ORG30003 - Sustainable Design: Woolworths and Contingency Theory

This essay explores the application of contingency theory to Woolworths Supermarket's organizational design. It examines both structural dimensions, such as hierarchy of authority and centralization/decentralization, and contextual dimensions, including technological changes and strategic shifts. The analysis considers how these dimensions impact both internal and external stakeholders, such as suppliers, shareholders, employees, and customers. Specific examples, such as Woolworths' adoption of in-store robot technology, changes in food strategy, and hierarchical restructuring, are used to illustrate the practical implications of contingency theory. The essay concludes that adapting organizational design to contextual factors is crucial for Woolworths to maintain competitiveness and meet stakeholder needs. Desklib provides more resources like this essay, including past papers and solved assignments.

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SUSTAINABLE ORGANIZATIONAL DESIGN
WOOLWORTHS SUPERMARKET

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Contingency is considered the event as well as circumstances that can be occurs in future, it is
one of the circumstances that might causes troubles as well as problems in the organization. The
Insurers support their rates of premium as well as their willingness to understand the risks
partially on the possibility, so that the contingencies will not be occurred (Anderson, 2018). The
implications of contingency management style lead positive results in the organization. It helps
the organization in providing solutions in the particular circumstances as well as enhances the
managerial quality. In this essay, the example of Woolworths is taken as well as distinctive
features and internal environment of the company is discussed. In this, the implications of
contingency theory are analyzed by focusing on structural as well as contextual dimensions. The
affects of these in inside as well as outside the organization is also discussed with the example of
Woolworths Supermarkets.
Woolworths Supermarkets is an Australian supermarket/grocery store chain, which was founded
in the year 1924. Woolworths mostly specializes in selling groceries but also sells
magazines, DVDs, health & beauty products. Woolworths currently operates about 1000 stores
across Australia. The company is in the Retail industry and headquarter of Woolworths
Supermarket is in Australia. In the year 2017, the revenue earned by the company was A$55.669
billion (Pulker et al., 2018). The distinctive features of the company, includes that it has more
than 115000 employees in the department of operational. The company provides customer
services efficiently because of skilled and competent employees in all the departments (Paull &
Hennig, 2018). The company also uses distinctive strategies of marketing that is it provides
petrol pump discounts, offers like 50% weekly offer as well as other gift cards. The internal
environment of the company are decentralized, the company use 360-degree performance
appraisal method and provide other benefits like 5% discounts to the employees etc. Further, the
implications of contingency theory for managers as well as structural and contextual dimensions
are discussed (Pulker et al., 2018).
The Contingency theories are broad and demonstrate that the efficiency of guidance as well as
leading the employees is depending on the situation. It is based on the factors, which includes
tasks nature, personality of the leader's, cultural, environment as well as the behavior of the
group to whom the leader is leading. The manager evaluates as well as understands the situation
and makes the decisions accordingly. The structural dimension includes the formalization,

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specialization, chain of command as well as centralization (Worren, 2018). In this essay, the two
structural dimensions are taken which includes hierarchy of authority as well as centralization &
decentralization.
The hierarchy of authority defines the power structure of the organization. The degree of
authority rises with the each individual, which is on the higher level in the hierarchy. The overall
power is in the hands of the person, who is in the top level in the hierarchy. It mainly explains
which person reports to whom as well as the amount of control for every manager. The vertical
lines on the organizational chart represent the hierarchy of the organization (Anderson, 2018). In
Woolworths, the numbers of the workers reporting to the supervisor are wide, so, the chain of
command is shorter. The changes in the hierarchy of authority in Woolworths shows the positive
results, the authority is mainly in the hands of the Chief executive officer of the company; he is
in the top-level hierarchy and manages the other employees of the organization (Matanga, 2018).
The chief financial officer, human resource department, department of marketing has to report to
the chief executive director of Woolworths. This helps the company to work with coordination as
well as clear lines of communication are structured for all the employees in Woolworths.
Through this, the employees of the company are motivated and work efficiently; this is because
the revenue of the company in the year 2017 was A$55.669 billion (Vidler et al., 2018). This
change affects the suppliers of Woolworths because now suppliers also has to follow the
hierarchal authority while supplying raw material, for this the in the 2019, the percentage of
supplier reduced and due to inadequate supply Woolworths is shutting 30 stores of Big W in
Australia (Sayar & Tokdemir, 2019).

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Source: (Paull & Hennig, 2018)
The Centralization is considered the level of hierarchy, which has the power to make the
judgment. If the decision-making authority is with the top-level management than the
corporations are centralized, but if in the organization delegation of the authority is done to the
other levels of the organization like middle as well as lower level, then the corporation is said to
be decentralized. The examples of the decisions, which makes in the organization that may be
centralized as well as decentralized it include purchasing of the organizational equipment,
formulating the goals and objective, selecting the suppliers, hiring of workers as well as while
deciding territories for marketing (Worren, 2018). In the year, 2017, due to change in
Woolworths regarding the hierarchy level of authority, the structure as well as power of authority
also changes and company adopted the decentralized hierarchical level. In Woolworths the
authority is delegated among the employees, which includes that in the year 2017, the new

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hierarchal level is developed in the company (Matanga, 2018). In this, the Board serves the
interests of all the shareholders, the strategy then delegated to the chief executive of the
company, the CEO with the help of the senior management is accountable to the board. Through
this strategy the shareholder value increases in Woolworths that is in the year 2018, Woolworth’s
strategy is to return up to the amount of $1.7 billion to all shareholders, with an off-market share
buy back as well as by the special dividend (Pelcher, 2019). Woolworths is also affects internally
through this and leads lower expansion, because to expand the business in the global market,
company relies on local employees that is in the year 2017, Woolworths have only sixty-four
stores throughout the Africa (Das Nair et al., 2018). The dimensions of contingency also affect
the internal as well as external stakeholders of Woolworth’s supermarkets. In this the two
contingency dimensions that are changes in the technology by Woolworths as well as strategy of
the company are analyzed.
The organizational technology considered the tools, equipments methods, as well as actions
taken by the organization to convert the inputs into final product. It considered the actual
production of the goods as well as services offered to the consumers. It also helps in providing
other services like flexibility in the manufacturing, superior system of information as well as
Internet (Stanford, 2018). The changes in the technology by Woolworths that is in the 2016
adopted the in-store robot technology, to make the secured store for the consumers as well as
team members. In the year 2018, company also makes other change in the technology to increase
the speed of the online order and change adopts automated technology (Faisal et al., 2019). This
change negatively affects the employees of Woolworths, because no appropriate training is
provided to the employees. However, it affect stakeholders which are outside the organization in
positive manner that is customer were more satisfied with the delivery services and increases the
sales of the company that is in 2018, the revenue generated by the company was A$56.726
billion which is higher compared to the year 2017, which was A$55.669 billion (Dakwa et al.,
2019).
The strategy of the organization defines the plan of action that illustrates the planning for
allocating the resource as well as the actions for handling with the changing environment and the
companies develop the strategies for attaining the objectives of organization (Narayan, 2015).
The change in the strategies of Woolworths that is in the year 2015, the makes the changes in the

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food strategy, which is that the new strategy focuses on three principles. The principles are offer,
growth as well as efficiency, which are achieved by adopting the model of Lean Retail. This
influence the middle level as well as lower level employees of Woolworths to work in the
efficient manner to provide more satisfaction to the customers (Haysom et al., 2019). However,
the customers were also influence positively through this strategy because now company does
the innovation according to the needs of consumers for this in 2018, the company sets up the in-
store innovation lab and increased by sales by 4.3% (Curtain & Grafenauer, 2019).
From the above it is conclude, that the Contingency theories are wide as well as helps in
providing efficient guidance to all the staff members depending on the condition. In this essay,
Woolworth’s supermarket is selected for understanding the implication of contingencies theories
with the help of structural as well as contextual dimensions. From the above it also concludes
that changes in the structural dimensions that are hierarchy of the authority as well as power of
delegation affects the internal and external stakeholders like suppliers as well as shareholders of
Woolworths. The alteration in the contextual dimensions like changes in the technology, which
Woolworths adopts that is automated technology as well as alteration in the strategies for
example Woolworths also changes the food strategy to provide more satisfaction to the
consumers, this strategy influence Woolworth positively to the customers.
References

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