1

International Baccalaureate:

Extended Essay in Business Management

Cargill

An evaluation in Cargill company, implementing a new organizational

structure for reducing the costs and improving the human resources
management.

Research question:

To what extent can implementing a new organizational structure have a positive effect
to reduce costs and have a better management of human resources at Cargill?
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Table of Contents

1. Introduction................................................................................................................................... 3

2. Methodology.................................................................................................................................. 4

3. Theories used ……………..…………………………………………………………………………………………4

3.1 Organizational Structure ……….……………………………………………………….………….. 5

3.2 Human Resource management …………………………………………………………………. 5

3.3 Steeple analysis …………………………………………………………………………………………. 5

4. Background .……………………………………………………………………………………………………………5

4.1 Cargill’s situation………………………………………………………………………………………….6

4.2 Analyzing the competitor…………………………………………………………………………….9

5. What is the purpose of this Change……………………………………………………………………….14

6. Steeple analysis……………………………………………………………………………………………………..15

7. Proposal…………………………………………………………………………………………………………………16

8. Conclusion…………………………………………………………………………………………………………….18

9. Bibliography ………………………………………………………………………………………………………….20
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1. Introduction:

Cargill, Incorporated is a privately held American multinational food corporation with

its founding location in Wilmington, Delaware and its corporate headquarters in
Minnetonka, Minnesota. William Wallace Cargill founded Cargill in 1865 after investing
in a grain-flat house in Conover, Iowa. A year later, Sam Cargill joined William to form W.
W. Cargill and Brother. Together, they started a lumberyard and built grain flats.

The trading, buying, and distribution of grains and other agricultural products,
including palm oil, the trading of energy, steel, and transportation, the raising of
livestock, the production of feed, and the production of food ingredients are some of
Cargill's main businesses.

As we well know, Cargill is considered the biggest agribusiness company of the United
States and probably of the whole world. In its statistics, Cargill has 160,000 employees
spread throughout the world, with more than 70 branches or companies in different
countries, expanding its range to 6 regions around the globe.

In the United States, Cargill is the largest private corporation in terms of revenue. The
company also supplies about 22% of the US domestic meat market and imports more
products from Argentina than any other company. So this data shows us the great
power and influence of the company around the world.

Nowadays in 2023 the United States tends to suffer an almost and evident inflation and
recession in their economy. Given that the vast majority of economists at 23 major
financial institutions surveyed by The Wall Street Journal predict that the United States
will fall into the grip of a recession in 2023. This shows us that different external factors
such as inflation and the fall of global markets will be present, and they will affect
mainly the agronomic sector.

Therefore, the objective of this essay is to propose and resolve the following question:
To what extent can implementing a new organizational structure have a positive effect
to reduce costs and have a better management of human resources at Cargill?
It is worth investigating this question, since in this way Cargill will be able to reduce its
losses, once preventive actions have been taken for subsequent financial crises, we will
be able to avoid external factors so its participation in the agricultural sector will not
fall.
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[Link]

There are numerous secondary sources from which the data used to answer the
research question was compiled. Sources that permit a comprehensive analysis of the
data and take into account a range of viewpoints, ensuring that bias does not
compromise the objectivity of this study. The type of information that was used for the
test is quantitative information given by numbers and data that helped us reach a
conclusion based on previous decisions of competitors.

In addition, in the research it was used a number of articles, magazines, business

reports, and case studies during my research. For instance, scholarly journals were used
like Reviews and various newspaper articles from reputable publications like Globaldata,
Statista to take into account a range of viewpoints that, when combined, will allow an
inclusive interpretation and discussion of the results.

The steps that were carried out to obtain the information and analysis, is the first
introduction to the area and context of the company, also the book Agribusiness
management Sixth Edition 2020 was read. Then relevant articles that contained vital
information were found and investigated, to finally be able to make the proposal and
determine a conclusion.

3. Theories used

The essay was based on the concepts of human resources management, steeple
analysis, and finance, this will help us understand the aspects of each change for the
proposal.

Human resources management and finance, gave us a perspective of the factors that
we must take into account when talking about employees and reducing costs. Steeple
analysis helps the proposal in the analysis and view of the external factors that could
influence when making a decision, so we must analyze from an economic, social, and
political point of view.
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3.1 Organizational structure

An organizational structure classifies team members according to roles and importance,

reflecting the management style. An organizational chart is used to show how the
business and its employees are set up, with roles, responsibilities, and reporting
relationships represented.

3.2 Human resource management

Human Resource Management (HRM), often referred to as human resources (HR),

encompasses the practice of recruiting, hiring, deploying, and overseeing an
organization's employees. The HR department holds the responsibility of formulating
and implementing policies that regulate worker interactions and the organization's
employee relationships. HRM, or HR, is a business process aimed at enhancing
employee contributions towards achieving company objectives, emphasizing
self-management and organizational oversight.

3.3 Steeple Analysis

For Cargill's analysis, this is a main concept given that, as mentioned above, it is a
company closely watched by environmentalists, activists, and others due to its large
actions that pollute the environment in previous years, so a possible cut in personnel
will alert the society on Cargill's social image and will negatively affect it if not carefully
analyzed.

4. Background

In the diagnosis, what is sought is to have an understanding of the situation, both past
and present, in order to fully understand and repair what is happening with Cargill and,
depending on that situation, carry out a scan of everything that can help the company
and which way to implement it.

It is also important to have a point of view from the situation of Cargill's direct and
indirect competitors, in order to implement a solution that may have already been taken
by a company and also avoid mistakes made by them.
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4.1 Cargill’s Situation

Now in the actuality Carfill continues to grow and is considered one of the monster
producers in the agricultural sector. During its history it is recognized for its advances
in its technologies and many aspects. Just as it has been criticized and considered the
World's Worst Company by Mighty Earth Company which is a global defense
organization working to defend a living planet. This is due to its various practices that
affect the environment and biodiversity.

Cargill, like other agribusinesses, during these last years, has experienced different
challenges when it comes to progress, such as the covid 19 pandemic, the invasion of
Russia to Ukraine and others, due to this the food sector is affected and the prices of
Food in 2021 and 2022 tends to rise, causing as much as in the US and in the world, so
allowing the analysis of this essay will give a perspective about how implementing a new
organizational structure would affect Cargill Inc.

In March 2023, the Cargill company was featured on the Fortune list as one of America's
most innovative companies of the year. Therefore, this indicates that the company's
trend is good and many aspects are improving day by day.

Looking at the situation of the company in the management of human resources, Cargill
is a company that needs a lot of human resources to be able to function, this due to its
great size as a company, as mentioned multiple times, Cargilll has more than 150,000
employees spread over the world, which indicates that it is a company that is managed
in an industrial way.

The different 160,000 employees are divided into 70 countries that are on 4 different
continents. The following graph from the Globaldata page shows us the percentage of
Cargill employees and where they are located and as shown in the graph, one of the
places with the most employees is North America, which employs around 31% of all
resources, and it should be noted that the majority are in the US, where the central
company of cargill is maintained.
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Employee Distribution of Cargill

source:Shahbandeh, M. “Share of Cargill Employees by Region, 2022.” Statista, 25 Aug. 2022,

[Link]/statistics/274780/number-of-cargill-employees-by-region/.

Also Cargill's organizational structure has changed over the years due to its recent
growth. Today the organizational structure of Cargill is the hierarchical organizational
structure by functions, and is divided into three groups, the management team, the
board of directors and finally the CEO and the executive team, under the command of
this are the other employees in charge of covering more specific positions.

The following graph shows us the organizational chart of Cargill in 2023, to analyze it
and get conclusions for the essay.

Cargill Hierarchical organizational structure by functions - Leadership team

source: “Cargill - Org Chart, Teams, Culture & Jobs.” THE ORG, [Link]/org/cargill.
Accessed 17 Aug. 2023.
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One of the focuses of the essay is the management of human resources, Cargill manages
a large number of employees, and for the last few years this sector has been affected a
lot, so the following graph gives us a view of the hiring trend of employees at cargill, in
order to determine if the proposal will have a positive response.

Hiring trend of Cargill 2022 - 2023

source: Plc, GlobalData. “Cargill Inc Company Profile - Overview.” GlobalData,

[Link]/company-profile/cargill-incorporated-gd11768/. Accessed 18 Aug. 2023.

The chart below indicates Cargill's trend in terms of employee recruitment, as can be
seen Cargill started the year (January) with quite high employee recruitment, indicating
a need to fill positions. Then the decrease in this contracting is noticeable, which shows
us the situation of many countries that suffer from external problems such as inflation.
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4.2 Analyzing the competitors

In order to know what would be a good decision to make when deciding, we must first
see the competitors that are in the same production sector and that have already made
a decision on the problem to know if it is a sustainable, good and efficient decision and
if they already implemented a solution to solve the problem. So here we have a list of
the main direct competitors of Cargill.

List of Cargill’s Market Competitors

Source: Plc, GlobalData. “Cargill Inc Company Profile - Overview.” GlobalData,

[Link]/company-profile/cargill-incorporated-gd11768/. Accessed 18 Aug. 2023.

One of Cargill's leading competitors is the Archer Daniel Midland Company, which is a
company that is in the agriculture sector, like Cargill, since Archer Daniel is the largest
company in the United States that processes agricultural commodities, this is a
company which, like cargill, is being affected by the different external problems, given
that the agricultural sector is one of the most affected in the United States and in the
world.
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This company is a world leader, just like Cargill, in both human and animal nutrition and
one of the main agricultural processing companies. This means that a different aspect
from Cargill is that they do not own farms, one of their main activities is to take natural
products and convert, renovate and make sustainable staple foods. In 2012 archer
daniels was forced to make changes to its structural organization, more to the point of a
3% reduction of company employees worldwide, due to volatility in global commodity
markets, this could be positive. It would affect the company in such a way that it would
reduce expenses and save around 100 million dollars a year, since the results of said
change would be seen from the following year.

This tells us that due to the competitive comparison between Archer Daniels Midland
Co and Cargill, changing the organizational structure at Cargill could stabilize Cargill's
profits compared to other years and to some extent increase them, thereby reducing
most of its costs.

Right now Archer Daniels Midland Co. has a tall Organizational structure that manifests
itself hierarchically that we can see in the next Chart. Which means that different
structural changes have taken place in the course of the last years and that there was an
implementation of a greater number of employees.
Organizational structure of ADM

Source: Plc, GlobalData. “Archer Daniels Midland Co Company Profile - Archer Daniels
Midland Co Overview.” GlobalData,
[Link]/company-profile/archer-daniels-midland-co/. Accessed 18 Aug. 2023.
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To make a complete analysis of Cargill's competitors, the status of each company will
help us to see their situation, and from that, making changes avoid making mistakes that
competitors have, or to some extent imitating their good decisions. So, the following
graph shows us the sales Growth of Archer Daniel Midland Company.

Sales Growth of Archer Daniels Midland Company.

Source: Plc, GlobalData. “Archer Daniels Midland Co Company Profile - Archer Daniels
Midland Co Overview.” GlobalData,
[Link]/company-profile/archer-daniels-midland-co/. Accessed 18 Aug. 2023.

To analyze the situation of both Cargill and its direct competitors such as Archer
Daniels and JBS, we must see the situation and the trend of each company. This is
reflected in the sales growth that shows the situation of the companies involved in
agriculture.

As can be seen in the graph, this is positive in the years after 2021, after that, we see a
negative trend, which indicates that the increase in sales is decreasing. This is an
indicator that shows us the difficulty of the market and its production.

Cargill's next direct competitor is JBS SA, this is a company that is worth analyzing due
to its size and importance, so possible past structural changes will help us a lot in the
analysis, understanding and conclusion of the present essay. It is a Brazilian company
that was founded in 1953 by the Brazilian José Batista Sobrinho, who started his
operations in a small processing plant with a capacity of 5 head of cattle per day in the
city of Annapolis in Goias, Brazil.
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JBS, which has been around for more than 60 years, is both the second-largest food
company in the world and the largest producer of proteins. In addition to producing
convenience foods and a wide range of goods like biodiesel and other products, its
extensive operations also include the processing of beef, sheep, pork, and chicken.

JBS manages a massive workforce of more than 240,000 employees, far exceeding
Cargill's employment figures. JBS has an impressive global footprint of close to 400
units, of which over 230 are dedicated to the production of meat and high-value
products. This important human resource capacity emphasizes the requirement for
complex management systems.

Notably, the complex organizational structure shown in JBS's chart links the model for
Cargill that has been suggested, highlighting the similar differences between these two
industry giants. The following graphic shows the organization chart of JBS.
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Organizational structure of JBS.

source: admin_jbs. “Global Structure.” JBS, 20 Dec. 2022,

[Link]/en/about/global-structure/.

JBS, which has been around for more than 60 years, is both the second-largest food
company in the world and the largest producer of proteins. In addition to producing
convenience foods and a wide range of goods like biodiesel and other products, its
extensive operations also include the processing of beef, sheep, pork, and chicken.

JBS manages a massive workforce of more than 240,000 employees, far exceeding
Cargill's employment figures. JBS has an impressive global footprint of close to 400
units, of which over 230 are dedicated to the production of meat and high-value
products. This important human resource capacity emphasizes the requirement for
complex management systems.

The following graph shows the sales growth of the company there, the situation of the
company and different and to what extend their decisions could help Cargill.
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Sales growth of JBS.

Source: ​Plc, GlobalData. “JBS SA Company Profile - Overview.” GlobalData,

[Link]/company-profile/jbs-sa/. Accessed 24 Aug. 2023.

The previous graph shows us the growth in sales of JBS, as previously said, this indicates
the situation that the company is in and what is happening with the market. Like Archer
Daniels, the company has a negative trend after 2021, which again indicates the market
situation and the different factors that occur and should be avoided.

5. What is the purpose of this change?

As mentioned before, Cargill is an international company with a high number of

employees in different regions. So for it it is hard to manage and care about the culture
of the company, which is dedicated to providing products and services in the food
sector, financial, agricultural, industrial products and risk field management.

The post-pandemic shift in social conditions and norms that has affected operations,
including the transformation of digital products and shifting consumer preferences,
presents a dual challenge for Cargill. Sales are negatively impacted as a result of both
declining demand and rising production costs.

This essay provides a new organizational structure for Cargill's agricultural division in
response, emphasizing effective human resource management to advance the business
and reduce costs.
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6. Steeple analysis

To do this, the different factors that could affect Cargill when making this change must
be analyzed, so to reduce the margin of error, the following Steeple analysis was
carried out.

Social: ● Firing or reducing the employees

would have be negative bad seen
by the society, so they can be
redistributed
● Our response to the negative
effect could be the Internal factors
or problems of the country.

Technological: ● Through the Reduction of the

Employees and a new
organizational structure , news
technologies could be
implemented to the benefit of the
company
● Infrastructure of the company
would change
● Cost reductions of the employees
salaries would let us invest that
money on new technology
● Faster rate of production

Economic ● Changes would affect the

company’s economy through the
adaptation of the new
organizational structure
● Inflation would be reduced
through the decrease of the costs.
● Costs would decrease

Ethical ● Fair trade would be not taken in

account
● Many employees would be
redistributed to other parts of the
world
● People would need to move to
other places if they want to
continue working in the company

Political ● Regional policies would need to be

taken in account when
redistributing employees
● Political influences would not
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affect to much the change

Legal ● Substantial reasons for

redistributing or firing should be
consider to avoid legal problems
● Employment laws like the
commission would affect the
company situation

Ecological ● No ecological factors would be

necessary be analyzed or could be
a problem in the decision

As seen in the steeple analysis, the factors that support this change outweigh the
negative factors. In this case, the steeple analysis helps us to consider all these external
factors in order to make a change as big as changing the organizational structure. It
would help us to design all the plans when changing the organizational structure, and
allow us to implement it successfully.

Not doing this type of analysis could lead us to poor decision making risks in very
important factors. Which within the analysis considers different opinions that the
workers and their families could have before the redistribution to other countries and a
possible reduction of personnel.

7. Proposal

After everything collected and analyzed in the essay, to a medium extent it is a good
decision to implement a new organizational structure. Along with many other
businesses, Cargill is affected negatively by a variety of external factors, such as
diseases, societal problems, governmental conflicts, high costs and mainly due to
change and global warming that impacts the agricultural sectors.

As evidenced by hiring patterns, negotiation values, and sales growth graphs, that were
shown in the essay before, these difficulties in particular limit the development of
industries in the agri sector. Notably, increased disease susceptibility and
contagion concerns have a significant impact on Cargill's core food production
business, making it more complex, expensive, and demanding.

Cargill during the last years has managed and manages a hierarchical organizational
structure by function, and it is distributed at the top of the company in three groups
that manage the company. Which tells us that the distribution of the employees is
divided to perform different tasks and focus on those.
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It has a decentralized structure so that the decision-making power passes directly

through each supervisor and in some cases reaches the highest positions such as the
president and executive director, Brian Sikes. What is proposed in the following essay is
to implement a change in the organizational structure of the company.

The primary goal is to mitigate challenges faced by the company, including rising global
warming, high production costs, also market disruptions like the Russia-Ukraine
conflict, or the covid-19 that made many companies go bankrupt and finally enhance
human resource management. The organizational shift at Cargill necessitates careful
consideration of modified areas, employee redistribution, adaptation, necessary
resources, and ensuring smooth post-change operations.

Based on the organizational structure that Cargill already has, what is recommended is
to alternate certain areas which will allow a better flow of the company, lowering costs
and improving employee management. Likewise a small redistribution of roles and
employees in the companies.

The new organizational structure is going to be a semi - flat organizational structure by

functions. This will allow the company to continue focusing on different production
areas, maintaining an operating system similar to the previous one, what is sought is to
have a little more decision-making power decentralized, which allows directors to have
more autonomy. So it is important to note that the three groups of directors and the
head of the company will not be altered.

The first change would be the reduction in production tasks in North America,
especially the United States, because it is a country that is going through inflation and
political problems, which makes production and obtaining raw material difficult. This
would occur from the cut of some employees.

This until reducing the employees from 31% that is in North America to around 27%,
then the redistribution of employees to Europe and Middle east will be sought, since
these have a smaller number of employees and do not have much growth for the
company. This will help develop agriculture and thus expand Cargil to different corners
of the world.

Up to this point the proposed structural change only seeks to reduce employees with
lower and less important positions to reduce the workforce so that the company can be
more efficient.

It's important to consider how coming organizational change will affect the personnel
because some employees may be unhappy about being redistributed or losing their jobs.
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It is advised to maintain the company's relationships and reputation by measuring
compensation and satisfaction.

It is crucial to have a strategy for communicating decisions and negotiating with

employees, as well as a one-month trial period. In order to ensure efficient operations,
redistributed employees should also receive training, and a support system should be
established to help with operational problems.

Finally, this new organizational structure which will be characterized by being a

semi-flat organizational structure will have fewer levels of hierarchy. Due to the little
information found on the web about the company, the proposal of the following essay is
to reduce the masses of employees surrounding the company's largest factories.

That is to say a redistribution of the different employees and possibly a reduction of

personnel, to make the organization more volatile and manageable. This will allow the
directors to have better control of the company, it will also allow the implementation of
better technologies that will be possible due to the reduction of costs in the human
resources sector. Other details of this change are to be able to amortize the external
factors that could affect the company in the future, and not prevent its growth.

8. Conclusion

The results of this essay give a clear answer to the research proposal. Over the last
years Cargill has been growing very rapidly, this means that it has become a
powerhouse as a company, which makes its presence on different continents noticeable.
That is to say that its magnitude as a company makes it more difficult to manage and
that a fluctuation in the operating process, such as external factors, could lead it to
collapse.

During the evaluation, the analysis of the data informs us of the unfavorable situation
that Cargill has, as well as its direct competitors (Archer Daniels, JBSA), these show a
decline in their sales and growth, to avoid many risky situations, the conclusion was
reached. It is concluded that up to a midpoint, implementing a new organizational
structure would help the company, if it is managed correctly and all the details are
analyzed, such as the communication of the change or the support structure.

The response to the proposal is appropriate to some extent because making an

organizational change in a company as large as Cargill would become difficult. Even so,
it is a company with too much economic and social power, for what it could carry out.
In the same way, it is a change that must be taken with care because the reduction of
personnel must be executed to the point of continuing with production and normal
operation.
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It would lead the company to cushion external factors, such as inflation, recession,
pandemics among others. This also leads us to the conclusion that it would be a big
change that would move many important pieces of the company, it would correspond to
a long process, where it would be in charge of instructing redistributed employees well,
and dealing with those who leave the company.
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