An Examination of Woolworths' Corporate Governance Structure

This report provides a detailed analysis of Woolworths' corporate governance structure, focusing on key aspects such as leadership, corporate social responsibility (CSR), and risk management. The report examines the role of the board of directors in strategic leadership, ethical practices, and compliance with ASX principles. It highlights Woolworths' commitment to diversity and inclusion, including gender balance and environmental sustainability initiatives. The report also explores Woolworths' risk management strategies, particularly the three-line defense model. Furthermore, it assesses Woolworths' adherence to optimal corporate governance practices, emphasizing transparency, accountability, and ethical conduct. The report concludes by summarizing the key findings and emphasizing the importance of effective corporate governance in the success of the organization.

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WOOLWORTHS CORPORATE GOVERNANCE
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Executive Summary
The report looks at corporate governance of Woolworths focusing on leadership in which the
board is the key leading unit and whose corporate structure rest. The board steers the leading and
business of Woolworths with strategic leadership. Moreover, the social responsibility is another
aspect examined and Woolworths embraces sustainable environmental business and take care of
the concerns of the community through inclusion in employment, balances gender and uses green
initiatives. The Risk management aspect places the organization at the top because they use the
three line defense model where all three levels of structure get involved in risk management. It is
clear that Woolworths’ corporate governance practices are optimal because they adhere to rules,
regulations and codes of conduct.

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Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................3
Company Background.....................................................................................................................3
Corporate Governance.....................................................................................................................4
Woolworths Corporate governance.................................................................................................5
The leadership..............................................................................................................................5
Ethically and Responsibly............................................................................................................6
Corporate Social Responsibility..................................................................................................6
Risk Management and Assurance....................................................................................................7
Risk Management Strategies...........................................................................................................9
Risk Avoidance.............................................................................................................................9
Risk Reduction..............................................................................................................................9
Risk Transfer................................................................................................................................9
Risk Retention............................................................................................................................10
Woolworths’ Three Line Defense Model...................................................................................10
The Commitment to Optimal Practices.........................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13
Appendices....................................................................................................................................15

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Introduction
The success of every organization depends on the structure of governance and how
employees take up with the structure presented. Corporate governance is now being employed by
the much leading organization in business. It is with this point of view that the report is going to
examine the corporate governance of Woolworths. The structure of the report begins by giving
the background of the company and the followed by the description of corporate governance, the
corporate governance of Woolworths, which encompasses leadership, corporate social
responsibility, risk management and assurance. Furthermore, the report looks at some strategies
used in managing risk; the three lines defense Model that is adopted by Woolworths. An
evaluation of whether Woolworths’ practices are optimal gets presented and the report ends by
giving a conclusion.
Company Background
Woolworths is the leading organization in the retail business in Australia which gets
connected with the company’s strategic techniques that cut across business, branding, corporate,
leadership, pricing and quality products. Irrespective of its success, the company experiences
competition from competitors such as Coles, Wesfarmers, Carrefour, ALDI, Safeway, Metro,
Distributor, Giant Eagle, and Supermarcato24. The company has stood to be the leader in this
industry.
Corporate Governance
This is a system in which companies get controlled and run and different bodies have
functions charged to ensure that organization is in good leadership control. The board of
directors’ role is to ensure that there is good governance by setting strategies, putting leadership
into effect, provide supervision and report to the shareholders (Aggarwal, 2013). On the other

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hand, the role of the shareholder is the make sure that the right peoples for posts of directors,
auditors and to ensure that there is proper governance the organization (Ahmed Sheikh, Wang,
and Khan, 2013). Therefore, corporate governance revolves around the board of the company,
their functions and how they set the values of the company and is very different from the
operational management by the executives. The sole role of corporate governance is to ensure
that there are transparency and accountability in the organization’s systems. The corporate
governance is one of the systems that are set under laws in UK corporate code of governance in
which the code applies to all organizations that have equity shares irrespective their location
((Iatridis, 2013).
The aim of corporate governance is to set and promote a culture in which it will be
prioritized by the directors so that it renders good ethical leadership that serves the interests of
the stakeholders. Corporate governance that is good depends on the competence and integrity of
the people who are in the positions of directorship and management in ensuring practices that are
good for the organization (Claessens and Yurtoglu, 2013, pp.1-33). There is no model that
outlines good corporate governance but it only depends on dynamic circumstances in the
establishment and must be constantly changed so as to meet the changing circumstances. The
regulations on corporate governance are flexible except in the US where the corporate
governance has to follow set legislation. The role of corporate governance is to give direction,
monitor performance of finances and management defines risk management procedures and
control; and ensures that the business follows ethical and transparent routes (Kamal Hassan and
Saadi Halbouni, 2013).

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Woolworths Corporate governance
The leadership
The organization depends on the board in corporate governance for the creation of value
that is for a long period of time for the benefit of the shareholders and every employee is
expected to act in an ethical manner. As per Woolworths group (2017), the organization is in
compliance with ASX principles and therefore follows the expectation of these codes.
According to Ahmed Sheikh, Wang and Khan (2013, pp.38-55), the performance of the
organization get begged on the governance structure set in place. In Woolworths, the governance
structure is under the directors who are charged with the role of ensuring that proper strategic
direction and plans are set for the organization, act an oversight on management and financial
issues, adopt the budget as well risk management and compliance. Additionally, the board report
on finances and approve budgets that may be quarterly or yearly coupled with monitoring and
ensuring that there is the quality financial report and that integrity is maintained. The CEO is on
the board and it is the role of the board to evaluate the performance of the CEO as well as
leadership strategy employed (Woolworths group, 2017).
The succession, planning, and remuneration lie at the center of the board, they make sure
the people in the company get rewarded well based on the company’s performance as per the
policies set by the relevant committee. Additionally, they ensure that the succession process is in
place so that there is leadership continuity. They create programs and plans for people who deem
potential for leadership roles in the organization (Woolworths group, 2017).
As per Ntim and Soobaroyen (2013, pp.468-494), performance and the social structure of
an organization are directly connected to how it is going to perform. The social responsibility
being part of strategies used at Woolworths, the board takes into consideration the impact of

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Woolworths in terms of ethical and environment, monitor and look at the compliances to
standards (Woolworths group, 2017). On the other hand, the board approves on the expenditure
for transactions that are major and keep an eye on the relationship of the company with the
regulators in order to ensure adherence to obligations (Iatridis, 2013).
Ethically and Responsibly
The organization has a set code of behavior that is expected to be followed by its
employees. These standards are guided by the core values which entails caring, listening,
learning and doing right things (Aggarwal, 2013). The code of conduct cut across all the
employee of the organization and illustrates the expected standard that everybody has to conform
and these codes emphasize on integrity, honesty, and fairness by every worker when in constant
interaction with suppliers, clients, competitors and the society (Woolworths group, 2017).
Additionally, there are other regulations defining the commitment of the organization to being
responsible, compliant, and responsible among others which boosts the code of conduct and
encourages all the workers to be accountable and responsible (Claessens and Yurtoglu, 2013,
pp.1-33).
Corporate Social Responsibility
The organization utilizes diversity and inclusion as one of the components of corporate
responsibility to the society (Woolworths group, 2017). The organization integrates a number of
aspects in employment so that they gather for all people from diverse cultures, background
ethnicity etc. so that the clients of the company feel valued and are part of the company (Cheng,
Ioannou and Serafeim, 2014). The company’s commitment is to attract and retain a workforce
that is all-inclusive with the key focus of increasing indigenous Australians. There is the gender
balance which is the key focus for the company (Rodriguez-Fernandez, 2016). They strive to

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attract and retain bright and focused female to the Woolworths team and specifically to the
management levels. The gender equity gets applied also through equal pay for work done in
equal measures. The company reviewed the salaries of all its employees equally with no
disparities in gender (Khan, Muttakin and Siddiqui, 2013, pp.207-223).
Furthermore, the organization embraces the green concern by ensuring that recyclable
materials are used so that it facilitates the need for green environment. It has strived to create
recyclable packaging bags and has planned to phase out polystyrene materials by 2020. They are
now in the process of making awareness to the customers of this shift in packaging bags
(Woolworths group, 2017). Also, they embrace green sourcing of raw materials and thus they
work with suppliers who practice sustainable sourcing as well (Kamal Hassan and Saadi
Halbouni, 2013). In line with this, the organization undertakes awareness on sustainable business
with the community with the aim of making them aware of the need to embrace green
technologies for the sake of reducing carbon footprint (Amba, 2014). Moreover, the organization
is ethically responsive to food products and especially those concerning the use of animal
products with the aim of following strictly on ethical rules (Hřebíček et al., 2014, pp.157-166).
Risk Management and Assurance
According to Leitch (2016) risk is anything that is likely to create a problem in a system
such that there is total interferences or total halt of the normal running of the system. A system
can be a set of structures set so that they work together to attain a set output. An organization is a
system that has sub-systems working together so that the overall set objective of the firm is
attained. Dixon, (2017) asserts that when there are accumulations of risks in a system, the entire
process is prone to break-down.

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The management of risks entails task that is coordinated with the aim of directing and
controlling the organization in relation to risk (Sweeting, 2017). The management of risk is part
of every undertaking of a business and the get enshrined in practices, culture, and strategy with
the aim of creation, realization, and preservation of value (Farrell and Gallagher, 2015). When
these risks are not managed, the results are that the customers get affected, the images of the
organization get tainted, and regulation consequences will ensue (Soin and Collier, 2013).
Woolworths has risk management policy which allows the specialists utilize management
of risk procedures to enable them to suspect issues and actualize arrangements. This is a piece of
a nonstop procedure of evaluation, prioritization, and criticism (Woolworths gathering, 2017).
Anytime in this procedure, the targets of the association or conditions of the outer condition may
change, requiring an association to be adaptable in its way to deal with developing dangers.
Without a cautious examination of particular dangers and an arrangement to moderate them,
associations may endure misfortune (Olson and Wu, 2015). Once associated with a global
business venture, associations must ensure their tasks and their gainfulness through ceaseless risk
investigation and planning. The greatest risk with any business venture is that the association has
no valuation for hazard or how it can influence them. Risk administration is indispensable to any
association. When building up a procedure to oversee chance, it is best to create one that can fall
into at least one of the accompanying classes (Bromiley et al., 2015).
Risk Management Strategies
Risk Avoidance
In the assessment of a situation in the market environment and the likelihood are that
there are risks that might come on investments, the only safest way is to avoid the venture or the
process (Lam, 2014). This is a strategy which requires analysis and weighting of options prior to

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setting up. When there is no comprehension of the harm or risks that are going to happen, then
there is the best solution to leave irrespective of whether the prospects projected are high (Mikes
and Kaplan, 2013)
Risk Reduction
The risks can be tended to by discovering techniques to decrease either the seriousness of
the risk or the probability of the misfortune happening. Likewise, associations can reduce risk by
outsourcing capacities to the individuals who are more talented or to the individuals who can
exhibit a capacity to oversee or decrease risks. These experts know the risks associated with
worldwide sending and have the technique required to reduce or eradicate huge numbers of those
risks (Mikes and Kaplan, 2013).
Risk Transfer
The transfer of risk implies getting another establishment to acknowledge the risk.
Additionally, risks are exchanged through contracts, which is the case in construction business
where the developer accepts risks related to the development that is faulty. Hedging
methodologies, derivatives, and futures contracts are different types of exchanging financial risks
to others. Risks are pooled also, and risks can be spread to members so that when one member
suffers, the resources are combined to gather for the risk (Sadgrove, 2016).
Risk Retention
Associations can acknowledge certain risks and losses that may emerge. This is a suitable
way to deal with little risks where the cost of alleviation or protection is going to be more
prominent after some time than the aggregate losses experienced. The risks not transferred or
avoided get retained. This incorporates vast or cataclysmic risks that they cannot get insurance or
where the premiums are very high (Garforth, Bailey and Tranter, 2013).

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Woolworths’ Three Line Defense Model
The organization uses this model so as to minimize or eradicate risks as much as possible.
The model is structured such that there are three lines of defending the risk. The first line is the
people with who own and manage the risks (Woolworths group, 2017). This is the board with
the work of giving direction to the management and identifying the major risks experienced by
the organization (Haimes, 2015).
The second line and their specialization is risk management. These are the people who
undertake the management of risk and control (Woolworths group, 2017). The manager lead and
direct employees were applicable to the areas to be done on risk management and control and
take control of the activities that are set for removing risks (Hopkinson, 2017).
The third line is that line the give assurance and the audit is the actor. This is the section
the make sure that there is effectiveness on the risk framework set in the organization
(Woolworths group, 2017). This requires a very active and adequate line function that gets to
pass information without any barrier (Appendix 2).
The Commitment to Optimal Practices
In the examination of Woolworths’ corporate strategy, it is apparent that the practices are
optimal. This is because it has a commitment to the governance structure. It shows that the
directors are charge ensuring proper strategic direction, oversight on management and financial
issues; adopt budget and management and compliance among many functions.
Additionally, the organization has a set code of behavior to be followed by its employees.
These standards are guided by the core values which entails caring, listening, learning and doing
right things; and cut across all the employees; it illustrates the expected standard that everybody
must conform and as they emphasize on integrity, honesty, and fairness by every worker when in

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constant interaction with suppliers, clients, competitors and the society. Furthermore, the
organization utilizes diversity and inclusion as components of corporate responsibility to the
society. The organization integrates a number of aspects of employment so that they gather for
diverse cultures, background ethnicity.
Moreover, the company’s commitment is to attract and retain a workforce that is all-
inclusive with the key focus of increasing indigenous Australians. There is the gender balance
which is the key focus for the company. They strive to attract and retain bright and focused
female to the Woolworths team and specifically to the management levels. The gender equity
gets applied also through equal pay for work done in equal measures. The company reviewed the
salaries of all its employees equally with no disparities in gender. The organization embraces the
green concern by ensuring that recyclable materials are used so that it facilitates the need for
green environment. It has created recyclable packaging items.
Woolworths has risk management policy which allows the experts utilize risk
administration procedures to enable them look for issues prior to happening and actualize plans.
This is a piece of a consistent procedure of appraisal, prioritization, and input feedback
incorporated. The organization uses three line defense models so as to minimize or eradicate
risks as much as possible.
Conclusion
The success of the organization in the retail business gets attributed to the best strategies
leveraged for the benefit of shareholders. The uniqueness of Woolworths is how corporate
governance has been structured in such a way that corporate responsibility gets pronounced very
much to the point of getting every detail of this strategy for the sake of making the customer, the
shareholders and the suppliers happy. It is seen with the use of good strategic leadership that