A Case Study on the Failure of Corporate Governance at Woolworths Supermarket

This case study analyzes the failure of corporate governance at Woolworths Supermarket, including the breach of applicable corporate laws and steps that could have been taken to better manage governance effectiveness.

You are required to prepare
a casestudy on a
contemporary example of a
significant failure of
corporate governance of
woolworths supermarket

TABLE OF CONTENTS
INTRODUCTION ..........................................................................................................................1
MAIN BODY...................................................................................................................................1
Describing the incident...............................................................................................................1
Explaining how company has breached applicable corporate laws............................................2
Analyzing the steps the company's directors and senior officers could have taken to better
manage its governance effectiveness..........................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Corporate governance is associated with g having the system in the organization that pay
attention on adhering all the regulations for operating successfully in the specified organization.
In the current era, for becoming successful it is important for the firm to focus on having the
effective corporate governance course of the action in turn reliable strategies for achieving
success can become possible. The current study is based on Woolworths supermarket which
operates in retail sector to offer the groceries products. There is failure of following the
corporate governance by the organization that has majorly affected its overall functioning. The
current report will pay attention on having the significant description o its failure, the reason for
the breached applicable corporate laws and steps to better manage governance effectiveness.
MAIN BODY
Describing the incident
It is one of the successful organization that is associated with offering the products on
the retail sector. For being sustainable organization it is crucial for the firm to pay attention on
having the ethical conducting in respect to meet the organizational requirements in the effective
manner (Jiang and Kim, 2020). Woolworth supermarket is faced the failure due to the
inappropriate implementation of its organizational practices that has not permitted to coordinate
with the corporate governance. In the journey of its operational practices conducted it can be
mentioned that the company has been questioned a lot of time regarding its ethical course of the
action related with its stakeholder, it has been come up in the news regarding ineffective
compliance with employment law as under payment practices are held by firm. In addition to
this, it has been failure to disclose its accurate financial position with the investors that has kept
all the stakeholder in misunderstanding that firm is performing well. There are various actions
which had lead firm to face the losses and one of the major reason is its ineffective management
of the organizational practices that has shown continuous declination of the profitability.
In the particular case it can be supported that all the involved directors and the senior
managers did not pay concern regarding offering the significant & precise information about its
current performance so that accomplishing the organizational objective of creating the higher
trustworthiness can be attained (A failure of corporate governance? 2022). The managers and
directors has interpreted that there are masters strategy which shows that business is possessed
the strong potential which can help in gaining the competitive edge in respect to overcome the
1

realistic challenges. It is specified that there is execution of model which will help in having
over optimistic roll out plans. This is recognized that it is the strategy model for having realistic
adaption which shows that delivering of message to audience has not been properly understood
and clarified among the management and directors. This depicts that the firm has created the
dishonest expectations which is not accomplished by the firm through articulated strategy and
resulted in losses. On the basis of this, it can be specified that there is non adherence of
corporate governance practice such as disclosing corrective information with investors, effective
board conducting, quality performance to customers, proper payment to employees, etc which
has not allowed to receive sustainable growth. This presents that improper risk management
strategy has been adopted which has affected overall organizational performance.
Explaining how company has breached applicable corporate laws
There are different form of the laws which needed to be followed by the firm in order to
gain the competitive edge in respect to ensure that proper strategies for conducting the
operational practices can become possible (Naciti, Cesaroni and Pulejo, 2021). There are various
benefits which can be achieved by the enterprise through possessing proper implementation of
corporate governance that includes having the positive behavior, reducing the cost of capital,
improving decision-making of top-level, having strategic planning and possessing talented
directors. These all helps the organization to have effective utilization of capital, mitigating risk,
etc which has not been attained by the organization. On the basis, it can be specified that it has
affected the position of enterprise as overcoming prevailing competition can become possible.
There is improper compliance with the payment law which is connected with the employment
legislation. It is recognized that there has been under payment which has affected negatively
employees in addition to this, Woolworths supermarket has crated the false financial position
which has given improper disclosure of information about the past, current & future events to
the investors.
Senior managers and the board of directors of the company are responsible for
exerting accountability to shareholders via establishing corrective vision, mission, values, etc.
Woolworths supermarket's management and the directors has the improper presentation of
financial documentations while delivering information related with company's performance. It
shows non-compliance with corporate governance law of fair framework of the documenting
that has outcome in losses of investors and created higher bad reputation in the industry. This
2

reflects that the organization has not possessing effective management of resources which has
formulated negative working and false promises creating image. It is important for the company
to declare the relate risk with investors so that effective decision regarding the investment can be
taken. In addition to this, it is specified that these all has lead the firm towards failure due to the
improper responsibility accomplishing of managing organizational practices via adhering to the
corporate governance laws. On the basis of this it can be suggested that the organization is
required to focus on having the effective compliance with corporate governance laws such as
documenting, offering clear information to investors, fair auditing of organizational
performance, making reliable payments to employees, etc. This has negatively impacted the
overall functioning of the business resulted into heavy losses.
Analysing the steps the company's directors and senior officers could have taken to better
manage its governance effectiveness.
For operating successfully, the organization is required to pay attention on having the
competitive edge by adhering all applicable corporate governance laws (Dat and et.al., 2020).
The main reason behind this is to avoid the irrelevant occurring of the legal issues which can
create barriers for attaining smooth proceeding. For this purpose the firm will focus on
possessing relevant course of the actions in turn accomplishing reliable ability to coordinate with
stakeholders requirements. On the basis of this it can be specified that the organization I
required to pay attention on having the effectual steps such as executing the board corporate
governance model. This is associated with possessing the governance model that can allow the
specified senior manager & broad directors so that effective clarity & transparency in following
the certain roles and responsibilities to ensure ethical conducting. This as well contribute in
developing effective policies so that establishing corporate governing culture can become
possible.
This is identified that board of the directors to give emphasis on having the clarity of
what actions are take by corporate via evaluating strategies so that actions such as having
appropriate allocation of capital for long term growth & assessing risk in turn ethical conducting
can become possible (Adnan, Hay and van Staden, 2018). The one of major course of the
action which can be taken into the consideration by the firm is to audit committee in respect to
get the clarity of financial performance can be achieved by focusing on the long term
sustainability. Corporate governance of committee has the focus on proper leadership role in
3

shaping compensation and other policies so that adhering reliable pattern of working to comply
with ethical requirements can become possible. In addition to this, having balance board
composition, evaluating regularly, ensure independence of auditor, being transparent, aim of
creating long term value creation, managing risk proactively, etc are common steps that help in
achieving objective of following corporate governance practices. For having the effective
governance to manage the overall functioning by the specified organization can be done
properly which can result in eliminating the negative impact that has occurred on stakeholders.
Realistic recommendations to avoid the similar incidents by other organizations:
 It is suggested to pay attention on having the comprehensive policies such as broad
diversity and remuneration in turn effective ability to coordinate with standard practices
can become possible (Bhagat and Bolton, 2019). The main reason behind this is that it
aids in having transparent reporting of board evaluations & clear process for on boarding
of new directors to make sure that ethical activities are taken into the procedure.
 This is advised to organizations to get the proper training & development process in the
firm so that aspects such as having focus on transparency, accountability & strategic
planning to create trustworthiness in investors via eliminating risks. The reason behind
this is that it aids in gaining competitive edge to adhere all the corporate governance
laws to avoid similar incidents.
CONCLUSION
From the above report it can be concluded that corporate governance is crucial for
having long term sustainable growth. The current study has identified that firm has not
effectively shared information with investors which has neglected the rule regarding full
disclosure. There was no clarity of risks, proper financial position, etc which has negatively
affected firm. The recommendations such as having proper comprehensive policies such as
broad diversity & remuneration, audit committee, etc to comply with corporate governance
requirements in effective manner.
4

REFERENCES
Books and Journals
Adnan, S.M., Hay, D. and van Staden, C.J., 2018. The influence of culture and corporate
governance on corporate social responsibility disclosure: A cross country
analysis. Journal of Cleaner Production. 198. pp.820-832.
Bhagat, S. and Bolton, B., 2019. Corporate governance and firm performance: The
sequel. Journal of Corporate Finance. 58. pp.142-168.
Dat, P.M. And et.al., 2020. COMPARATIVE CHINA CORPORATE GOVERNANCE
STANDARDS AFTER FINANCIAL CRISIS, CORPORATE SCANDALS AND
MANIPULATION. Journal of security & sustainability issues. 9(3).
Jiang, F. and Kim, K.A., 2020. Corporate governance in China: A survey. Review of
Finance. 24(4). pp.733-772.
Naciti, V., Cesaroni, F. and Pulejo, L., 2021. Corporate governance and sustainability: A review
of the existing literature. Journal of Management and Governance. pp.1-20.
Online
A failure of corporate governance? 2022. [Online]. Available through:
<https://theconversation.com/masters-a-failure-of-corporate-governance-53619>
5