Business Management Assignment: Impact Of Internal & External Factors On Woolworths Performance
Question
Task:
Write a report on business management assignment analysing the case of Woolworths and discuss the impact of internal and external factors on the decision making and performance of the business.
Answer
Introduction
Business organizations gets impacted by a number of factors as mentioned in this business management assignment which collectively form the business environment. These factors include internal factors, which cover factors from inside the business such as management structure, organizational culture etc., and external factors, which include factors from outside the organization such as political, economic, social, technological and environmental factors. The main purpose of this essay is to conduct a business case analysis of Woolworths for assessment of the impact of internal and external factors on the decision making and performance of the business. The key points to be covered in this essay include the business and governance structure along with the environmental factors, top risks and business practices that create an impact on the performance and decisions of the company. Moreover, it will also focus on the functional departments of Woolworths.
Case Organization Synopsis
Woolworths is the largest chain of supermarket and grocery stores from Australia. The company was founded in the year 1924 and operates with the goal of creating better experiences for its team, customers, shareholders and communities. It runs 995 stores across Australia with the help of 115,000 team members in support offices, distribution centres and stores for the purpose of providing superior service, handiness, range and value to its customers. The company is governed the simple ideas of fairness, collaboration and local sourcing while working with its partners (Woolworths, 2020(a)).
Business Structure and Governance Structure
The term business structure describes the organization of a company with regard to its legal status. Woolworths operates as a public limited company whose majority of the income is received frim the home improvement products, food and groceries, liquor, petrol and general merchandise in New Zealand and Australia. Since Woolworths operates as a public limited company, its shares can also be acquired from the Australian Securities Exchange (Bailey, Price, Pyman & Parker, 2015).
The governance structure reflect the interrelated factors, relationships and other influences upon the companies. The analysis of Woolworths provides that the board of directors are acting on behalf of the shareholders for the supervision of the company and are playing an important role for upholding good corporate governance. Moreover, the operations and the management decisions of the company are the responsibility of Group Executive Committee established by Woolworths. The company also follows a continuous disclosure policy which aims to assist in the adherencee with the continuous disclosure obligations under ASX Listing Rules and Corporations Act 2001 (Woolworths, 2020(b)).
Environmental Factors that Influence Performance and/or Decisions
PESTLE model can be defined as the framework which is used for the analysis and monitoring of the factors of macro environment that impacts the organization. PESTLE framework will be utilized for the purpose of identifying the environmental factors that affect the performance and/or decisions of Woolworths.
Political-Australia can be regarded as a politically stable nation which facilitate the smooth functioning of Woolworths. Moreover, fast decline in the rate of corruption can be noticed in the country which further reduce the costs of the business and create a positive impact on its profitability (Lloyd, 2015).
Economic-The growth of the retail organizations is greatly supported by the economy of Australia. The country has further experienced economic growth along with a significant increase in the GDP growth rate and a decline in the rate of unemployment which has created a positive influence on the demand for the retail products and therefore, supports the operations of Woolworths.
Social-The analysis provides that the requirements and outlooks of the customers have changed and currently they give preference to sustainable and environmental friendly products. Woolworths is already taking a number of initiatives in this direction and is making efforts for offering fresh and healthy products to its customers (Carlson, O’Cass & Ahrholdt, 2015).
Technological-With the passage of time, technology has become advanced and is offering various opportunities to Woolworths. The company is making the best use of technology by utilizing social media platform for the marketing of its offers and discounts which has significantly increased its customer base. Also, Woolworths is showing commitment towards technological innovations for meeting quality expectations of the consumers and enhancing service efficiency (Govender, 2017).
Legal-Woolworths ensure the compliance with various environmental laws, Australian corporation laws, employment laws, etc. The company is exposed to the risk resulting from the changes in the laws and regulations which may negatively impact the operations of the enterprise and therefore, has taken decision regarding the constitution of Compliance Framework who is especially look after this area.
Environmental-The customers and government have started to give preference to those organizations who give due consideration to the environment. Woolworths is adopting a variety of sustainable practices and making the best efforts for reducing the impact of its operations on the environment along with ensuring sustainable sourcing of materials. However, Woolworths may get impacted by the various environment laws developed by the Australian government (Devin & Richards, 2018).
Top Risks Faced by Woolworths and Its Impact on the Performance and/or Decisions
The term risk can be defined as the exposure of an organization to factors that have the capability of lowering its profitability or leading it towards failure (Sadgrove, 2016). The top three risks faced by Woolworths include strategic, operational and compliance related risks. The first risk is the strategic risk which the company experiences due to increase in competitiveness, technology disruption, new entrants in the market, internal and external risk drivers and the changing expectations and needs of the customers. Failure of the company in successfully responding towards these marketplace changes, strategies of the competitors and other factors has the capability of adversely influencing the business performance and significantly reducing the market share of the company (Woolworths Group, 2020(c)).
The second risk is the operational risk which includes exposure of Woolworth’s to events, failure to meet product safety or people standards, security, information technology, business disruptions and data breaches as a consequence of natural disasters, cyber-attacks, weather conditions, technology failures, etc. Such risk can impact the performance of the company by resulting in huge financial and reputational losses. The company has made strong decisions in this regard and have established standards, policies and training for taking safety measures against such risks (Woolworths Group, 2020(c)).
The third risk is the compliance risk as Woolworths is required to ensure compliance with a variety of applicable regulations, laws and contractual agreements. Moreover, it is also exposed to adverse legislative or regulatory changes. The compliance risk is capable of influencing the performance and reputation of Woolworths and can put huge penalties and fine on the company which can significantly reduce its profits. The company has made decision regarding the constitution of a Compliance Framework for ensuring various compliances and liaising with the regulatory bodies for changes in laws and regulations (Woolworths Group, 2020(c)).
Business Practices and Its Impact on Performance and/or Decisions
The analysis of the company provided that Woolworths adopts sustainable business practices and takes all the possible steps for the reduction of impact created on the environment as a result of its operations. It is also found that the company is responding to climate change along with working closely with the suppliers, and service providers for innovating a healthier planet. The company has made major decisions in this regard and is working in the areas of animal welfare, sustainable forestry products, sustainable tea, etc. (Pulker, Trapp, Scott & Pollard, 2018)
Another business practice adopted by the company is establishing performance objectives for its team members and offering appraisals at regular intervals in order to increase their motivation levels. It is also found that open communication has been adopted in the organization due to which they are in a better position to understand their responsibilities and expectations of management from them. This, in turn, has reduced the confusions among the employees regarding the tasks allocated to them and has improved their individual performances and the overall performance of the organization.
It is further evaluated that appropriate training is offered to the employees as a part of their business practices which involve executive development programs, management development, training and apprenticeship programs and induction programs. Along with this, training is also offered to the employees and committee members for dealing with the strategic and compliance risks in an appropriate manner. These business practices are influencing the performance of the company in a positive way and has led it to the position of largest supermarket chain of Australia (Methner, Hamann & Nilsson, 2015).
Functional Departments of Woolworths
The main functional departments of Woolworths are human resource, operations, marketing and financial department. The operations department of Woolworths manage the activities under the diverse product range of the company including groceries, pet and baby supplies, DVDs, magazines, etc. The human resource department perform the task of attracting and retaining talent workforce in the organization for the performance of operations as per the goals set by the company. The financial department play a vital role in the financial risk management of the business and protects it from the liquidity, credit, foreign exchange and interest rate risks with the help of group treasury functions. Furthermore, marketing department is the strength of Woolworths as its effective strategy has increased the customer base of the company across Australia. The department uses platforms like social media, magazines, television and newspaper for the marketing of offers and discounts on products. All these departments have contributed in making Woolworths the largest supermarket chain of Australia (Castellacci, et. al. 2018).
Conclusion
Therefore, it can be concluded that the internal and external environmental factors create a great impact on the decisions and performance of Woolworths. All the functional divisions are also operating as per requirement and are supporting the goals of the business. It is found that the company is making the best use of the opportunities resulting from the political, economic, social and technological factors of the environment and handling the risks in an effective manner. However, the management of Woolworths is suggested to take measures in future for dealing with the legal and environmental factors and strategic risks as it can lead to negative impact on the organizational reputation and performance.
References
Bailey, J., Price, R., Pyman, A., & Parker, J. (2015). Union power in retail: contrasting cases in Australia and New Zealand. New Zealand Journal of Employment Relations, 40(1), 1.
Carlson, J., O’Cass, A., & Ahrholdt, D. (2015). Assessing customers’ perceived value of the online channel of multichannel retailers: A two country examination. Journal of Retailing and Consumer Services, 27, 90-102.
Castellacci, F., Gulbrandsen, M., Hildrum, J., Martinkenaite, I., & Simensen, E. (2018). Functional centrality and innovation intensity: Employee-level analysis of the Telenor group. Research Policy, 47(9), 1674-1687.
Devin, B., & Richards, C. (2018). Food waste, power, and corporate social responsibility in the Australian food supply chain. Business management assignment Journal of Business Ethics, 150(1), 199-210.
Govender, S. (2017). How social media can be used to engage and interact with consumers in the retail industry: an analysis on Woolworths' online strategies. Retrieved from http://iiespace.iie.ac.za/handle/11622/270
Lloyd, C. (2015). The lucky country syndrome in Australia: Resources, social democracy and regimes of development in historical political economy perspective. In Natural Resources and Economic Growth (pp. 271-293). Routledge.
Methner, N., Hamann, R., & Nilsson, W. (2015). The evolution of a sustainability leader: The development of strategic and boundary spanning organizational innovation capabilities in Woolworths. In The Business of Social and Environmental Innovation (pp. 87-104). Springer, Cham.
Pulker, C. E., Trapp, G. S., Scott, J. A., & Pollard, C. M. (2018). Global supermarkets’ corporate social responsibility commitments to public health: a content analysis. Globalization and health, 14(1), 121.
Sadgrove, K. (2016). The complete guide to business risk management. Routledge.
Woolworths Group. 2020(a). Strategy and objectives. Retrieved from https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-objectives/
Woolworths Group. 2020(b). Corporate governance. Retrieved from https://www.woolworthsgroup.com.au/page/about-us/our-approach/corporate-governance
Woolworths Group. 2020(c). MATERIAL BUSINESS RISKS. Retrieved from https://wow2017ar.qreports.com.au/home/business-review/material-business-risks.html
