An Example of a Difference between Russian and Western Operating Company Structure
The information about the companies that are mentioned above refers to the Central Headquarters of these companies. This could be described as the mother company. All of these companies have operating companies that are spread out regionally or internationally which report to the Central Headquarters, where financial and performance indicators are consolidated. An example of this is Royal Dutch Shell that has its Central Headquarters in The Hague in Holland. Royal Dutch Shell also has operating companies in Nigeria, Oman, Australia and many other countries around the world. Rosneft has headquarters in Moscow and operations in Sakhalin island, in Siberia and the Timan-Pechora province.
An Integrated Asset Based Organization that you would typically find in a western operating company is centered around Asset teams. Theseasset teamslook after and are responsible for ALL activities relating to an asset (or a group of assets). In a way an Asset team can be seen as a micro company within the main company. To operate in this way the Asset team needs to contain an integrated team of specialists. The reason for working in this way is the idea in the west that integrated teams are more effective than the functional approach. The Asset based organization also allows management to allocate budget, set targets and manage improvements more effectively because each Asset Manager is responsible for his Asset. The disadvantage of an Asset based organization is that it is difficult to maintain the technical level of functional specialists.
Until twenty years ago Functional based organizations as seen in Russian operating companies were also typical in Western companies. In such organizations all specialists of one function work together in one room and support all of the operating companies assets. The advantage of this system is that by working closely together within the function, specialists maintain a high level of technical expertise. The disadvantage is that integrated team work is absent and responsibility for a single asset is held only at the General Director level (see pictures below) this system is that by working closely together within the function, specialists maintain a high level of technical expertise. The disadvantage is that integrated team work is absent and responsibility for a single asset is held only at the General Director level (see pictures below).
21. Answer the following questions:
1. What does an Asset Based Organization consist of?
2. What does a Functional Based Organization consist of?
3. What are advantages and disadvantages of an integrated asset based organization?
4. What are advantages and disadvantages of a functional based organization?
5. Give your own examples of organizations of both types.
6. Name the positions within an oil company that belong to a corporate level (the headquarters) and regional level?
22. ROLE PLAY: You are welcoming a visitor to your company. Consult …
a. Introduce yourself
b. Make a presentation of your company. Use the following plan.
A. Title page
C. General Overview of the Company (industry, geographical location, number of employees, and etc)
D. Structure of the Company (general level – key people)
E. Performance Overview – Major achievements \ successes (2-3 slides)
3. Answer all necessary questions concerning your company.