Analyzing Woolworths' Corporate Responsibility Ethics and Governance

This case study delves into the unethical business practices of Woolworths, specifically focusing on their misleading conduct and failure to uphold consumer safety standards, which led to a $3.057 million fine by the ACCC. The report discusses how Woolworths neglected its responsibility to consumers by knowingly selling defective products, providing false information, and failing to report incidents or recall hazardous items. The analysis covers the company's lack of quality assurance, the impact on consumer trust, and the violation of Australian Consumer Law. Furthermore, the study explores ethical decision-making approaches, emphasizing the importance of prioritizing consumer safety and ethical conduct for sustainable business outcomes. Recommendations are provided to enhance product quality control, improve transparency, and ensure compliance with safety standards, ultimately aiming to prevent similar incidents and restore consumer confidence in Woolworths.

Running Head: Corporate Responsibility Ethics and Governance
Corporate Responsibility Ethics and Governance
Essay
System04104
1/21/2019

Corporate Responsibility Ethics and Governance
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Executive Summary
Woolworth is a popular supermarket giant in the Australian retail market. Woolworths is an
incorporated public company that is listed in Australian stock exchange. Woolworths is also
known for its largest retail supply chain stores in Australia. According to the market
capitalization and sales, it is one of the largest companies in Australia and New Zealand.
The company was found to be guilty of mislead and cheat Australian consumer in Feb 2016
by the ACCC and fined for $3.057 million for its unethical practices. This report is based on
the unethical business practices of the Woolworths. In this report it has been discussed that
how company avoided their responsibility towards the people even when they aware about
their defective products and false information. They even fail to notify such issue towards the
ACCC and also failed to recall their products from the market. The company also lack in
their quality assurance and control programs because it was also the failure of their 'product
quality and standards' department.

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Table of Contents
Executive Summary...............................................................................................................................1
1. Introduction...................................................................................................................................3
2. A brief history of the Organisation................................................................................................3
3. Discussion of the case....................................................................................................................3
4. Argument about the case..............................................................................................................4
5. Ethical Decision-making approaches and Theories........................................................................5
6. Recommendations.........................................................................................................................6
7. Conclusion.....................................................................................................................................6
References.............................................................................................................................................8

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1. Introduction
Woolworth is known for its retail business operations in Australia and one of the leading
supermarket retail organisations that deal in grocery, home appliances, furniture, and digital
products. This case is about the irresponsible and unethical behaviour of the company where
company represents the false information to its customers and mislead them about the
defective products that were sold to the customers (Knox, 2014). This report is about the
unethical and misleading business operations of Woolworths that cause injuries and hazards
to the customers. Further, the unethical practices of Woolworths along with a brief history of
the company have been discussed. In addition to this, a discussion is also included in the
report that represents how company mislead the customers by provide them false information
and why they fined by the Australian Federal court for such unethical practices. In the last
part of this report, several recommendations have been included that how can a company
avoid such problems and further a brief summary of the report discussed as a conclusion.
2. A brief history of the Organisation
Woolworth is one of the leading supermarket giants in Australian supermarket/grocery stores.
It was founded in 1924. Woolworths is operating its business along with Coles in Australia.
Woolworths and Coles almost form a Duopoly in the Australian Supermarket. Woolworths
specially deals in grocery stores and run more than 1000 stores across the country including
some convenience stores (ABC News, 2016). Woolworth mostly specialised in selling
groceries (such as vegetables, fruits, meats, packaged foods, etc.) but they also sell some
home appliances like DVDs, TV sets, furniture, stationery items, health & beauty products,
and other household products. The company also sells product on its private labelling and
brand on a cheap rate and also manipulate the prices of products because of its own
packaging and labelling on the products.
3. Discussion of the case
Woolworth was fined $3.057 million in the Federal Court by the Australian Consumer Law
for misleading consumers and sold them faulty and unsafe household brand products (Lai and
Becher, 2018). The Australian Competition and Consumer Commission (ACCC) took the
legal action against the Woolworths for misleading and deceptive behaviour of the company
with consumers and represents the wrong information about the five products- Homebrand
safety matches, Woolworths Drain clear which was sold under the company’s brand name,
Abode 3L stainless steel deep fryer, and chairs and masters folding stools.
These products were caused serious injuries to customers such as the deep fryer was reported
to burn the customer's hand with hot oil that spread because of product’s weak handle were
broken during the use. Many customers were burned because of this problem. Another
complaint was the defective cap on drain cleaner bottles that caused chemical burns including
to a young child. Apart from this, the Federal court found that the information prints on the
products were false and misleading customers. For example, the capacity of bearing the

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weight of padded flop chair was print 115kg but under testing, it was found that it could not
reliably support more than 92kg.
Woolworths also failed to notify these incidents to ACCC with the mandatory reporting
requirements because of these are the serious injuries and it was the responsibility of the
company to notify such issue to the ACCC and take corrective action against these problems.
Even they were aware of such problems but never took any action neither they report to the
respective authority about the incidents (Price, 2016). The Chairman of ACCC Rod Sims said
that Woolworths was found to be guilty to misled Australian consumers and did not care
about the safety of its consumers. The penalties imposed on Woolworths reflect its
misconduct and serious nature of the offence with the consumers (Thomsen, 2016).
4. Argument about the case
Consumer safety must be the first priority for any business organisation because if customers
are not satisfied with the business operation of a company, the company could not succeed to
earn profits or survive for the log time of period. Woolworths is one of the leading names in
Supermarket in Australia. However, misleading customers and placed their safety on risk is
not showing the responsible behaviour of Woolworths towards its customers (Grimmer,
2018). As one of the reputed brand in the country and supplier of goods and services to a
large number of the people, Woolworths should consider the following responsibility towards
their customers and society as well.
a. A business organisation must consider the safety of consumers after selling the
products and must provide them accurate information to their customers, but
Woolworth failed to do so. Although the Woolworths knew about the defects of the
products and injuries that causes because of these defected products, they ignored
these things and that displayed their irresponsible behaviour towards the customers. It
was totally a misconducted behaviour of the company (Vassilikopoulou, Siomkos,
and Souvlaki, 2018).
b. It was the company’s responsibility to provide accurate information to the
customers and must act or quickly investigates and remove the products from sale and
recall it if necessary. However, Woolworths failed to provide accurate information to
its customers and even they did not recall the defective products from the market even
they knew the problems and defective products and misleading information
(Haskelberg, et.al, 2016).
c. It was important for a company to ensure the quality of the products by an effective
quality assurance and control program that was consistently and regularly applied
in the organisation to ensure the product quality and customer safety. However,
Woolworths failed to ensure the safety of consumers because they lack in quality
assurance and control program.
d. It is also the responsibility of suppliers to confirm that house-brand goods have been
manufactured on the quality parameter and according to the product specifications in

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compliance with safety standards by applying relevant and basic quality control
measures and ensure inspections before pre-shipments and results must be scrutinised.
Apart from these safety concerns, the Woolworths should consider the product safety issues
and focuses on quality assurance programs that minimise such hazards and injuries. One of
the major causes behind the incident was that the company failed to identify the defects in the
early stages. If quality control measures and programs were well structured, then the
company can avoid such injuries and hazards and company was not imposed a heavy penalty
for such scandals. This incident not only affects the company's reputation rather it also left a
negative impact in the mind of its customers about its responsibility towards its customers
and people. If the company could frequently evaluate its quality management process and
procedures and educates the employees about their accountability and obligations under the
CCA, this incident might be avoided to happen (Kurnia and Schubert, 2018). However, the
store retailers of Woolworths were also responsible for these mistakes because if they care
the misleading information and raised their voices against such defective products, it might
be possible that problem might be avoided in its early stage. Although, from the above
discussion it can be said that company does not fulfil its social responsibility towards the
people in which company was operating their business neither they take corrective action
against the problem to which they already aware about. The irresponsible behaviour and
unethical conduct of business operation of Woolworth's cause customer dissatisfaction with
the products, consumer injuries and hazards with defective products and further a heavy
penalty by Federal court of Australia on such misleading behaviour of the company.
5. Ethical Decision-making approaches and Theories
Woolworth has been receiving criticism and condemnations from various groups in the
country due to its unethical practices. Most of the people know that Woolworths is known for
its extensive promotional and advertisement campaigns to promote their products. However,
this case shows the unethical behaviour of Woolworths towards its customers and misleading
them false information that causes several injuries and hazards to its customers. Ethics in
business is very important because if an organisation fails to fulfil its social responsibility and
not operating the business ethically and legally, it will not only dangerous for the people
rather it is dangerous for the survival of business organisation (Alm, Takeno, and Engelseth,
2016).
There are two types of decision-making approach under which the decision-making approach
can be explored- Descriptive and Normative Approach. A descriptive or positive approach is
a research attempt to understand the behaviour of an organisation. The descriptive approach
investigates the relationship between the organisation and its greatest influences in ethical
decision-making (Carrigan, Marinova, and Szmigin, 2015). However, the normative
approaches in decision making provide basic foundations for ethical decision making and
help in developing principles, values, and norms. The Normative approach of decision-
making focuses on what should be done to improve the ethical practices in the business
organisation. The normative approach of decision making also focuses on what kinds of

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marketing strategies ought to do, or what type of or marketing system a society ought to have
(Caner and Banu, 2014).
Stakeholders, especially customers or consumers have expectations that large firms will
behave ethically. In addition to this, it can also be said that ethical practice in business leads
to a sustainable business outcome. The safety of consumers should be on high priority by any
company and it must be considered here that Woolworths avoid the safety concern of their
customers (Phillipov, 2016). It was really unethical practice, which was done by the
company. Another example of unethical practices was that when company knew about the
product defects and injuries that happen because of the false information, Woolworths was
blamed that nor they informed the ACCC neither they take any corrective action against such
problems (Keeves, 2017). Woolworths was blamed to mislead customers with false
information and with defective products that caused customers injuries and hazards. Thus, the
company was responsible for such adverse things because of their false product planning,
poor quality control and assurance program, and failure of their Supply chain department to
ensure the quality of the product before dispatched it to the Woolworths retailers (Gellert and
Schalk, 2012). The Retailers were also responsible for not ensuring the quality of the
products. Thus Company lack in various areas of their business operations and breach the
rules of ethics and Australian consumer protection laws.
6. Recommendations
Customer safety should be a major concern for any company. If Woolworth takes the
following decisions regarding consumer safety and product quality, the company may avoid
such incidents and hazards of consumers.
1. Implementation of proper quality assurance and control programs to ensure the
product quality on set standards.
2. Should ensure that the product has been manufactured according to the product
specifications or not.
3. If the top management self-audited the quality management system of the company,
they can avoid such incidents.
4. Understand the social responsibility and their ethics that if they found anything wrong
then they should try to take corrective action to remove the problem or should call
back defective products from the market.
5. Awareness and Learning programs for both managers and employees must be
conducted on regular basis to provide them education about their obligations towards
the company and towards the customers as well.
6. The company should focus on re-check the product quality according to the given
product specifications and their safety standards to ensure customer health and safety.
7. Conclusion
Misleading consumers is one of the major offences in any business organisation. Woolworth
was accused of misleading its customers by providing them false information about the

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product and sold them bad quality products that caused injuries to the customers. The
company also avoided their ethics and avoided their responsibility towards the people and
even they know the problem but fail to notify it to the ACCC. This shows their unethical
behaviour and conduct. However, if they focus on product quality and safety standards they
may stop these problems when saved themselves to be fined by the court. This case also
shows that they lack in their supply chain process and not check the product quality and
standards before shipment of products to the retailers.

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References
ABC News (2016) Woolworths ordered to pay $3 million over safety of deep-fryer, drain
cleaner and other products [online]. Available from: https://www.abc.net.au/news/2016-02-
05/woolworths-ordered-to-pay-3m-over-product-safety-case/7144442 [Accessed:
21/01/2019].
Alm, K., Takeno, T. and Engelseth, P. (2016) Food Safety, Quality and Ethics in Supply
Chains: A Case Study of Informing in International Fish Distribution. The Crisis of Food
Brands, 26(8), pp. 75-94.
Caner, D. and Banu, D. (2014) An Overview and Analysis of Marketing Ethics. International
Journal of Academic Research in Business and Social Sciences, 4(11), pp. 151-158.
Carrigan, M., Marinova, S. and Szmigin, I. (2015) Ethics and international marketing.
International Marketing Review, 22(5), pp. 481-493.
Gellert, F. and Schalk, R. (2012) Age-related: Attitudes the influence on relationships and
performance at work. Journal of Health Organization and Management, 26(1), p. 98–117.
Grimmer, L., (2018) The diminished stakeholder: Examining the relationship between
suppliers and supermarkets in the Australian grocery industry. Journal of Consumer
Behaviour, 17(1), pp.e13-e20.
Haskelberg, H., Neal, B., Dunford, E., Flood, V., Rangan, A., Thomas, B., Cleanthous, X.,
Trevena, H., Zheng, J.M., Louie, J.C.Y. and Gill, T. (2016) High variation in manufacturer-
declared serving size of packaged discretionary foods in Australia. British Journal of
Nutrition, 115(10), pp. 1810-1818.
Keeves, J. (2017) Australian Competition and Consumer Commission v Reckitt Benckiser
(Australia) Pty Ltd (2016) 340 ALR 25. Adel. L. Rev., 38, p.503.
Knox, M. (2014) Supermarket Monsters: Coles, Woolworths and the Price We Pay for their
Domination [Online]. Available at:
https://www.themonthly.com.au/issue/2014/august/1406815200/malcolm-knox/supermarket-
monsters [Accessed: 21/01/2019].
Kurnia, S. and Schubert, P. (2018) Towards Achieving Customer Satisfaction in Online
Grocery Shopping: Lessons Learned from Australian and Swiss Cases [online]. Available
from:file:///C:/Users/System04104/Downloads/Towards_Achieving_Customer_Satisfaction.p
df [accessed: 21/01/2019].
Lai, J.C. and Becher, S.I. (2018) Protecting consumer protection. Victoria U. Wellington L.
Rev., 49, p.259.

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Phillipov, M., (2016) Helping Australia Grow: supermarkets, television cooking shows, and
the strategic manufacture of consumer trust. Agriculture and human values, 33(3), pp. 587-
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Price, R. (2016) Controlling routine front line service workers: an Australian retail
supermarket case. Work, employment and society, 30(6), pp. 915-931.
Thomsen, S. (2016) A really bad week for Woolworths just ended with a $3 million fine for
unsafe products [online]. Available from: https://www.businessinsider.com.au/a-really-bad-
week-for-woolworths-just-ended-with-a-3-million-fine-for-unsafe-products-2016-2
[Accessed: 21/01/2019].
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