Delayering as a Defense Mechanism

It is not uncommon for organizations to restructure and merge. Restructuring and

mergers are common when organizations are faced with obstacles while trying to stay

competitive in the corporate world. Restructuring an international organization is far more

challenging than restructuring a national organization. Many organizations are restructured for

lucrative growth. Organizational structure describes the structure and function of an

organization’s actions. It also details how the parts of an organization belong together [Gri141].

As stated in the Delayering as a Defense Mechanism case, are typical and probable

m
er as
reasons for organization restructuring. The streamlining and effectiveness approaches are vital

co
eH w
for corporate competition and survival [Gri141]. Cynthia Carroll, fairly new CEO of Anglo

o.
American, was faced with the issues of having to restructure a well- established 91-year-old
rs e
ou urc
company. Xstrata proposed a merger with Anglo American in June 2009, but Carroll and the

board refused it. Although Carroll was under strain from the investors, she took a firm position
o
aC s

with the plans she recommended to decrease costs. A couple of months later, Xstrata removed its
vi y re

offer. Shortly after that Carroll released her plan of simplification and delayering [Gri141].

Simplification is a process of reconstructing the organization as a whole by the implementing

ed d
ar stu

creative results. Delayering is a decrease in the number of levels within the organizations’ order

[Web14]. Delayering reduces costs, enhances communication, and reveal new opportunities
is

[Fri06]. The purpose of this paper to is provide my analysis of the following as if I were a). An
Th

investor and whether I would or would not support Carroll and the board’s position and b). An
sh

employee having to relocate to another part of the world as a result of restructuring.

Assuming that I am an investor in Anglo American, I would have supported the position

of Carroll and the board when Xstrata first made its merger bid. Cynthia Carroll was an

This study source was downloaded by 100000830144400 from CourseHero.com on 09-07-2021 20:52:55 GMT -05:00

https://www.coursehero.com/file/34816477/Delayering-as-a-Defense-Mechanismdocx/
 American female and far from being a mining industry veteran, yet she was still appointed CEO

of Anglo American. This appointment was made by the board of directors of a well-established

91 year-old organization. It is my belief that Carroll would not have been appointed CEO if the

board of directors thought she could not perform effectively. This appointment lets me know the

board believed in Carroll and they knew she would excel. It also gives me the confidence

needed to back Carroll and the board’s decision to veto Xstrata’s offer.

At the time Xstrata made its first merger bid, Carroll had been with the company for two

years. Forced to launch a $2 billion effectiveness plan, Carroll managed to decrease costs by

m
er as
$450 million within two years [Gri141]. Although analysts and investors were not impressed by

co
eH w
the savings, I believe Carroll’s cost decrease was important to Anglo American’s survival.

o.
When Xstrata made its merger offer, Carroll and the board weighed the advantages and
rs e
ou urc
disadvantages of the merger. One flaw identified was that the value of the Anglo American’s

portfolio was greater than Xstrata’s. They knew this merger would weaken the value of their
o
aC s

portfolio. Carroll and the board also knew that the merger could increase the market value of the
vi y re

Anglo American investors. With all the facts in front of them, Carroll and the board rapidly

refused Xstrata’s merger offer. Carroll provided the first half of 2009 financial outcomes and a
ed d
ar stu

case explaining why Xstrata’s offered was refused [Gri141]. Carroll was certain Anglo

American would prevail in the future and sure enough it did. When Xstrata made its merger
is

offer to Anglo American, they were heavy in debt [Reg09]. As an investor I would not have
Th

wanted Xstrata to decide the fate of Anglo American. It is my belief that the fate of any

organization should rest in the hands of its investors and not a debt burdened company. As of
sh

now, I would still support Carroll and the board’s position because of the same reasons I

previously mentioned.

This study source was downloaded by 100000830144400 from CourseHero.com on 09-07-2021 20:52:55 GMT -05:00

https://www.coursehero.com/file/34816477/Delayering-as-a-Defense-Mechanismdocx/
 Assuming that I am an Anglo American employee, if the organization’s restructuring

required me to move to another part of the world, I would decline. As I referenced earlier,

restructuring is a part of the corporate world and I completely understand. However, being just

an employee and not a top level executive, again, I would not move to another part of the world.

There are several advantages and disadvantages to making this decision. Some advantages

include, but are not limited to increased job opportunities, job security, and the chance to meet

new people from different cultures and backgrounds. Some of the disadvantages are it could be

costly and stressful. The decision to have to uproot my immediate family and move away from

m
er as
the rest of my family is a disadvantage that would weigh heavy on my decision. Family is

co
eH w
powerful. I am very family oriented. I am the fourth of six siblings and we all are very close. I

o.
could not bear the thought of not having them around and to watch my daughter grow. While the
rs e
ou urc
job security is an advantage that would weigh heavy on my decision, I have faith that I could

find another job or better career, but I could never replace my family.
o
aC s

In conclusion, organization reconstructing requires concurrent change in culture, board

vi y re

and management, structure and in the processes vital to organizations’ function. It is not

uncommon for an organization to have to change their structure. Simplification and delayering
ed d
ar stu

are two approaches that are essential to an organizations’ competition and survival. I have

provide an analysis of the positions I would take assuming I were an Anglo American investor as
is

well as an employee. I have also provided comprehensive explanations of these analyses.

Th
sh

This study source was downloaded by 100000830144400 from CourseHero.com on 09-07-2021 20:52:55 GMT -05:00

https://www.coursehero.com/file/34816477/Delayering-as-a-Defense-Mechanismdocx/
 References

Friedman, D., Scullion, C., & Hill, J. (2006). Global Delayering for Competitive Advantage.

Retrieved from BCG:

http://www.bcg.com.cn/export/sites/default/en/files/publications/articles_pdf/Global_

Delayering_Competitive_Advantage_Oct2006.pdf

Griffin, R. W., & Moorhead, G. (2014). Organizational Behavior: Managing People and

Organizations, 11th ed. Mason: South-Western Cengage Learnng.

Reguly, E. (2009, June 24). Investors To Decide Anglo's Fate, Not Xstrata. Retrieved from Globe

m
er as
and Mail :

co
eH w
http://www.globeinvestor.com/servlet/ArticleNews/story/GAM/20090624/IBXSTRATA24

o.
ART1903 rs e
ou urc
WebFinance, Inc. (2014). Delayering. Retrieved from Business Dictionary:
o

http://www.businessdictionary.com/definition/delayering.html
aC s
vi y re
ed d
ar stu
is
Th
sh

This study source was downloaded by 100000830144400 from CourseHero.com on 09-07-2021 20:52:55 GMT -05:00

https://www.coursehero.com/file/34816477/Delayering-as-a-Defense-Mechanismdocx/
Powered by TCPDF (www.tcpdf.org)