Join the Premium Student Club @Zero Cost!
Get Assignment Done by MAS Certified Experts
Flat 50% Off on Assignment Bookings
The aim of this study is to critically analyze the business performance and decision making of the organization. For this study, the Woolworths Supermarket is selected. Woolworths is a renowned name in the Australian supermarkets with 990 stores and employs 115,000 members. The internal and external factors that impact the performance of the Woolworths group us discussed in detail. The study emphasizes on the corporate governance structure, the external factors, risk, business practice, and functional departments. The performance of the organization on these factors is examined.
Table of Contents
The Woolworths Supermarket
External factors that impact the Woolworths Supermarket
In this dynamic business environment, in order to ensure strong and long-term growth, the organization needs to set up an environment of credibility, transparency, and accountability. This can be done by the organization through its corporate governance practice. Corporate Governance can be understood as the rules and regulations that must be abode by the management as these are the basic guidelines through which the management is administered and directed (Velnampy, 2013).
Good corporate governance is essential for an organization to ensure sustainable economic development (Sarbah & Xiao, 2017). The aim of this study is to critically analyze the internal as well as external factors that impact the performance and decision making of the Woolworths Supermarket. In order to conduct this analysis, a brief overview of the company that is provided, followed by its governance practices, and environmental factors that impacts the organization, challenges, and opportunities for Woolworths is discussed in detail. In the end, the study is concluded and recommendations are provided.
On December 5, 1924, Woolworths opened its first store in Sydney, and in 1927 it opened its second store and since then there has been no looking back (Woolworths, n.d.a). The Woolworths group is a diverse group that is committed to providing the best possible customer satisfaction. The aim of the group is to build strong and long-term relations with suppliers and thus believes in fair and equitable dealings. Woolworths is the largest supermarket chain in Australia with 995 stores and employs 115,000 members (Woolworths Group, n.d.b).
According to the study conducted by Naimah and Hamidah (2017), corporate governance is essential to augment the performance of a firm. The elements of corporate governance comprise the corporate governance mechanism that includes the board size, independent decision making by the board, the external directors, size of the audit committee, the frequency and effective output from the audit committee meetings the quality of audit and the Corporate Governance Perception Index (CGPI). Their study indicated that the independence of the board, leverage, and size of the firm negatively impacted the profitability while the factors that impacted the profitability of the firm were the meetings of the audit committee, CGPI, audit quality. Moreover, the size of the board and the Audit committee, outside directors, didn’t have a significant impact on the profitability of the firm. Hence, the principles of corporate governance have a significant and positive impact on the profitability of the firm. (Naimah & Hamidah, 2017)
The Woolworths Group follows each of the recommendations provided by the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendation (Third edition) (Woolworths Group, 2019). In order to be more transparent about the working of the organization, each year, the group launches a Corporate Governance statement that addresses the framework adopted by the Board over the last financial year (Woolworths Group, 2019).
On behalf of the shareholders, the Board of directors supervises and practices good corporate governance practices. The administration of management and operations of the organization are conducted by the group executive committee. The Audit, Risk Management, and Compliance Committee established an internal Audit team to monitor the risk management as well as governance practices, simultaneously, provide a benchmark in accordance with the APRA Prudential Inquiry report (Woolworths Group, 2019). The results of the evaluation are implemented. The group is transparent about its corporate governance practices and has provided details about the board charter, committees, the group risk management, policies relating to code of conduct, disclosure, securities trading, speak up, diversity, small supplier payment, fraud, anti-bribery and corruption safety, health and well-being policy as well as equity incentive plans on its website (Woolworths Group, n.d.d)
Political factors include elements that pertain to the government policies and the rules that the retail industry must comply with (Dragnic, 2014). Political stability amplifies business opportunities as well as smooth operations in the supply chain. Along with it, the legal factors also impact the supermarkets Since, there are certain legal regulations about the quality of gods, the labor laws, and other associated laws that need to be strictly adhered to. Economic factors that are associated with the national and global economy impact the retail industry. When an economy experiences higher growth then people have more disposable income as a result they will demand more goods and services. The social factors are those factors that entail to the consumers' lifestyles and habits (Dragnic, 2014). With digitalization and online business, the shift is from paying a visit to the store to buying things from the comfort of the house. An improvement in technology is another factor that impacts the supply chain and the provision of customer sales. With rapid changes in technology, there has been the ease in buying and selling. Moreover, a growing emphasis on climate change is promoting the organization to be more sustainable. Supermarkets need to cater to the changing environmental condition and adopt more eco-friendly ways. The rising competition in the supermarket industry is also an important external factor that impacts the performance of the Woolworths group.
Since the Woolworths group operates in the retail environment it is exposed to various types of risks. These are Strategic, material operational, financial, and compliance risks (Woolworths Group, 2020).
Operational risks can be understood as the exposure to loss that arises due to incompetent internal processes, people or systems, or external (Bank for International Settlements, 2011). Strategic risk is the type of exposure that impacts the ability of a firm to implement its strategies efficiently to meet the objectives of the business. it affects the shareholder's value and in turn the hinders the viability of the firm. (Tonello, 2012). The strategic and competitive risks are those risks that entail to the dynamic and evolving market places. Financial risk can be understood as the type of risk that arises from the financial transitions of an organization (Blachm, 2010). Material risk is associated with the exposure to a specific risk that can impact the operations of the organization and thus should be managed. (Bank for International Settlements, 2019). Compliance risk is that risk that pertains to adherence to the legal and regulatory guidelines (Losiewicz-Dniestrzanska, 2015).
Woolworths Group tackles the material risks using the enterprise risk management system long with corporate governance. Also, the company maintains the risk registers specifically for the principal risks (Woolworths Group, 2020). As a part of the corporate governance practice, the significant risks are examined thoroughly by the group as well as at the individual levels. There is a proper board that administers the risk and takes necessary actions to mitigate the risk (Woolworths Group, 2020). The Group Executive Committee regularly monitors the key customers, employees, and suppliers. Also, remain updated on the market trends, competitor's strategies, sales propositions, marketing, and promotional activities. The Woolworths Group has set up a Compliance Framework for the organization and ensures the operational, legal, and regulatory compliance (Woolworths Group, 2020). They have dedicated in-house teams that take care of legal, government relation, and litigation. The financial risks are administered by the Board which is approved by the Treasury Policy that manages the treasury risks that are associated with liquidity, funding, fluctuation in the interest rate, and foreign currency (Woolworths Group, 2020).
The Woolworths Group's ways of working revolve around its core values and objectives. They believe in giving the priority to the customers, thus all the practices are to provide maximum satisfaction to consumers. Also, ensures continuous development by being aware and taking the necessary steps to deal with the environmental as well as internal changes. Effective management of internal processes, systems, as well as external stakeholder’s people, are key drivers of their growth. In order to ensure the incorporation of the Group’s objective and strategies in the performance of the employees, the remuneration framework is developed accordingly (Woolworths Group, 2020). All these practices significantly impact the working and decision making of the employees since all the employees are guided by the same set of values (Woolworths Group, 2020).
In the financial year 2019, the Woolworths group launched two new departments; Fresh Convenience and Fresh Service. This was done to adapt to follow the new customer operation model. This new model was developed to foster smooth operations of the store and improve the customer shopping experiences by providing them with fresh food and convenience food. These departments are a way to meet the increasing demand for fresh food as the focus is now shifted to health and conveniences (Woolworths Group, n.d.c). These changes have a significant implication on the shopping experience in the supermarket. The company’s decisions are now more centric to providing innovation in the supermarket experience and to cater to the demands by providing them with practical and personalized shopping experience (Woolworths Group, n.d.c).
In this rapidly evolving and competitive business environment the success of the organization depends on corporate governance. Corporate governance promotes the attainment of economic development of the organization. Woolworths is the largest supermarket that operates in the retail industry and its functioning is impacted by the internal as well as external factors. The external factors comprise; political, legal, social, environmental, and technology. Woolworths has an effective corporate governance management system in place that administers the compliance of the rules and regulations. The organization ensures effective management of operational, strategic, material, and financial risk The business practices revolves around the core values and objective of the organization. The innovation and keeping abreast of changes in the environment have to lead to the establishment of new functional departments. Together, all these factors contribute to the growth of the organization.
Bank for International Settlements. (2011). Principles for the sound management of operational risk. Basel Committee on Banking Supervision. https://www.bis.org/publ/bcbs195.pdf
Bank for International Settlements. (2019).Overview of Pillar 2 supervisory review practices and approaches. Basel Committee on banking supervisions. https://www.bis.org/bcbs/publ/d465.pdf
Blachm, J. (2010). Financial risk identification based on the balance sheet information. International Conference Managing and Modelling of Financial Risks. https://www.researchgate.net/publication/270957084_Financial_Risk_Identification_based_on_the_Balance_Sheet_Information
Dragnic, D. (2014).Impact of internal and external factors on the performance of fast-growing small and medium businesses. Management, 19. 119-159. https://pdfs.semanticscholar.org/5611/1a9851de30f0941d94cdaba4bb656e66608c.pdf
Losiewicz-Dniestrzanska, E. (2015). Monitoring of compliance risk in the bank. Procedia Economics and Finance, 26, 800 -805. DOI: 10.1016/S2212-5671(15)00846-1
Naimah, Z. & Hamidah (2017). The role of corporate governance in firm performance. SHS Web of conference 34, 13003. DOI: 10.1051/ SHS Web of Conferences 34, shsconf/20173413003
Sarbah, A. & Xiao, W. (2015). Good corporate governance structures: A must for family businesses. Open Journal of Business and Management, 3(3), 40-55. DOI: 10.4236/ojbm.2015.31005
Tonello, M. (2012). Strategic risk management: A primer for directors. Retrieved from https://corpgov.law.harvard.edu/2012/08/23/strategic-risk-management-a-primer-for-directors/#:~:text=These%20more%20significant%20risk%20exposures,and%20achieve%20its%20business%20objectives.
Velnampy, T. (2013). Corporate governance and firm performance: A study of Sri Lankan Manufacturing Companies. Journal of Economics and Sustainable Development, 4 (3). https://www.researchgate.net/publication/249341798_Corporate_Governance_and_Firm_Performance_A_Study_of_Sri_Lankan_Manufacturing_Companies
Woolworths Group (2019). Corporate Governance Statement. Retrieved from https://www.woolworthsgroup.com.au/content/Document/2019%20Corporate%20Governance%20Statement.pdf
Woolworths Group (2020). 2019 annual report. Retrieved from https://www.woolworthsgroup.com.au/icms_docs/195582_annual-report-2019.pdf
Woolworths Group (n.d.a). The Woolworths Story. Retrieved from https://www.woolworthsgroup.com.au/page/about-us/The_Woolworths_Story/How_We_Were_Founded
Woolworths Group (n.d.c). Future of Fresh. Retrieved from https://www.woolworthsgroup.com.au/icms_docs/185017_The_Future_of_Fresh.pdf
Woolworths Group (n.d.d). Corporate Governance Retrieved from https://www.woolworthsgroup.com.au/page/about-us/our-approach/corporate-governance/
Woolworths Group. (n.d. b) Woolworths supermarkets. Retrieved from. https://www.woolworthsgroup.com.au/page/about-us/our-brands/supermarkets/Woolworths/
Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Management Assignment Help
Proofreading and Editing$9.00Per Page
Consultation with Expert$35.00Per Hour
Live Session 1-on-1$40.00Per 30 min.
Doing your Assignment with our resources is simple, take Expert assistance to ensure HD Grades. Here you Go....