Corporate Governance and Risk Management - Analysis of Wesfarmers Limited

This essay provides an analysis of corporate governance and risk management in Wesfarmers Limited, a leading Australian organization. It discusses the company's overview, advertising value, core values, past history, and required key areas of skill. The essay also examines the company's corporate governance documents and policies.

Running head: CORPORATE GOVERNANCE AND RISK MANAGEMENT 0
corporate governance and risk management
MAY 28, 2018
student details:

CORPORATE GOVERNANCE AND RISK MANAGEMENT 1
Executive Summary-
The stakeholders of the company expect the good corporate governance. The corporate
governance is linked with the control over the activities and effective control over the
corporate sector. The corporate governance describes the issues related to the application of
good corporate governance and responsibilities of shareholders. It monitors the policies,
practices, activities, functions of the stakeholders and decisions of the company.
The corporate governance presents the challenges at the various levels of the company. The
board of Wesfarmers limited is a solid supporter of good corporate governance. The
corporate governance is strengthened by the corporate governance of the Wesfarmers limited.
The main object of the governance board of the Wesfarmers limited is render pleasing return
of the investment of the stakeholders of the company. The governance board of the
Wesfarmers limited compels to accomplish responsibilities and duties in the best interest of
the company and the stakeholders of the company. (Babb, 2017).
In this essay, these very concepts have been explained in detail, and to explain the corporate
governance, the corporate governance of the Wesfarmers limited is analysed.
Introduction-
The corporate governance refers to the process by which corporation is directed and
controlled. The corporate governance balances the interest of shareholders, clients, dealers,
management of the company, investors, government and various communities (Bainbridge
and Henderson, 2018). It also includes the process which helps to achieve pre-determined
objects of the corporation. The board of directors (BOD) of company are liable for the
corporate governance. It is a duty of shareholders to make an appointment of auditors and the
directors. The shareholders of the company are required to ensure the good corporate
structure in the workplace of the corporation. The corporate governance is about the

CORPORATE GOVERNANCE AND RISK MANAGEMENT 2
performance of the functions or actions of the board of directors (BOD) and values of the
company set by them. In the following parts, the corporate governance of an Australian
company Wesfarmers is discussed and critically examined (Bottomley, Hall and Spender,
2017).
Corporate governance of Wesfarmers limited-
The corporate governance of the Wesfarmers limited is examined in the following parts-
An Overview of Wesfarmers limited-
In Australia, Wesfarmers limited is one of the leading organisations. The headquarters of
Wesfarmers limited are situated in the Perth, Western Australia. In 1914, the Westralian
Farmers Cooperative limited was formed as Cooperative Corporation by the Farmers and
Settler’s Association of Western Australia. Later, in 1984 it was formed as Wesfarmers
limited and listed in the Australian Securities Exchange as a public company. Now it has
many hotels, supermarkets, coal mining, gas processing, chemicals, energy distribution,
stores, home care stores, office supplies and the departmental stores. The Wesfarmers limited
is one of the biggest organisations which has more than 210,000 employees and approx
500,000 shareholders (Campbell, 2017).
The main objective of the company is to provide appropriate return to the shareholders of the
company. The purpose of the company is to satisfy the customers and make them happy by
fulfilling their requirements by providing the goods and services at reasonable price. The
company gives protection to the shareholders and provides them opportunity for the future
growth and the success. The founders of the company emphasis on the good corporate
governance of the company. The annual report of the Wesfarmers limited indicates that the
board of directors (BOD) are reliable for giving the adequate gain to the shareholders and

CORPORATE GOVERNANCE AND RISK MANAGEMENT 3
ensures the roles and responsibilities in making good corporate governance of the company
(Clarke, 2017).
The company has key corporate governance documents such as corporate governance
statement 2017, Appendix 4G and Wesfarmers constitution. The corporate governance
statement of the company describes the role and responsibilities of the board of directors
(BOD). The Appendix 4G defines the key disclosure of the corporate governance council
principles and recommendations. The entity is required to lodge Appendix 4G at the same
time when it lodges the annual report of company. The Wesfarmers constitution defines the
whole company.
Wesfarmers limited compiles with law, rules and regulations of the country in which it
operates its business, performs functions in the ethical way and follows the principle of
honesty, principle of integrity, principle of respect and the principle of fairness. There are
some improper conducts like bribery. It considers serious offence for the company as well as
an individual. It is not consistent with value of Wesfarmers limited (Corkery and Taylor,
2018). Following are the purpose of the policy of Wesfarmers limited-
1. Decide the roles and responsibilities of the Wesfarmers group companies and
personnel of the company to stop the bribery and other improper conduct or
misconduct.
2. Give the information about the code of conduct.
3. Give the directions to identify and deal with improper conduct, bribery or corruption.
This policy is applicable to the all Wesfarmers group such as the directors and the employees
of the Wesfarmers group companies. It cannot be amend without the previous permission of
the Wesfarmers board. The operations of Wesfarmers extend to the countries outside
Australia because of the diversified nature of operations of Wesfarmers limited. This policy

CORPORATE GOVERNANCE AND RISK MANAGEMENT 4
makes sure that the inconsistency of anti-bribery policies of different divisions or units of the
Wesfarmers limited (Davis, 2018). There are various requirements which are required to be
fulfilled by the employees of the company such as-
1. The employees should understand the policy and comply with the policies.
2. The personnel should not take, give or demand the bribes or other payments which are
prohibited. The bribery can be in any form. It can be monetary or non-monetary. The
bribe may include the contribution to political and charitable trust, loan and advances,
non-cash gifts, business proposals, opportunities to get job or employment and
facilities. Bribery can be indirect through the mediators, agents and the other
associates.
3. Wesfarmers limited never approves any offer and request of unauthorised payment or
improper payment.
4. The personnel of Wesfarmers limited should not take, give or accept the secret
commissions. The secret commissions arise when the workers of the Wesfarmers
limited make the offer or provide the commission secretly to the agents or any other
authorised person or the clients of the company. The agent or the authorised person
does not disclose the secret commission to their principal. It is not in the interest of
the company.
5. The employees should not involve in the money laundering. Money laundering refers
to a way by which an individual or an entity hides the facts of the existence of the
illegal sources of the revenue.
6. The employees are required to comply with procedure of reporting and approval to
accept gift, entertainment or the hospitality. The practices in relation to accept or give
or demand the gift, entertainment or the hospitality are different from one country to
another country. It may be acceptable in one country and on the other hand non

CORPORATE GOVERNANCE AND RISK MANAGEMENT 5
acceptable in another country. So the workers of the Wesfarmers and the Wesfarmers
group apply this approach or policy prudently in the best interest of the company.
7. The employees should not take, give or demand the gifts, entertainment or the
hospitality from or to the public or the leaders or government officers without the
authorisation from the anti-bribery officers.
8. The gift, entertainment and hospitality should be accepted in the some conditions such
as in the open, simple and transparent method and it is for the purpose of the general
relationship building. The gift, entertainment and the hospitality should not include
cash, cash equivalent and the loan and advances.
9. The chief executive officer and the managing directors of the business unit or the
division and the managing directors of the Wesfarmers limited can set out the
financial limit on the acceptance of the gift, entertainment and the hospitality. When
the gift, entertainment and hospitality are to be accept above the set financial limit
then it is the duty of the chief executive officer or the managing director of the
Wesfarmers limited to record in the gift, entertainment and hospitality register of the
company.
10. For the donations and the sponsorship, the employees are required to take approval
from the relevant authorities.
11. When the employee deals with the parties then it is necessary to keep proper records.
12. The personnel should be vigilant. They are required to act with care and the diligence.
13. The personnel of the company should act in the good faith (bona fide).
14. The workers of the company are required to perform their functions in the proper
way.
15. In the respect of the policy, the employees are required to report the doubtful
behaviour and breaches of duties.

CORPORATE GOVERNANCE AND RISK MANAGEMENT 6
For the better implementation of the policies, there are following responsibilities of the
division or unit of the Wesfarmers limited-
1. The division or business unit must appoint the anti-bribery officer. The anti-bribery
officer should apply and monitor the anti-bribery policy for the division or the
business unit.
2. They should make sure that these anti-bribery policies should reviewed timely by the
corporate solicitors office and the anti-bribery officer of the division and the business
unit before its implementation.
3. The division and business unit should provide and describe the anti-bribery policy to
the employees of that division and the business unit.
4. They should make sure that anti-bribery policy can view and download from the
intranet site of the business unit or the division.
5. The division and business units are required to give annual report on the anti-bribery
matters which are required under compliance reporting policy of the Wesfarmers
limited (Farrar, 2017).
Advertising value of company-
The main focus of the company is to ensure strong capability to manage, execution and the
day to day operational functions. The company makes focus on the environment’s protection.
It provides the safe environment for the workers, gives reward to the employees for the better
performance and gives the opportunity for the future growth of the employees of the
company. It contributes towards the growth and wealth of the nation to take the chances of
the business expansion (Francis, 2018).
The Wesfarmers limited continues to make focus on the rights of individual and ethical
sourcing, mainly in respect of the supply chain transparency. It also continues to focus on the

CORPORATE GOVERNANCE AND RISK MANAGEMENT 7
climate change flexibility. The company makes effort to reduce its footprint. The Wesfarmers
limited delivers the problem’s solution to help the customers. The report of the Wesfarmers
specifies the broad range of the customers, clients, workers, dealers, financers and the
governments. It defines the roles and responsibilities of the workers, financers, dealers,
investors and the government (Guo, 2018).
The Wesfarmers limited plays the most important role in supporting the United Nations
Sustainable Development Goals (SDGs). SDGs identify the role of business to achieve
targets of the company. The agenda of United Nation Sustainable Development Goals
(SDGs) represents the necessity to finish poverty, fight inequality and the unfairness.
The core values of Wesfarmers limited –
The divisions and business units of the Wesfarmers have the different culture. These business
units and division run their own separate business. The core values of the company help to
drive all the business in the different culture (Hussain, Rigoni and Orji, 2018). These four
core values are the following-
1. Integrity- the staffs and management of the Wesfarmers are required to deal, perform
functions and act in the ethical way. They should be honest in dealing with others.
2. Openness- the personnel are required to give their feedback and innovative ideas with
openness and honesty. They should be honest and open in the reporting. They should
accept the blunders made by them in day to day operation and should learn from their
mistakes in day to day operations.
3. Accountability- the accountability refers to the substantial delegation of the authority
and decisions making to the business units and the divisions. The management and
workers of the company are responsible for their performance. They contribute to
protect and enhance the reputation and goodwill of the company.

CORPORATE GOVERNANCE AND RISK MANAGEMENT 8
4. Boldness- the directors, staff and management should be bold to take or accept the
challenges. They should take decisions with the boldness for the future growth and the
expansion of the business. They should keep and encourage the fearless environment
in the company.
Required key areas of skill-
1. Being commercial- The talent, skill, awareness, information and experience are
essential to make plans and make decisions related to the business.
2. Deliver outcomes- the particular implementation of the talent and skill and their
execution required to render greater results.
3. Engagement of people- the communication skills are necessary to affect and
encourage people to render greater results (Hussey and Ong, 2017).
Past history of Wesfarmers limited –
The formation of Wesfarmers was demanded by the rural workers union so that they can get
better pay scale and less office hours. Later, it was formed as the Wesfarmers limited in 1984
(Kilroy and Schneider, 2017).
In 2008, Wesfarmers limited issued US senior notes at the first time by raising US$ 650
million. It led a renounceable right issue by raising $2.5 billion (Plessis, Hargovan and
Bagaric, 2018).
In December 2011, the board of Wesfarmers limited permitted the extension the production
limit of ammonium nitrate $550 million in Kwinana and the Western Australia (Miller and
Jentz, 2017).
In August 2014, Wesfarmers limited declared the purchase of work wear group of the pacific
brands for $180 million. It includes Kinggee, Stubbies and the Hardyakka brands. This

CORPORATE GOVERNANCE AND RISK MANAGEMENT 9
purchase of work wear group of pacific brand was finalised in December, 2014 (Shailor,
2018).
After the acquisition of the pacific brand’s work wear group, in June 2015 Wesfarmers
limited declared the purchase of the gas producer and processor quadrant energy holdings for
US$ 100 million. In August 2015, Wesfarmers declared an organisational restructure to make
group of its three industrial businesses such as chemicals, energy and fertilisers; resources
(WesCFF) and Industrial and safety (WIS) in only one new business division (Lydon, 2017) .
In January 2016, Wesfarmers declared the purchase of home improvement and garden retailer
home base of home retail group in UK for 340 million. This acquisition of home
improvement and garden retailer home base was finalised in the February 2016. In February
2016, new division for department stores Kmart and Target has been established by the
Wesfarmers. This new division will assist Kmart and Target to get opportunities of keeping
and developing these iconic Australian brands (ASIC, 2017).
In February 2017, the Wesfarmers limited opens a new home improvement and garden store
having 30000 products. Bunnings group takes renowned fund raising Sausage sizzle in the
United Kingdoms. In June, Wesfarmers limited opens four pilot stores which generate 120
new jobs. The England rugby union legend kyran bracken joins the celebration of opening
ceremony. Bunnings which is famous Australian retailer of the home improvement and
outdoor living products purchased home base for £340 million in February 2016 (Kotler,
Burton and Deans, 2015).
The organisation of Wesfarmers group makes plan to invest £500 million in Bunning
warehouse in United Kingdoms and Ireland in three to five years. Now Wesfarmers limited
has many hotels, supermarkets, coal mining, gas processing, chemicals, energy distribution,
stores, home care stores, office supplies and departmental stores (Kingsbury, 2018).

CORPORATE GOVERNANCE AND RISK MANAGEMENT 10
The Material issues raised by Wesfarmers-
The material issues describe important social and environmental impact. They affect the
assessment and decisions of the shareholder (Aras and Aluchna, 2018). The Wesfarmers
limited draws an attention towards following material issues-
1. The main issue which is to be focused is to provide safe workplace for employees.
2. To provide opportunities to the employees of the company to enhance their job
performance.
3. To give opportunities to the personnel to develop their career.
4. To give rewards to the personnel of the company.
5. To give the attention to the gender diversity.
6. To create the healthy corporate culture in the work place of the company.
7. To create respectful and strong relationship with dealers.
8. To make sure to maintain discipline in the workplace of the company by the
employees and the management.
9. To provide all possible assistance to the workers of the company.
10. To form an open door policy in the organisation.
11. To make policy for easy and simple communication between the employees and the
management of the company.
12. To resolve the disputes and issues arise among the employees or management of the
company.
13. To improve social and environmental practices with dealers.
14. To make efforts to source the products in a responsible way at the time of dealing
with the dealers.
15. To keep focus on the communities in which company operates the business.

CORPORATE GOVERNANCE AND RISK MANAGEMENT 11
16. To make a positive contribution to the various communities in which organisation
operates business.
17. To make sure that products which are to be provided to the customers are safe.
18. To make efforts to decrease the business’s emissions intensity.
19. To make efforts to improve their flexibility towards the change of the climate.
20. To make efforts to reduce the wastage of the landfill.
21. To make efforts to not to waste the water.
22. To maintain robust corporate governance policies in the businesses of the company
(Sullivan and Goulson, 2017).
The Wesfarmers limited inherited in the business of the gambling at the time of the
acquisition of the Coles in 2007. The Queensland also purchased to have competition with
the Woolworth in respect of the business of liquor. The Wesfarmers limited enters into the
pokies because Queensland directs to have own hotel mandatory to retail the liquor. The issue
of the pokies is required to reform (Wang, 2017).
Conclusion-
As per the above analysis it is clear that the Wesfarmers group operate their business as per
the law, rules and the regulations. For Wesfarmers limited, honesty, fairness and the integrity
are major parts to operate the business in the various business division and the business units.
There are some practices which are the inconsistent with the core values of the company such
as the corruption and the bribery. The Wesfarmers limited has made a strict policy which
does not permit the personnel or the management to enter into the corruption and take, give
or accept the bribe. The Wesfarmers limited sets the internal and the external goals in respect
of the major issues. The important issues of the Wesfarmers limited are handled at the
divisional level of company. It is seen by the company’s board (Wesfarmers board) and the
divisional board as per the regular reporting.

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