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Factors Affecting Business Success of Small & Medium Enterprises

Table of Contents

Introduction.

Contextual Factors Impacting Operations, Performance and Growth.

Governance Structure and Effectiveness of the Organisation’s Corporate Governance.

Influence of External Environmental Factors.

Political

Economic.

Social

Technological

Environmental

Legal

Business Practices.

Major Risks Faced by the Company and Their Influence.

Functional Departments of Woolworths Group.

Conclusion.

References.

Introduction to Woolworths Australia and Walmart US Analysis

Keith (2012) found out that one of the world’s most cluttered supermarket industries finds its home back in Australia. The Woolworths Supermarkets is an Australian subsidiary retail enterprise of supermarkets owned by the Woolworths Group. It has giant retail outlets and grocery stores in both Australia and New Zealand. Known fondly as the “Woolies” in Australia, the Woolworths Supermarkets coexists with its biggest competitor called the Coles, and both form an almost duopoly, accounting for approximately 80% of Australia’s market. According to Sarangdhar (2012), while the demand in Asia-Pacific region continues to grow, inflation and non-availability of labour is also continuing to pose challenges for companies in the area. The following assessment shall attempt to furnish a best-value report of the business, examining the costs along with other quantifiable and non-quantifiable components of the business. The assessment shall also strive to answer questions pertaining the impacts of internal and external contextual factors which affect and support performance, investment and a host of other decisions the company has to make from time to time.

Contextual Factors Impacting Operations, Performance and Growth

Contextual factors play a crucial role in shedding light on research findings such as opportunities for investments, return on investment, budget allocations and effectivity of proposed schedules and delivering these discoveries in other surroundings/environments (Tomoaia-Cotisel et al., 2013). They can be applied on both internal and external facets of governance or organisational policies. The topmost contextual factors are identified by the teams or team members deployed for carrying out such a business case study. The findings are then grouped thematically and recommendations are generated to report context. This assessment will look at the effects of the governance within the organisation, external environmental factors, major risks faced by the organisation, business practices and functional departments, on the performance and decision-making of the Woolworths Supermarkets.

Governance Structure and Effectiveness of the Organisation’s Corporate Governance

Frias-Aceituno (2012) describes the Board of Directors as a mechanism of corporate governance including a group of chosen people representing the shareholders, who play a vital part in implementing good practices in the company’s corporate social responsibility, implementing programmes for stakeholder participation and building mechanisms to effectuate holistic lucidity. It is a governing body which typically sets up meetings at regular periods of time for setting policies related to corporate management and lapses. According to the Woolworths Group (2017), the Board of Directors of the Woolworths Group Limited (Woolworths Group or the Group) comprises Gordon Cairns (Chairman of the Board), Jillian Broadbent, Jennifer Carr-Smith, Holly Kramer, Siobhan McKenna, Scott Perkins, Kathee Tesija and Michael Ullmer. Brad Banducci is the CEO, Paul Graham- the Managing Director of Supply Chain- and Claire Peters- the MD of stores. The Board is conscious of maintaining the goodwill and trust of the customers, teams, suppliers and other related communities. Time to time, the Group’s purpose is remembered, its values are upheld, ways of working are refined and the culture of the Group is monitored. The Group’s strategic direction and approvals of strategic business plans are reviewed regularly. The finances and management of the Group are carefully handled by experts in these fields. Risk management and compliance is overseen vigilantly. Leadership, succession, remunerations, performance, the social and ethical environments of the company as well as set standards for the company’s operations and its relationship with regulators and other external bodies are aspects given high importance at the Woolworths. All these factors lend a positive impact on the company’s corporate governance and ensures its effectiveness.

Influence of External Environmental Factors

Chittithaworn et al. (2011), explain that external environmental factors are those factors which affect the success of any business by analysing the risks which could lead to the failure of the business and hence giving the business a chance to thrive in the cut-throat market. To determine these external factors, a PESTEL analysis of the business is carried out. The acronym- PESTEL- stands for political, economic, social, technological, environmental and legal. Desai (2019) defines PESTEL analysis as a tool which studies markets and the effects of its macroenvironmental determinants on the performance of businesses. It helps in determining the correct strategies the business and the strategic management team must deploy.

Political

Australia is politically stable. Corruption is on the decline. Australia and New Zealand are bound by trade and economic relations which further the interests of the organisation. Moreover, Woolworths complies with the state liquor and environmental regulations and therefore can comfortably run its operations in the region.

Economic

As is true for everywhere in the world, the economy in Australia is central in bringing about a development of retail firms. Woolworths is among the few giant retail industries in Australia and supplies is consumers with a wide range of products and services. Australia has been witnessing a steady economic growth and unemployment has reduced. These factors combined together make Australia an excellent market for various retail and grocery products and thus can enhance the sales of retail industries.

Social

Australia is a flourishing consumer economy. People want to buy fresh, hygienic and health-giving foods and groceries, sustainable and eco-friendly products and services, especially those products which have a green tag on them. The demand for organic fresh foods is also on the rise. So, Woolworths should include organic foods in its stores. Woolworths has taken care of the social and cultural aspects of consumer choices in Australia and New Zealand.

Technological

New technology is always coming up and being included in businesses. Woolworths is committed to coping with these changes and provide its customers with products and services in the best possible ways by deploying state-of-the-art technological innovations. For instance, Woolworths has installed self-checkout machines and point-of-sales machines at all of its stores.

Environmental

The world is amidst the crisis of CoViD-19- a pandemic that has engulfed the entire world populous and snatched away hundreds of thousands of lives. Lockdowns have been witnessed in most countries of the world with people running out of the basic necessities of sustenance. With the unfolding impacts of CoViD-19, unpredictability has been witnessed amongst consumers across Australia. The disturbing health and financial factors caused as a result of the pandemic have given rise to a change in people’s normal buying practices. For instance, according to Meat & Livestock Australia (2020), around the time of March, 2020, people began rushing to these retail stores to stock-up most of the essential items, buying practices of people changed all of a sudden, red meat still remained high on demand and spikes in fresh meat sales were brought about by people buying sausage and mince much more than ever before. The month of March, 2020 witnessed an unprecedented growth in sales, about 18% higher than those of Christmas and the New Years in the month of December, 2019. A lot of growth in the sales of home office equipment and accessories and exercise equipment was also witnessed as people tried adjusting to the lockdown conditions. As a result of all of these factors operating simultaneously, big retail stores such as the Woolworths have had to ramp up production and delivery activities, modify the shopping hours, keep every nook and corner of the stores sanitized ensuring the safety of their employees and customers alike and to the maximum extent, maintain the personal and health details of the customers pouring in on a day-to-day basis, checking their temperatures before entry and sanitizing them upon entry. Even before the advent of CoViD-19, Woolworths had been keeping complete compliance with Australia’s environmental policies and had moved its practices towards circular economy in the past three years.

Legal

As is obvious, Woolworths is also affected by legal factors of the region. Compliance with all the corporation, environmental and employment laws and regulations is necessary for the smooth functioning of the establishment. Jues (2019) has highlighted that Woolworths ensures complete compliance with these rules and also ensures that its vendors do the same. However, any novel regulations the government passes may affect the working of the company.

Business Practices

Arli et al. (2013) have established that Woolworths focusses a great deal on its supply chain collaboration (SCC) with its partners thus being able to pick products up from their manufacturers and supplying these to its consumers. Woolworths has specific teams for identifying who to collaborate and share information with as a partner. These efforts represent the best practices in business and contribute in building great partnership relationships and towards business growth. These practices can also be credited for the superior performance of the business as they drive common objectives in all kinds of partnerships. Overall, through the years, Woolworths has been able to make its place in the market and has also been able make itself climb up on an advantageous pedestal by building great partnerships and committing itself towards timely sharing of profits, information, knowledge as well as the risks involved at this level.

Major Risks Faced by the Company and Their Influence

The Woolworths Group’s Annual Report (2017), suggests that the Group comprises a vast network of businesses which may time to time be subject to strategic, financial, compliance and operations threats or risks. The strategic risks involve cut-throat competition in the market, disruption in technology, changes in customer behaviour and preferences among many other internal and external issues. The financial risks involve funding and its management, fluctuating foreign exchange and adverse interest rates. Not being able to handle people and product safety standards, IT, data breaches and disruptions in business because of supply chain failures, industrial disputes or cyber-attacks or natural disasters count as operational risks. Compliance risks are those which the company is subject to upon its failure to comply with existing laws, guidelines, regulations and contracts. The Group tackles such risks with its enterprise risk management framework and its corporate governance, building a strong support for dealing with all of these material risks. Strategic risks are dealt with by promoting the culture of “customer first”, investment in technology and growth enablers, establishment of delivery offices, providing long-term and short-term incentives to customers and setting targets under Corporate Responsibility Strategy 2020 towards more sustainability and minimising the environmental impacts of the organization’s operations. The Group’s liquid assets, foreign currency, rate of interest and all such financial risks are dealt with by its treasury-related policies approved by the Board. To improve its capital, Woolworths Group is also venturing into the petrol sector. The mitigation of operational risks is taken care of by set standards and policies of the company in business operations, investments in technology, people safety and the safety of foods and products. The Compliance Framework of the Group along with some policies provide legal and regulatory compliances and internal protocols. Entering into liaisons with the government and regulatory bodies also helps in handling compliance risks.

Functional Departments of Woolworths Group

The various functional departments in the organization include Customer Service, Forecasting, Supply Chain Management, Design Process and Human Resources, and Job Design. During the time of shopping at Woolworths, the customers are constantly being served with, of course, services. From air conditioning of the stores to carrying bags, carts and baskets, to billing and packaging, all of these are part of services being rendered on behalf of the Group. Moreover, if the customers have any sort of complaints with the products and/or services they are being rendered, the Group has a customer-friendly Grievance Redressal mechanism, which can also be thought of as a service. Forecasting is another functional department which tries to analyse the future needs of the stores such as when to put the next orders in place, which kinds of products the customers are buying the most, which they are not liking at all and the different kinds of seasonal products to be put on display at the right time. The Supply Chain department is probably the one working the hardest because of the ceaseless incoming and outgoing of goods into and out of the stores. This department has to look into the matters of whether the orders made by the store manager reach the stores on time, and also orders from the customers are shipped out on time. So, this is a constant job. The HR department tries creating new kinds of job profiles and positions for accommodating new recruits. It also manages all the labour in the stores and keeps a check on attendance, absenteeism, leaves and so on. The Job Design department functions together with the HR department in trying to create comprehensive job profiles and positions for the organization as well as recruiting new people.

Conclusion on Woolworths Australia and Walmart US Analysis

It can be concluded that the Woolworths Group Limited is a soaring business in Asia-Pacific. It has millions of consumers in the region and even outside it. The Group is certainly the biggest supply chain collaboration in Australia and New Zealand and has a spread of businesses dealing in fresh foods, liquor, home appliances, electronics and accessories among a host of other things. The Group can be said to have deployed the best practices in terms of strategizing business growth, use of technology and innovation, keeping its operations eco-friendly, promoting excellent customer service and care, keeping in line with the laws and regulations laid out whilst providing its consumers with the best quality products and services. The company is expected to have a profiting future with its enterprise risk management framework dealing with any possible risks efficiently.

References for Woolworths Australia and Walmart US Analysis

Arli, V., Dylke, S., Burgess, R., Campus, R. & Soldo, E. (2013). Woolworths Australia and Walmart US: Best practices in supply chain collaboration. Journal of Economics, Business, & Accountancy Ventura, 16(1). DOI: doi:http://dx.doi.org/10.14414/jebav.v16i1.123

Chittithaworn, C., Islam, M. A., Keawchana, T. & Yusuf, D. H. M. (2011). Factors affecting business success of small & medium enterprises (SMEs) in Thailand. Asian Journal of Social Science, 7(5), 180. DOI: 10.5539/ass.v7n5p180

Desai, C. (2019). Management for scientists. United Kingdom: Emerald Publishing Limited

Frias-Aceituno, J. V., Rodriguez-Ariza, L. & Garcia-Sanchez, I. M. (2012). The role of the board in the dissemination of integrated corporate social reporting. Corporate Social Responsibility and Environmental Management, 20(4), 219-233. DOI: https://doi.org/10.1002/csr.1294

Jues, J. (2019). PESTLE analysis of Woolworths (SWOT analysis and recommendations). Retrieved from: https://assignmenthelp4me.com/article-pestle-analysis-porter-five-forces-model-and-product-life-cycle-585.html

Keith, S. (2012). Coles, Woolworths, and the Local. The Australian-Pacific Journal of Regional Food Studies, (2), 47. Retrieved from: https://d1wqtxts1xzle7.cloudfront.net/51489395/Locale_n2_-_07_-_Keith.pdf?1485230436=&response-content-disposition=inline%3B+filename%3DColes_Woolworths_and_the_local.pdf&Expires=1597044220&Signature=bwW-WgDr27vYSVVUZlgfEinGq7xYPMkDXGXLAoBd7PTt9wjEbnFOqY3EW1DhA7RWZuOR31abhR1B~ev3ldDY06y0nCyFqh1g~4n0J5R0~INy6A1BBy3YDaqiBwB7JVfLnsY8H34DRPQohVBW~UP-WAhc8ynpkqOrbz2GDTbRpkzunWUxjuYQQ7KZhXnwRq9ozCi83P8cJlcgfar7RCi1G26qXnwUaD-r7~aKcfshClUldW6GjG9ZXA671ZiRea7maKu0k1Q6yWKdYfOHrVji3NXmvJPzz44eoeYWiGwTq1O4a0M8xmoxmkVgrvBFozoUmYPwVbY3Iu9hBTzPY-C5AQ__&Key-Pair-Id=APKAJLOHF5GGSLRBV4ZA

Meat & Livestock Australia (2020). CoVoD-19 crisis sees surge in domestic retail demand. Retrieved from: https://www.mla.com.au/prices-markets/market-news/covid-19-crisis-sees-surge-in-domestic-demand/

Sarangdhar, V. (2012). What can we learn from Asia Pacific’s supply chain leaders? MHD Supply Chain Solutions, 42(5), 66-67. Retrieved from: https://search.informit.com.au/documentSummary;dn=912949301506116;res=IELENG

Tomoaia-Cotisel, A., Scammon, D. L., Waitzman, N. J., Cronholm, P. F., Halladay, J. R., Driscoll, D. L., Solberg, L. I., Hsu, C., Tai-Seale, M., Hiratsuka, V., Shih, S. C., Fetters, M. D., Wise, C. G., Alexander, J. A., Hauser, D., McMullen, C. K., Scholle, S. H., Tirodkar, M. A., Schmidt, L., Donahue, K. E., Parchman, M. L. & Stange, K. C. (2013). Context matters: The experience of 14 research teams in systematically reporting contextual factors important for practice change. The Annals of Family Medicine, 11(Suppl 1), S115-S123. DOI: https://doi.org/10.1370/afm.1549

Turbek, S. P., Chock, T. M., Donahue, K., Harvilla, C. A., Oliveria, A. M., Polutchko, S. K., Shoemaker, L. G., & Vimercati, L. (2016). Scientific writing made easy: A step-to-step guide to undergraduate writing in the biological sciences. The Bulletin of the Ecological Society of America, 97(4). DOI: https://doi.org/10.1002/bes2.1258

Woolworths Group (2017). Annual report 2017. Retrieved from: https://wow2017ar.qreports.com.au/home/business-review/material-business-risks.html

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