Woolworths Limited: Gaming Operations, Agency & Stakeholder Analysis

This report delves into the contentious issue of whether Woolworths Limited should continue its gaming operations, particularly the operation of poker machines in Australia. It employs two key theoretical frameworks: agency theory and stakeholder theory, to analyze the arguments for and against the company's involvement in the gaming industry. The agency theory perspective examines the relationship between the company's agents and its business principles, weighing the financial gains from gaming revenue against potential risks to the company's image and stakeholder relationships. The stakeholder theory approach considers the impact of gaming operations on various stakeholders, including employees, shareholders, and the broader community, evaluating the ethical and social implications. The report presents arguments based on both theories, ultimately aiming to provide a balanced conclusion and recommendations regarding Woolworths' future gaming strategy, considering potential social, economic, and strategic business risks, and exploring the potential for social and economic reforms.

Running head: ACCOUNTING AND SOCIETY
Accounting and Society
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Executive Summary:
This report aims to arrive at a valid solution as to whether Woolworths limited should
continue operating the gaming structures in Australia. The agency theory approach as well as the
stake-holder theory approach is discussed regarding whether the company should really stop the
operations of the gaming machines. Finally possible alternatives to the solution are discussed
based on the findings.

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Table of Contents
Introduction:....................................................................................................................................3
Agency theory approach to determine whether Woolworths Limited needs to continue operating
gaming machines in Australia:........................................................................................................3
Arguments for the motion:...........................................................................................................4
Arguments Against the motion:...................................................................................................4
Stakeholder theory approach to determine whether Woolworths Limited needs to continue
operating gaming machines in Australia:........................................................................................5
Arguments for the motion:...........................................................................................................5
Arguments Against the motion:...................................................................................................6
Conclusion and Recommendations:................................................................................................7
References:......................................................................................................................................9

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Introduction:
Woolworths Limited is a major Australian organisation having immense retail interest
throughout Australia and New Zealand. It is the second largest organisation in terms of revenue
after Wesfarmers in Australia and New Zealand. The organisation owns 75% of the Australian
Leisure and Hospitality Group, which operates above 12,650 poker machines in Australia
(Woolworthsgroup.com.au 2017).
Hence, the first section of the report aims to discuss the approach of agency theory for
ascertaining whether Woolworths Limited should carry on with the gaming machines in
Australia. The company should also abide by the corporate relationship strategy it has developed
as well as the corporate responsibility strategy it has brought out for the year 2020.
The current report aims to evaluate the probability of operating gaming machines in
Australia on the part of Woolworths Limited. Depending on the company strategies as well as
objectives it needs to be understood that the image of the company should not be destroyed in
any way.
Agency theory approach to determine whether Woolworths Limited needs to continue
operating gaming machines in Australia:
The agency theory approach is basically the association between the agents in a business
and the business principles. The agency theory deals with solving issues that remain inherent in
the relationships of the agency due to the unaligned goals as well as several aversion level risks
(Bosse and Phillips 2016).

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Arguments for the motion:
 The major reason why the company needs to continue the operation of gaming
services is from the business aspect and the gains part of it. It has been found that
the company has generated revenue amounting to several millions which can be
compared to the revenues generated by the company form the retail market
(Lozano, Carpenter and Huisingh 2015).
 It can also be said that a company prospers from getting revenue from all aspects
of the business it participates in and thus it can be said that if it is found that the
company prospers from the gaming machines as well as its operations it should
not be stopped. The annual report generated for the business returns and the gains
for Woolworths limited clearly shows that it has become one of the retail
supergiants in the gaming segment as well (Bridoux and Stoelhorst 2014).
Arguments Against the motion:
 The gaming machine operations in Woolworths comprises mainly of the poker
machines which are specifically known as pokies. Due to this scenario
Woolworths has faced flak from the groups which do not favour such gambling
methods. In terms of collection of revenue, though the poker machine has
generated several millions as profit for the company, it can be said that the retail
supergiant needs to refocus its strategies as well as business decisions.
 It can also be said that the business relations of the company with other industries
in which it was already established needs to be maintained. It can also be said that
the other aspects of the business should not be impacted due to the involvement of
Woolworths in the gaming operations (De Massis et al 2014).

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Stakeholder theory approach to determine whether Woolworths Limited needs to continue
operating gaming machines in Australia:
The stakeholder theory is that which is related to the organizational management as well
as the ethics in business that put forward values as well as morals in managing the organisation.
Stakeholder’s are extremely crucial to a company. They can affect as well as be affected by the
actions, policies and objectives of the company. Stakeholders of a company include employees,
directors as well as creditors (Bonnafous-Boucher and Rendtorff 2016). It is the duty of the
Woolworths company that the shareholder’s funds as well as the stakeholders claims and values
need to be controlled (Westphal and Zajac 2013).
Arguments for the motion:
 It can be said that the company can give rise to employment options for the
people as well as give opportunity to several efficient gamers as well. It can also
be said that the company will help increase it revenue as t6he gaming systems are
bound to have a high demand in the game stations of Australia (Chiu and Wang
2015).
 As stated by the stakeholders as well as the share holders it can be said that the
revenue claims which the company has received show that the revenues collected
contribute to about 40% of the revenues. Thus it can easily be said that the
revenues collected from the gaming industries is huge. So a sudden shutdown of
gaming operations of the company should not be considered. So there should also
be several reforms which need to be adopted to find the value of them.

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Arguments Against the motion:
 An important reason the retail supergiant should consider stopping the operations
of the gaming systems is that majorly in case of poker, the gaming influences the
human brain and causes the secretion of dopamine hormone which only occurs in
cases where there is a sort of addiction just like the addition to cocaine. In case
the gaming theory becomes an addiction it can lead to a tarnished image for the
retail supergiant (Stufflebeam and Coryn 2014).
 Moreover for high and increased demand it can lead to a dearth of the man power
which can be said to hamper the business of the company if it fails to deliver the
required demand within a stipulated period of time. It can also be said that if the
clients are lost then the company will suffer overall from all the segment6s of the
economy. Risks can be encountered in the several segments.
 The investment in the market is also extremely heavy as it requires more and
more capital to manufacture the gaming machines. It can also be said that the
business of investing in the high loss poker machines is extremely risky as it can
lead to the social cost of the industry as well as it can tarnish the image of the
company which it has build over the past several years (Waldman and Balven
2014).
 It can be said that the growing investments of in an electronic gaming machines
can cause a range of social as well as political harm as well as the community
obstacles. It can also hamper the probabilities of the company in other aspects as
well. The demands of the company in the retail sectors can also suffer (Mitnick
2015).

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Conclusion and Recommendations:
Going through all the facts which have been discussed above, a clear conclusion cannot
be drawn as such regarding the topic of Woolworths stopping its gaming operations. It can also
be said that the company can adopt social as well as economic reforms and should not cause
financial harm to any particular market or segment of the economy.
There have been many speculations regarding the fact that whether the company should
adopt the reforms. It should also be said that the cost of adopting the reforms is beneficial or
detrimental to the company. It can also be said that the criticism which Woolworths attracts form
the different quarters on issues namely the concentration of ownership in the grocery retailing,
impacts on the grocery stores and the overall impacts of business in different quarters. Unlike the
other problems, the majority of the Australians do not realize yet that Woolworths Company is
the hugest operator of the poker machines. Hence closing it down can just impact the overall
business of the company.
As illustrations suggest that the involvement of the Woolworths group in the poker
machine as well as the gambling scheme can lead to the risks in the organisations revenue as
well as the business. It can also be said that it is a potential strategic business risk to the
organisation. The company does not have a probable strategy for tackling the problem (Raelin
and Bondy 2013).
Woolworths also focuses on the relationships as well as building the trusted relations
with the people. So it should not indulge in any scenario where the trust is destroyed. It is quite
likely that the campaigns against the manufacture as well as the operations of the gaming
machines should be stopped as well as it can be said that the stakeholder issue related to the

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gaming operations in Woolworths should be given a due time before the claims as well as
problems die down. Though there is enough speculation regarding the matter that the problem
will die down anyway unless the issue is addressed in a meaningful as well as demonstrated way.

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References:
Bonnafous-Boucher, M. and Rendtorff, J.D., 2016. Stakeholder Theory: A Model for Strategic
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Bosse, D.A. and Phillips, R.A., 2016. Agency theory and bounded self-interest. Academy of
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Bridoux, F. and Stoelhorst, J.W., 2014. Microfoundations for stakeholder theory: Managing
stakeholders with heterogeneous motives. Strategic Management Journal, 35(1), pp.107-125.
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contributions to Corporate Sustainability. Journal of Cleaner Production, 106, pp.430-442.

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Woolworthsgroup.com.au. (2017). Woolworths Group: Quality Brands and Trusted Retailing.
[online] Available at: https://www.woolworthsgroup.com.au/ [Accessed 11 Aug. 2017].