. this report will also discuss about,
how the HR strategies and practices are developed and how to identify and respond to the
changes in the business environment.
Task 1
Assess a range of different factors which impact on an organisation’s business and its HR
function.
Saudi Aramco is an seventh largest Oil company which is based in Dhahran. It is the most
reputative petroleum industry in the world. It was founded in 1933 by Chevron. To analyse the
different factors which can impact the organisation growth PESTLE analysis has been used.
PESTLE helps in analysing the micro environment so that threats and weaknesses of the
organisation can be evaluated. PESTLE stands for Political, environmental, social, legal ,
technological, economical.
 Political factors: It basically includes unemployment rate, economic conditions, tax rate
of the country where the organisation is operating. If the tax in the economy will be high

then it can affect the revenue generating power of Saudi Amarico which can also affect
the growth of the company in the marketplace. Because of political factors fuel charges
are getting high day by day which is affecting the profit of the company.
 Economical: To operate any business in the market investment is very important to
perform the activities of the business. Due to the globalisation growth of the company has
been reduces in the market. Inflation rate is one of the economical factor which can affect
the profit of the company for example if the prices of the oil will be increase then people
will avoid using vehicle which will decrease the demand of the company in the market
also their revenue will not be generated.
 Social factors: In today's world people wants the best quality of product and services but
in cheaper rate. For the Oil and gas industry the competition in the market is tough
because they target the same markets in Europe, north America and Asia. As Saudi
Aramco is the best petroleum country in the world they cannot reduce they cannot reduce
the prices of the oil as per the requirement of the customer due to which they can face in
future.
 Technological: In every organisation technologies plays an important role in performing
the activities of the business. Saudi Aramco has received many awards for their
innovative services which they provide to the customers. In the oil and gas industry like
Saudi Aramco technology is very important to carry out its functions. It uses the high
technology of products to provide the services to the customers.
 Environmental: As a oil and gas industry Saudi Aramco may cause several damage to the
environment in case of any incidence so to avoid this organisation has to make
commitment against the preservation of environment and resources so that economy
cannot get effected.
 Legal factors: There are certain laws which Saudi Aramco has to follow so that smooth
functioning of the organisation can take place. There are several permit which
organisation has to acquire from the government so that in future government cannot
interfere in the functioning of the business. If the organisation will follow proper rules
and regulation then it will help the organisation to increase its chances of growth in the
market.

TASK 2
Analyse the forces shaping the HR agenda
There are various changes that are there in an organisation and the main role that the HR is
playing in an company is to change the attitude of the people regularly so that they can welcome
any changes that are them in the company and that they can provide better output for the
company. It is also the role of HR to hire the employees that are going to work for the
organisation in order to solve various issues (Chacko and Conway., 2019). HR is responsible for
the changes that are made internally in Saudi Aramco and it is the role of HR to make sure that
all the employees are welcoming the change that are made in the organisation. There are various
model that helps in analysing the forces that are shaping the HR agenda. This models are as
follows:
Ulrich model
According to the model given by David Ulrich the HR of any organisation plays four
different types of role the employees champion, administrative expert, change agent and strategic
partner. The four types of role are as follows:
 strategic partner- the HR plays the role of partner in order to interact with the internal and
external stake holders (Atkinson and et. al., 2021).
 Change agent- HR is responsible for the making the employees cope up with the change
that is happening in the organisation. They do it with the help of training and
development program.
 Employee champion – in this role of HR, they monitor or they measure the motivation
level of their employees and their staff.
 Admin expert – they formulate various administration policy regarding the health laws,
labour laws and trade laws etc.
Michigan model
According to this model the employees are the means for the organisation to achieve its
strategies. This is also known as hard HRM because of its beliefs. Saudi Aramco uses this hard
model because this model is based on the strategic control and the system of maintaining people.
The HR uses this type of model in Saudi Aramco so that they can acknowledge the central
importance of motivating the employees by rewarding them, but through this model they
concentrate the most on managing the human assets or the human resources that they are having

in order to achieve strategic goal. What this type of model emphasises is that the employees are
selected and after that their performance are being monitored. If their performances are good
then they are given appraisal in form of reward or in the form of development program. Through
this the HR of Saudi Aramco focuses on motivating the employees to work more and more
harder (Chang and Chin., 2018). When the employees are being given the traini9ng that they
need then they will be performing with their full potential and the thing that motivating them in
the reward that they are going to get when they achieve their full potential and when their
performances are good.
Internal forces that will influence the changes in the HR agenda
business objectives- the main aim for any business id to earn profit and to earn market share.
For assisting their objectives the HR department of Saudi Aramco have tyo make the strategy
keeping in mind the business objectives (Cheng and Hackett., 2021). During the process of
selection they also have to make sure that they are choosing the correct person for the Job and
during this process they have to have a productive workforce. For the achievement of the
business objectives the HR of Saudi Aramco have made the working environment of the
company suitable for everyone and through this they will be able to make sure that the
employees are getting motivated and that they will be able to work with their full potential.
Organisational culture – the culture that is being practice in the organisation affects the working
of the organisation as it defines the value, behaviours a and the vision of the employees.
Organisational culture plays a very crucial role in the success of the organisation. The HR in
Saudi Aramco uses always those culture that are focuses on achieve the organisational
objectives. The HR manger in Saudi Aramco uses the culture that is being accepted by all and
with the help of different personal they are able to modify their culture and their practices from
time to time.
Compare different tools for analysing the business environment
The business environment is the one that can change at and time and there are also
various factors that are making the change possible. There are also various types of tools that is
helping the organisation to analyse the changes that are happening in their environment
(Donnelly and Johns., 2020). The HR manager in Saudi Aramco use two tools that are helping
them in identifying the changes that are happening in their business environment. The

comparison between the two of the most affective tools for analysing the business environment
are as follows.
SWOT analysis – this tool is helping Saudi Aramco in analysing both internal and external
factors. This tools is used so that they can analyse the internal potential and can formulate their
policy according to that. SWOT analysis is done by the company so that they can know four
elements that can tamper the working of Saudi Aramco. This 4 elements are as follows:
1. Strength – due to their high level of manufacturing the per production cost of their barrels
is very low as compared to their competitors and with the help of this they are able to
make large profits. They are also having huge production with lager refining capacity.
2. Weakness – they are highly depended on the profitably of their crude oil sales and they
are also facing some issues related to the corporate governance and transparency.
3. Opportunity – with the help of their IPO they will be able to bring out their real valuation
and through this they will be able to make themselves financially strong (Forutnani, S.,
and et. al., 2018).
4. Threats – decrease in the global market share due to the fact that they are having new
competitors. Due to the war and terrorism in the middle east their are high chances of
lose for them.
Porters five forces – With the help of this tool Saudi Aramco is able to analyse the external
environment factors of the organisation. This will help the HR of Saudi Aramco to analyse the
competitive behaviours. This tool is having five element sand these five element are as follows:
 Threat of potential new entrant – according to this element the new entrant posses a huge
threat for the established brand as they try to penetrate the market and then capture a huge
market share with the help of their pricing. But in the case with Saudi Aramco this threat
is very less and there are various type of barricade for the entry f new organisation. This
barricades can be patents, large capital requirement and etc.
 Power of suppliers – this refers to the power that the suppliers is having so that they can
penetrate the prices. During the time of shortage the power of the suppliers of Saudi
Aramco increases as there are not much organisation that is supplying them oil now when
Saudi Aramco is getting oil from various suppliers then their power of the suppliers have
decreased.

 Power of buyers – the power of buyer refer to the buying capacity of the buyers and how
likely are they able to penetrate the prices (Gheiratmand and et. al., 2017). The power of
buyers in case with Saudi Aramco is very less as the buyer has to pay the price that they
are asking for.
 Rivalry among existing competitors – this refers to the level of competition that Saudi
Aramco is having. In the middle east there are a lot of organisation that are dealing in oil
and due to this the probability of the organisation have declined a lot in recent years.
 Threats of substitution – At present the threat of substitution in case with Saudi Aramco
is very less as more and more people are using oil and petroleum. But there are some of
the organisation that have already found the substitute for oil and Gas. They did it with
the help of latest advanced technology.
Explain the key stages in strategy formulation and the implementation and the role of HR
For making a strategy for a big organisation like the Saudi Aramco the HR manager uses
different steps and take different ways to implement the strategy(Hameed and et.al., 2020). The
process of strategy formulation is very important for an organisation as it will lay the blueprint
for their future course of action . The HR of Saudi Aramco formulates Strategy on the basis of 6
stages and these stages are as follows :
 Setting up of organisational objectives – the organisational objectives that are set by the
HR of Saudi Aramco must be for a long term. The objective that they are setting must be
simple, measurable, attainable, realistic and time bound.
 Evaluation – in this step the business environment of Saudi Aramco must be evaluated so
that they can get better insight about the market. Saudi Aramco does this so as to analyse
their competitive position.
 Setting Quantitative target – this is also an important factor as the objective that Saudi
Aramco have set should be quantitative also as this will help them in analysing
themselves. For example the quantitative target can be to increase the sales by 5 percent.
 Divisional plans – during this stage the dedication and the contribution of all the
department are measured so that they can analyse the performance of each department in
order to set the goal.

 Performance analysis – in this stage the difference of the planned performance and the
execution performance is done so that the HR of Saudi Aramco can determine the present
condition with future plans
 Choice of strategy – in this stage the HR of Saudi Aramco selects the best strategy they
should put to use in order to achieve their goals (Huselid., 2018). This is done by a
detailed analysis of all the information that are available.
After the strategies have been formed, the next step will be to implement the selected
strategy. The HR of Saudi Aramco take the main part in this process as the HR is responsible for
the allocation of the resources and for the coordination that will be required while implementing
the plan. The main role for the HR of Saudi Aramco is to mange the labour and the cost in order
to gain the competitive advantage. There are 5 steps for the implementation of the strategy and
these are as follows:
 Evaluation and communication- in this stage the HR first evaluates the strategy to check
whether the strategy that is formulated is according to the goal or is according to budget
that is set (Iqbal and et.al., 2018). After that the HR give insight about the plan to all the
employees.
 Development of structure and policies – after the plan is checked the HR develops the
structure that is required for the fulfilment of the plan. Along with it the HR also
develops the policy band the program that will help them in achieving the goal that is set
in the objectives.
 Budgeting and allocation – in this step the budget and the resource are allocated to
different departments and the HR monitors this stage closely so that they can make sure
that the department are using the resources wisely or not.
 Discharge function and activities – in this stage the employees are employed according to
the requirement for the fulfilment of the plan. They are also provided with the training
and development program that they will be needing.
HR develops the blueprint for the plan and after that HR is responsible for the
distribution of resources to various department and they are the one that will be handling various
critical situations in order to make the process of growth of Saudi Aramco faster.

HR’s contribution to business ethics and accountability
In the corporate world the motive of all the organisation is to earn profit, so that they can
have good market share and through which they can earn more customer base. In order to get
profit there are various organisation that have done scandals many times. To overcome this type
of scandal the HR of Saudi Aramco have developed various type of organisational method so
that they can reduce the risk of scandals (Khodaei, and et. al, 2019). What Saudi Aramco believe
is that the working of the organisation should be done with keeping in mind the ethical code of
conduct. As the organisation is taking the resources from the society the it should always be kept
in mind that they must also fulfil their duty regarding the upliftment of the society. When they
are doing something for the upliftment of the society then the society will flourish and when the
society is flourishing then the organisation will automatically see themselves growing. There are
some of the basic obligation that the HR in Saudi Aramco needs to follow and the obligation are
as follows:
1. Professional competence and behaviour – the HR should be taking the responsibility of
all the action and the decision that they are taking (Khodaei, Alizadeh and Hosseini.,
2019). As they are an example to all the other staff working in Saudi Aramco.
2. Ethical standard – the HR should be maintaining professional and personal relationship
with everyone and while maintaining that they shouldn't disclose any personal or
confidential data of any person for the benefit of another person.
3. Representative of profession – the work and the task of the HR should always support the
values and the reputation of the organisation and they should be maintaining leadership
quality for maintaining highest level of ethical conduct.
4. Stewardship – the HR should be dealing with the employees in a fair manner and they
shouldn't be dealing with the employees with favouritism in mind.
TASK 3
Evaluate business performance and the role of hr in business planning and the change
management agenda.
Saudi Aramco uses non-financial and financial indicators to measure its performance
which will help in increasing their profit in the market. Some financial indicators are Increase in
the profit margin, return on investment, residual income etc. on the other hand non-financial
indicators are customer satisfaction, strategy planning for success. These are the some of the

indicators which helps the organisation to judge their performance and improve the quality of the
services which they are providing so that there profit in the market can be increased. If the
organisation will follow these indicators properly then it will help the business in long term
survival which will also increase the market share of the company. Performance of the business
depends on the quality of services which the organisation is providing to the customer because
every organisation main motive is to earn profit by satisfying their customers.
HR of Saudi Aramco plays an important in the change management agenda because HR is the
one who hires the capable employees for the functioning of the business. To adapt the changes of
the business HR should hire the right people who can accept the business changes easily and can
perform their task accordingly. In order to ensure the performance of the business HR should
always motivates its employees so that their performance can be enhanced and more profit can
be earned. Because if employees of the organisation will not remain motivated then it affect the
performance and growth of the organisation. HR should also maintain a healthy relation with the
employees so that employees can contact HR in case of issue without any hesitation which will
also develop a healthy working environment in the organisation. HR in the organisation
generally adopt Lewin's change management model. In this model there are three steps which are
Unfreeze, change, Freeze.
 Unfreeze: To accept the change in the organisation first is to break the existing quo so
that new ways to operating the business can take place If the organisation will continue to
follow the same strategies then the performance of the business will never be enhanced in
the market and demand of the organisation can also decrease.
 Change: In this phase organisation looks for new ways to perform its activities of the
business. Employees and management of the organisation starts supporting the new ways
which can increase the profit of the company. Before accepting any change people of the
organisation should understand the benefit which can occur after adopting the change in
the organisation so that company cannot face any loss in the future.
 Refreeze: Once the change is applied in the organisation next step is to refreeze the
change so that it can be used all the time by the people of the organisation. It also
motivates the employees to perform their activities because new ways of working has
been adopted which attracts the attention of the employees and also increase the capacity
of the employees to perform the assign task.

Assess and utilise different sources of business and contextual data for planning purposes
In the corporate world there are various sources through which the organisation may get
information, but the main point is how the organisation utilizes that information for the purpose
of planning. Some of the source for getting data are as follows:
 Trends in HR as the world is moving in a very fast pace so is the technology and the
trends. There are various types of new technology that are out there in the market, so if
Saudi Aramco failed to collect the information regarding them, then their competitors
will use that to their advantage (Malik, Pereira and Tarba., 2019).
 Industry information – there are various types of information in the market that Saudi
Aramco will be able to get about their competitors and about their new strategies and
their plan. So what Saudi Aramco have to do is that they should modify their policy and
formulate strategy for coping up with them.
 Government information – the information that is provide by the government is very
crucial for Saudi Aramco because they have to mould themselves according to it
(Manzoor and et. al., 2019). For example, the Saudi government is banning its trade
relation with few country then the Aramco have to increase their activity and all the rest
of the country.
CONCLUSION
From the above report it is concluded that the external factors are the one that is going to
affect the working of the organisation the most. It is the role of HR to make sure that they are
having proper policy and proper strategy so that they can turn these factors into their strengths.
With the help of Porters five force and SWOT analysis it is found that the organisation is having
various competition in the market and most of them possess threat for the functioning of the
selected organisation. It is also been concluded that there are various stages for the formulation
of the strategy and there are also various phases for the implementation of these strategies. This
report also concluded about the role of HR in maintaining business ethics and planning. There
are also various source of the information that the organisation can get and if they properly
utilize the information then they will be able to gain competitive advantage from it.

REFERENCES
Books and Journals
Chacko, S. and Conway, N., 2019. Employee experiences of HRM through daily affective events
and their effects on perceived event‐signalled HRM system strength, expectancy
perceptions, and daily work engagement. Human Resource Management Journal. 29(3).
pp.433-450.
Atkinson, C., and et. al., 2021. Menopause and the workplace: new directions in HRM research
and HR practice. Human Resource Management Journal. 31(1). pp.49-64.
Bondarouk, T., Parry, E. and Furtmueller, E., 2017. Electronic HRM: four decades of research
on adoption and consequences. The International Journal of Human Resource
Management. 28(1). pp.98-131.
Chang, E. and Chin, H., 2018. Signaling or experiencing: Commitment HRM effects on
recruitment and employees' online ratings. Journal of Business Research, 84, pp.175-185.
Cheng, M. M. and Hackett, R. D., 2021. A critical review of algorithms in HRM: definition,
theory, and practice. Human Resource Management Review. 31(1). p.100698.
Donnelly, R. and Johns, J., 2020. Recontextualising remote working and its HRM in the digital
economy: An integrated framework for theory and practice. The International Journal of
Human Resource Management, pp.1-22.
Forutnani, S., and et. al., H.R.M., 2018. The role of rural libraries in preserving the indigenous
knowledge of rural residents: The case of South Khorasan Province. World Journal of
Science, Technology and Sustainable Development.
Gheiratmand, T., and et. al., 2017. Effect of iron particles size on the high-frequency magnetic
properties of iron-borosilicate soft magnetic composites. Journal of Superconductivity
and Novel Magnetism. 30(11). pp.3085-3090.
Hameed, Z., and et.al., 2020. Do green HRM practices influence employees' environmental
performance?. International Journal of Manpower.
Huselid, M. A., 2018. The science and practice of workforce analytics: Introduction to the HRM
special issue.
Iqbal and et.al., 2018. Does e-HRM improve labour productivity? A study of commercial bank
workplaces in Pakistan. Employee Relations.
Khodaei, A., Bagheri, R., Hosseini, H.R.M. and Bagherzadeh, E., 2019. RSM based engineering
of the critical gelation temperature in magneto-thermally responsive nanocarriers.
European Polymer Journal, 120, p.109197.
Khodaei, M., Alizadeh, A. and Hosseini, H.R.M., 2019. Effect of Oxidizing Atmosphere on the
Surface of Titanium Dental Implant Material. Journal of Bionic Engineering. 16(6).
pp.1052-1060.
Malik, A., Pereira, V. and Tarba, S., 2019. The role of HRM practices in product development:
Contextual ambidexterity in a US MNC’s subsidiary in India. The International Journal
of Human Resource Management. 30(4). pp.536-564.
Manzoor, F and et. al., 2019. An examination of sustainable HRM practices on job performance:
An application of training as a moderator. Sustainability. 11(8). p.2263.
Podgorodnichenko, N., Edgar, F. and McAndrew, I., 2020. The role of HRM in developing
sustainable organizations: Contemporary challenges and contradictions. Human Resource
Management Review. 30(3). p.100685.

Ren, S. and Jackson, S. E., 2020. HRM institutional entrepreneurship for sustainable business
organizations. Human Resource Management Review. 30(3). p.100691.
Richards, J., 2020. Putting employees at the centre of sustainable HRM: a review, map and
research agenda. Employee Relations: The International Journal.
Van Mierlo, J., Bondarouk, T. and Sanders, K., 2018. The dynamic nature of HRM
implementation: a structuration perspective. The International Journal of Human
Resource Management. 29(22). pp.3026-3045.
Zhou, A. J., Fey, C. and Yildiz, H. E., 2020. Fostering integration through HRM practices: An
empirical examination of absorptive capacity and knowledge transfer in cross-border
M&As. Journal of World Business. 55(2). p.100947.
ONLINE
ULRICH Model. 2019.[online]. available through ;<https://www.kbmanage.com/concept/ulrich-
model>
Hard HRM. 2021.[online]. Available through
<http://www.hrmguide.co.uk/introduction_to_hrm/hard-hrm.htm>