BUSN20019 Profitability of Woolworths Organization Assignment Sample

• Subject Code : BUSN20019
• University : Central Queensland University My Assignment Services is not sponsored or endorsed by this college or university.
• Subject Name : Professional Project

Professional Project

Executive Summary of Corporate Social Responsibility

Corporate Social Responsibility is a term that defines the efforts of an organization to conduct its business processes keeping in consideration the interests of the society. The organizations tend to increase their investment on CSR activities in order to build their positive image in front of the customers. There are many organizations which have increased their expenditure on CSR initiatives in order to increase their profitability. However, there are organizations that still consider CSR initiative as forced liability because they have to incur this expense in order to remain competitive.

In the current research study, the secondary data of Woolworths organization will be retrieved from the annual reports in order to evaluate the impact of CSR expenditure on the financial position and profitability of Woolworths organization. The data will be collected for the years 2010 to 2019 in order to increase the credibility of the research findings.

Table of Contents

1.Background.

1.1Problem Statement

1.2Research Aim..

1.4Research Questions.

2.Literature Review..

2.1CSR expenditure and Customer buying process.

2.2 CSR expenditure and financial position.

2.3 CSR expenditure and Profitability.

3.Research Methodology.

3.1 Research Design and Approach.

3.2 Data Sources.

3.3Data Analysis.

Conclusion.

References.

1.Background of Corporate Social Responsibility

Corporate Social Responsibility has become an integral part of the strategic management of an organization for building the reputation and brand image in the market. The executives of the organization consider the corporate social responsibilities as strategy for increasing the competitiveness of the organization (Cho et al., 2019). Therefore, over the years the CSR has become one of the important business tasks to be performed at both executive and employee level.

The business tasks performed by organizations are needed to done keeping in mind the community concerns and the welfare of the entire society. It has become important for the organizations to increase their investment in the CSR activities because the consumers in the market are becoming more aware about the environmental concerns and want to be associated with the organization that undertakes business processes which do not have negative impact on the quality of the environment. Therefore, it can be evaluated that corporate social responsibility can lead to increase in the attraction of the products for the customers (Mohiuddin, 2017). The organizations in order to increase the attraction of their products tend to increase their investment on the CSR activities. It can be evaluated that organizations have started considering Corporate Social Responsibility as an investment and not as an expense. In order to work in the financial management department of the organization it becomes important to have knowledge on the impact of different expenses and investments made by an organization. In order to understand the practical implications of CSR research area, the case study of Woolworths organization will be considered in the present research study.

1.1Problem Statement

The literature is unable to provide settled proof for the relationship between the CSR expenditure incurred by an organization and the profitability of the organizations. The literature rather depicts that the improvement in the financial ratios can only lead to positive impact on the profitability of the organizations. The organizations that do not invest in the CSR activities believe that the costs incurred on the CSR activities are a burden on the financial position of the organization (Lombart & Louis, 2014). Therefore, it becomes important to find out the impact of CSR expenditure on the profitability of the organization.

1.2Research Aim

The research aim of the present study is to find the impact of the CSR expenditure on the financial position and the profitability of Woolworths Corporation.

1.4Research Questions

• What is the impact of CSR expenditure on the ROA of Woolworths Corporation?
• What is the impact of CSR expenditure on the Profit of Woolworths Corporation?

2.Literature Review of Corporate Social Responsibility

2.1CSR Expenditure and Customer Buying Process

Various studies postulate different definitions for Corporate Social Responsibility. However, the purpose remains the same that it is the responsibility of conducting the business operations in a way that it meets the social, economic and environmental expectations of the society (Nnenna & Carol, 2016). The literature also states that the society is becoming pretentious in their decision making process while buying products and services. Therefore, it can be stated that an organization can increase the attractiveness of their products by increasing their investment on the CSR activities (Ahmed et al., 2018). The investment on CSR activities can help in positively impacting the customer perceptions thereby increasing the customer base of the organization which eventually have a positive impact on the profitability of the organization. A study conducted by Gaikwad (2020), adopted primary method approach in order to find out the factors that impact the customer buying process. The findings of the interview process conducted with the customers depicted that there are many variables that can impact the customer buying process including the brand ambassador of the brand, brand value and experience of the product by friends and family (Dlamini, 2016). It could be evaluated from the findings that CSR expenditure was not among the significant factors that had an impact on the customer buying process (Singh & Misra, 2019).

2.2 CSR Expenditure and Financial Position

It becomes important for an organization to hold a good financial position in order to attract the customers, shareholders and the investors towards the organization (Khan et al., 2019). According to the study conducted by Kumar et al. (2018), investors tend to form positive image for the organization that tend to contribute towards the welfare of the society. The shareholders also want to associate with an organization that does not conduct business operations that have negative impact on the quality of the environment and the human health because such organizations are not able to survive in the market for a longer period of time (Kumar et al., 2020). The contribution from the investors and the shareholders has a positive impact on the financial position of an organization (Kukunuru & Singh, 2017). Therefore, on the basis of the above discussion it can be stated that CSR expenditure can have positive impact on the financial position of the organization. However, according to the study conducted by Shukla (2017), the investment required for the CSR activities is considered as financial burden by many organizations. Therefore, it can be evaluated that the impact of CSR on profitability may vary on the type and size of the organization.

2.3 CSR Expenditure and Profitability

Some part of the already present research depicts that the CSR expenditure helps in increasing the profitability of the organization, while other predict that the CSR expenditure has negative association with the profitability of an organization. A study conducted by (), identified the impact of CSR expenditure on the profitability of the supermarket industry located in United States (Ibrahim & Abubakar, 2020). The finding of the study depicted that there was a negative association between the CSR expenditure and the profitability of supermarket industry of United States. While, the findings of the other study depicted that there is no significant association between the investment done on CSR activities and profitability of organizations (Singhal et a., 2020). Another perspective of the present literature is that CSR expenditure has become one of the significant factors that can lead to a positive impact on the profitability of the organizations because the proportion of customers who are aware about the environmental concerns are increasing (Bardos et al., 2020). Therefore, it has become important for the organizations to act in a way which is acceptable for the consumers in the society (Kumar & Kumar, 2019). However, there are still many organizations that consider it as an expense because it requires community conforming and investment (Mohiuddin, 2017). The organization needs to comply by with regulatory standards and procedures in order to ensure that the production processes of the organization have no negative environmental impact (Dlamini, 2016).

3.Research Methodology of Corporate Social Responsibility

3.1 Research Design and Approach

In order to identify the impact of CSR expenditure on the financial position and profitability of Woolworths organization, quantitative research design will be adopted. The research will be conducted using a deductive research approach in which secondary data will be analysed for finding specific answers to the research questions of the study. Data regarding CSR expenditure, Return on Assets (ROA) and profit of Woolworths Corporation will be collected.

3.2 Data Sources

In order to conduct quantitative research, secondary data will be selected from the annual reports of Woolworths organization for last 10 years from 2010 to 2019. The annual reports will provide reliable and authentic data about the organization which will further increase the credibility of the findings of the study.

2010: https://www.woolworthsgroup.com.au/icms_docs/183557_Annual_Report_2010.pdf

2011: https://www.woolworthsgroup.com.au/icms_docs/183558_Annual_Report_2011.pdf

2012: https://www.woolworthsgroup.com.au/icms_docs/185965_annual-report-2012.pdf

2013: https://www.woolworthsgroup.com.au/icms_docs/185963_annual-report-2013.pdf

2014: https://www.woolworthsgroup.com.au/icms_docs/185964_annual-report-2014.pdf

2015: https://www.woolworthsgroup.com.au/icms_docs/182381_Annual_Report_2015.pdf

2016: https://www.woolworthsgroup.com.au/icms_docs/185865_annual-report-2016.pdf

2017: https://www.woolworthsgroup.com.au/icms_docs/188795_annual-report-2017.pdf

2018: https://www.woolworthsgroup.com.au/icms_docs/195396_annual-report-2018.pdf

2019: https://www.woolworthsgroup.com.au/icms_docs/195582_annual-report-2019.pdf

3.3 Data Analysis

The data will be collected for three variables including CSR expenditure, Return on Assets (ROA) and Profit of Woolworths organization. The variable CSR expenditure will be considered as independent variable and Return on assets (ROA) and Profit will be considered as dependent variable.

The analysis will be conducted in the research study using Excel software. The inferential technique of regression analysis will be used in order to identify the relationship between dependent and independent variable. The first regression analysis will be performed between Return on Assets and CSR expenditure. In this analysis, the CSR expenditure will be treated as independent variable and Return on Assets will be treated as dependent variable. The finding of this analysis will help in evaluating the impact of CSR expenditure on the financial position of the organization. The second regression will be performed between CSR expenditure and profit of the organization. In this analysis, the CSR expenditure will be treated as independent variable and Profit will be considered as dependent variable. The findings of the analysis will help in finding the impact of corporate social responsibility on the profitability of the organization.

4. Conclusion on Impact of Corporate Social Responsibility

It can be concluded from the findings of the literature review that the impact of CSR on the profitability of an organization can differ on the basis of type and size of the organization. The analysis conducted in the research report will help in finding out the impact of CSR expenditure on financial position and profitability of Woolworths organization which is a supermarket located in Australia.

The findings of the current study will provide answers for the following questions:

• What is the impact of CSR expenditure on the ROA of Woolworths Corporation?
• What is the impact of CSR expenditure on the Profit of Woolworths Corporation?

5. References for Impact of Corporate Social Responsibility

Ahmed, T., Butt, B. Z., & Majeed, W. K. (2018). The Impact of Corporate Social Responsibility on Firm’ s Financial Performance. Information Management and Business Review, 10(2), 30-37.

Bardos, K. S., Ertugrul, M., & Gao, L. S. (2020). Corporate social responsibility, product market perception, and firm value. Journal of Corporate Finance, 62, 101588.

Cho, S. J., Chung, C. Y., & Young, J. (2019). Study on the Relationship between CSR and Financial Performance. Sustainability, 11(2), 343.

Dlamini, B. (2016). The impact of corporate social responsibility on company profitability in Zimbabwe: A case of a listed Telecommunication company. International Journal of Social Science and Economics Invention, 2(04), 333-to.

Gaikwad, S. N. (2020). Importance of Corporate Social Responsibility (CSR) Policy under the Company Act 2013. Studies in Indian Place Names, 40(27), 1088-1101.

Ibrahim, U. A., & Abubakar, A. (2020). Assessing the Influence of Corporate Social Responsibility on Organizational Image in Selected Food and Beverage Companies in Nigeria. Science Journal of Business and Management, 8(1), 27.

Khan, A. U., Rahman, H. U., Khan, Z. U., & Zubair, M. (2019). Corporate Social Responsibility and Firms’ Financial Performance: A Conceptual Framework. Journal Of Social Sciences & Humanities, 2(1 & 2), 84-95.

Kukunuru, S., & Singh, S. (2017). Corporate Social Responsibility and Impact on Profitability of Banks in the United Arab Emirates. Middle East Journal of Business, 55(4022), 1-11.

Kumar, A., Sinha, A., Arora, A., & Aggarwal, A. (2018). Impact of CSR activities on the financial performance of firms. MUDRA: Journal of Finance and Accounting, 5(1), 75-89.

Kumar, N., & Kumar, P. (2019). The Impact of CG and CSR Index on Profitability. IUP Journal of Corporate Governance, 18(2), 39-59.

Lombart, C., & Louis, D. (2014). A study of the impact of Corporate Social Responsibility and price image on retailer personality and consumers' reactions (satisfaction, trust and loyalty to the retailer). Journal of retailing and consumer services, 21(4), 630-642.

Mohiuddin, Z. A. (2017). The Impact of Corporate Social Responsibility on Organizational Repute. Journal of Marketing & Management, 8(1).

Nnenna, O., & Carol, N. (2016). The Impact of Corporate Social Responsibility Reporting on Profitability of Nigerian Manufacturing Firms. Research Journal of Finance and Accounting, 7(16), 227-232.

Shukla, A. (2017). The Relationship Between Corporate Social Responsibility and Financial Performance of Indian Banks. IUP Journal of Corporate Governance, 16(2).

Singh, K., & Misra, M. (2019). Corporate Social Responsibility (CSR): An Emerging Opportunity or a Forced Liability. International Journal of Advance & Innovative Research, 6(1), 85-94.

Singhal, R. K., Memane, A., & Kabadi, S. (2020). Analytical Study of Corporate Social Responsibility Affairs for Reliance Industries Limited. Studies in Indian Place Names, 40(27), 1057-1072.

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