GROUP 9 CHAPTER 16 CASE STUDY DELAYERING AS A DEFENSE MECHANISM Executive Summary In October 2009, Anglo American PLC, the world’s fourth largest diversified mining company announced that it was delayering – eliminating a layer of organizational structure. The major criteria for this reorganization were geography and asset status. Then in June 2009, the Swiss-British mining company Xatrata proposed a merger with Anglo- a move that would create a $68 billion frim to compete with industry giants like BHP Billiton, Vale and Rio Trinto. But in October, Xatrata withdrew its offer in the face of resistance from the Anglo board Carroll announces her “simplification and delayering strategy”. In making the announcement she asked shareholders for more time to develop the company’s assets and prove its value as an independent company. Introduction An organization changing its structure is not unusual among business these days as they struggle to remain competitive in a rapidly changing world. The structure of an organization is most often described in terms of its organization chart. A complete organization chart shows all people, positions, reporting relationship, and lines of formal communication in the organization. For large organizations, several charts may be necessary to show all positions. Literature Review Responsibility and authority are related to both configurational and operational aspects of organization structure. For example, the organization chart shows who reports to whom at all levels in the organization. From the operational perspective, the degree of centralization defines the locus of decision-making authority in the organization. Methodology * In October 2009, Anglo American PLC, the world’s fourth largest diversified mining company announced that it was delayering – eliminating a layer of organizational structure. * Below the divisional level were Anglo’s various global business operations each dealing with a different commodity (e.g. coal, platinum, iron core) and each headed by its own CEO and functional support staff. * The CEOs of these units reported directly to the CEO of its or her respective division. * The major criteria for this reorganization were geography and asset status. * The platinum unit, for example, is to be headquartered at south Africa ( which is also home to the parent company, the copper unit in Chile, and the metallurgical-coal unit in Australia * In addition, Bus has been established only for Anglo’s core assets- operations that are essential to producing revenue, cash flow, or profit. * The decision to delayer and divest says Anglo chairman Sir John Parker, “represent an important step in creating a more streamlined business, with enhanced focus on operational effectiveness- we have truly world-class portfolio of assets and these initiative further improve our ability to deliver its full potential. * The year 2009 had already been a hectic one for Anglo. In February, CEO Cynthia Carroll had admitted that the organization, like many companies, had begun to feel the impact of the global recession. * The slippage as hardly catastrophic, but analysis had predicted an increase of 13 percent in earnings per share and had expected operating profits to at least remain flat. * When she was made CEO of Anglo in 2007, Carroll’s appointment was a shock to many people in what the Times of London calls “an irredeemably macho industry” * When her appointment was announced, Anglo’s stock immediately dropped about $ 0.80 per share * Her whirlwind campaign to costs by $480 million in the first half of 2009 earned her the nickname “Cyclone Cynthia”, and many analysis and investors were unimpressed by the savings themselves. * Then in June 2009, the Swiss-British mining company Xatrata proposed a merger with Anglo- a move that would create a $68 billion frim to compete with industry giants like BHP Billiton, Vale and Rio Trinto. * But in October, Xatrata withdrew its offer in the face of resistance from the Anglo board. * Carroll announces her “simplification and delayering strategy”. In making the announcement she asked shareholders for more time to develop the company’s assets and prove its value as an independent company. Study The Anglo American PLC decided to make delayering to eliminate a layer of organization because the company feels the impact of the global recession. Although when Cynthia Carroll begins to be appointed as CEO of Anglo, she made investors unimpressed because of recession. The company should invest very careful and envision what good for the company. Analysis It doesn’t mean that you are eliminating your employee your company is going down but you’re thinking of how you will go to the trend of your competitors. The company you should working for helps you in your living and not putting you down so they will think of solutions that can make the company to be better. Conclusion and Recommendation Being in an organization you know how to deal with other people inside it and being the leader you should also know how to deal with your subordinates.
References and Appendices
Business Organization And Management., Roberto G. Medina