Range Resources's Low-Cost Structure

1. Managers at Range Resources say that maintaining a low-cost structure is the job of every employee, and they make cost control part of the company culture. Is this indicative of a hierarchical or a decentralized philosophy of control? Explain.

Range Resources’ making cost control a part of the culture and maintaining low-cost structure the job of every employee is indicative of a decentralized philosophy of control. In a decentralized system of management the decision-making authority does not sit with a central figure or group; instead the highest level of management makes major decisions about the company but middle and lower level management determine the remaining decisions. Range Resources draws from this idea by allowing its employees
In order to enact this structure successfully, every employee must understand and value the goal of minimizing cost, and that is why Range Resources’ low cost structure is so successful. Range Resources uses effective team leadership by rallying its people around a compelling purpose. Roger Manny illustrates this idea when he talks about the dynamics of their structure, “Maintaining a low cost structure is not so much what we do but who we are”. The low cost structure that Range Resource employees use every day is not a hierarchy, but a decentralized philosophy of control because management as well as standard employees implement the cost efficient strategies. It is so successful because everyone in the company benefits when the company raises equity at a lower
Through long term monitoring and long term planning, Range Resources diligently prepares for the future ahead, enlisting various tools to monitor performance and control costs. An indicator of their approach is how they handle huge profit opportunities, such as discovering the Marcellus Formation. When they began drilling this area they accepted about 1.9 trillion cubic feet of natural gas but geological experts discovered it may actually contain as much as 516 trillion cubic feet of natural gas, that is nearly 272 times what the company had hoped for and expected. According to top executives at Range Resources, upon discovering the Marcellus, the company adopted a ten-year growth outlook based on high production and a low-cost operating structure. In the midst of a wildly profitable discovery, the executives at Range Resources determined how they would maximize this profit