HI5015 Legal Aspects: Woolworths, Regulatory Impact & Trade Treaties

This report provides an analysis of the regulatory framework affecting Woolworths Limited, a major retailing chain in Australia and New Zealand. It identifies and discusses the impact of various Australian government policies such as corporation tax, food safety regulations, consumer law, and goods and service tax (GST) on the company's business operations and financial performance. Furthermore, the report evaluates the influence of international treaties, conventions, and agreements, specifically the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) and the Bilateral Free Trade Agreement (BFTA) between New Zealand and India, on Woolworths' products and services. The report also touches upon Woolworths' strategic investments, such as the acquisition of Danks Holding Limited, and their implications for the company's market position and product diversification.

0Running head: WOOLWORTHS LIMITED
Legal Aspects of International Business and Enterprise

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Table of Contents
Introduction................................................................................................................................2
Woolworth Limited....................................................................................................................3
Regulatory Framework Affecting the Company........................................................................3
Impact of Regulatory Framework on Woolworth......................................................................4
Impact of Treaties, Conventions, and Agreements on Woolworth Limited..............................6
Conclusion..................................................................................................................................8
References..................................................................................................................................9

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Introduction
Organisations are required to comply with various domestic and international regulations
while operating their business in multiple countries. The regulatory framework affects the
business of multinational corporations and its operations. This report will analyse the
regulatory framework of Woolworth Limited; it is one of the largest retailing chain in
Australia and second largest in New Zealand. The company was founded in 1924, and it
operates in the retailing industry. Further, the report will evaluate the treaties, conventions or
agreements in Australia that influence the business of Woolworth Limited.

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Woolworth Limited
Woolworth limited is world’s 19th largest retailing chain, and the stores of the company are
situated in more than 992 locations. Mainly, the corporation operates in Australia, New
Zealand, and India; the firm’s head office is situated in Bella Vista, Australia. Woolworth
limited is known for its competitive pricing products and high-quality customer services; the
company provides value and specialised facilities to diversified customers relating to
wholesale products (Raghuram and Kuberkar, 2008). The company is governed under the
chairmanship of Brad Banducci and Gordon Cairns; Banducci is also the CEO of the firm.
There are more than 202,000 employees in the company from which 197,000 work in
Australian stores whereas around 5000 are employed in other Woolworth stores situated
worldwide (Woolworth Group, 2017).
Woolworth limited operates in multiple sectors including hotel, liquor retailing, departmental
stores, and supermarkets. The financial position of the company is solid that assisted them in
expanding their business throughout Australia and New Zealand. The products and services
offered by the company focus on improving the living standard of its customers and
maximising stakeholders’ value (Lyons, 2007). The competition in the retailing industry has
proliferated due to globalisation and digitalisation; Woolworth has gained a competitive
advantage over its competitors because of competitive pricing and large market share.
Regulatory Framework Affecting the Company
Woolworth limited is constantly innovating and evolving its products and facilities to fulfill
the requirement of customers and finding new methods to address the market challenges. The
company operates as per its regulatory framework. The retailing industry changes rapidly as
per the market and customers’ requirements; nowadays, consumers prefer more choices and
affordable products in great quality. Woolworth serves more than 21 million customers in a
week. Therefore, the company requires that each of its vendor and supplier comply with legal
obligations and responsibilities (King, 2014). A code of conduct enhances the reputation of
Woolworth because the company can achieve its organisational goals through ethical, legal
and moral standards. However, several regulatory frameworks influence the business and
operations of the company.

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The frameworks varied from company to company in the retailing industry. The regulatory
framework is required to be followed in various areas relating to health, safety, trade
practices, food safety, privacy, environment, and responsible handling of alcohol. The
corporation is required to supply its products and facilities as per the conditions established
by the industry. The Woolworth limited and its vendors are required to analyse and fulfill the
requirements provided by the retailing industry. Many of the regulatory framework
provisions affect the operations, and financial performance of Woolworth limited in the long
run (Hollander, 2006). There is a significant amount of diversity in the retailing industry
based on area, nature of products, format of the sector, the level of competition and the
products and services that are produced and sold. In recent years, the firm has met multiple
challenges that are linked to rules and regulations of the retailing industry.
The performance, structure, and efficiency of the firm operating in the retailing industry have
become a barrier for the economic contribution in Australia. As per government regulation,
the Australian retailers are obligated to share their products and facilities with the foreign
counterparts. As per the directions of the Australian government, the retailing industry is
required to establish safety standards for the protection of life and health of the people
(Business, 2017). Many tax regulations influence the business of the corporation. The
government has implemented various taxes and duties on the retailing industry that creates
both advantage and disadvantage for the firm based on the conditions in which it operates.
Impact of Regulatory Framework on Woolworth
Following are the policies implemented by the Australian government that influence the
business of Woolworth limited:
Corporation Tax: The corporation tax influence the corporation’s development and
investment within an industry. This tax imposes on the net profit on a corporation hence it
reduces its investment opportunities. A high rate of corporation tax reduces corporation
revenue which decreases its investment opportunities, and it allows local competitors to
expand their business in the industry. The current corporation tax rate in Australia is 30
percent, and companies are required to pay such amount on their marginal income (Australian
Taxation Office, 2017).
Food Safety Regulation: The Australian government requires corporations to comply with
food safety standards to ensure that their good and services are as per the safety requirements

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to protect customers’ welfare. The food safety regulations apply to the retailing industry
because they sell consumer products and services (Hobbs, 2010). Woolworth limited
provides its services through supermarkets and departmental stores that offer a variety of
consumer food products. Therefore, the company can increase customers’ trust by effectively
complying with the regulations of food safety.
The Food Standards Australia New Zealand (FSANZ) provides a code of practices for
corporations operating in the industry to address various problems relating to food safety. The
standards require companies to sell environment-friendly products and services instead of
products that are hazardous for customers’ health; the corporations that failed to comply with
the safety regulations are forced to pay the penalty. Recently, Woolworth limited has to pay a
fine of $3 million for selling unsafe consumer products, and it reduces company’s
performance and revenue (The Australian, 2016).
Consumer Law: The consumer law ensures that contracts are created based on fair rules and
regulations that focus on protecting the customers from unsolicited agreements, product
safety, and penalties. The national statutory framework of the Australia has a significant
impact on its economy because it encourages retailers to ensure that their products and
services are not harmful to consumer health and environment. The Australian Competition
and Consumer Commission (ACCC) is authorised to impose these standards on corporations
(Richards, Lawrence, Loong and Burch, 2012). Woolworth limited is also required to comply
with the consumer law provided by the country. However, the company follow a strict code
of conduct that ensures the protection of the welfare of customers along with other
stakeholders.
The company ensures that its policies and strategies comply with the consumer laws because
noncompliance can have a negative impact on the performance and success of the firm. In
2016, a fine of $3.057 million has levied over Woolworth limited because it failed to comply
with the standards of safety and health provided by the government. Therefore, lack of
compliance with regulatory framework can reduce customers’ trust in a corporation.
Goods and Service Tax: The Australian Government introduced Goods and Service Tax
(GST) in 2000. The functions of Woolworth limited directly influence by the GST because it
affects its revenue and expenses. Currently, the rate of GST is 10 percent in Australia, and it
imposes directly on consumer products and retail sector (Australian Taxation Office, 2017).
The introduction of GST is beneficial for retailing corporations because it strengthens the

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strategies relating to customer product and services. The high rate of GST reduces tax
expenses for corporations from different areas such as service and real estate, and it ensures
that companies perform in an effective manner. GST reduce issues relating to value chain by
the implementation of uniform tax rates.
Impact of Treaties, Conventions, and Agreements on Woolworth
Limited
Woolworth limited in one of the largest retailing company in Australia, the company enter
into new agreements and contracts to expand its business. The company offers its services
and products in areas of Australia, New Zealand, and India, therefore, the agreements and
treaties between these countries have a significant influence on Woolworth’s business. In
1983, Australia and New Zealand entered into an agreement to bring economic relations
closer called ANZCERTA or CER which stands for Australia New Zealand Closer Economic
Relations Trade Agreement (Elijah and Leslie, 2013). The agreement allows corporations to
trade between the countries freely and it builds the foundation for the development of both
countries economic and trade association; the agreement help strengthen both countries
treading relations through common valuable development (Lockie and Higgins, 2007).
The agreement has a direct influence on Woolworth limited because the compliance and
transaction expenses for products has been reduced which resulted in higher revenue and
significant progress. The quantitative restriction on the offering of products has been
removed due to the elimination of tariffs which resulted in maximisation of market distortion
and eventually assist the company in satisfying a large number of customers’ requirement
(Wright and Grace, 2011). The elimination of trade barriers drastically changes the products
offered by Woolworth; the company has increased use of technology in the production
process because the cost and duties of transportation have been reduced due to the agreement.
Therefore, the quality of products has been increased which enables the company to satisfy
its customers and expand its market share.
The Bilateral Free Trade Agreement (BFTA) between New Zealand and India has assisted in
the expansion of economic cooperation between both countries (Aggarwal and Urata, 2013).
This agreement has a considerable influence on the retailing products of Woolworth limited;
the demand for products has increased between both countries because of the low cost of the
products. The quantity of manufacturing and trading of products has increased between the

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countries which positively influence the investment opportunities for the corporations. In
2009, Woolworth limited invested $24 billion in entering into the hardware sector; the
company enter into a contract to acquire ‘Danks’ in order to expand its operation in the local
sector. Danks Holding Limited deals in building supplies and hardware products, and it is one
of the largest hardware retailing corporation in Australia (Greenblat, 2009).
Woolworth limited focuses on establishing a multi-format strategy to improve the daily
requirements of customers. The contract has increased the corporation’s opportunity to
deliver and distribute products as per its customers’ requirements. The progress of
Woolworth in home expansion, consumer and hardware products increases the corporation’s
retailing capabilities, technology, and skills. Despite the adverse economic condition,
Woolworth limited decided to diversify their business and invest in a business which
provides high competition in the retail sector (Durie, 2009).
The decision affects Woolworth’s other operations as well because the amount could be
invested in improving the quality of existing products. The profitability and market position
of a company is influenced by significant amount of investment in the new sector. The firm is
now dealing with diversified products and facilities of the different retailing sector. The
agreement of expansion benefits customers because it increases the number of product
choices for them. This contract has also assisted in reducing the resource allocation of
producing other consumer products and facilities. Therefore, entering into new industry
increases and develops the corporation’s productivity but it also hampers the quality of
existing products of the firm.

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Conclusion
To conclude, several factors influence the retailing industry in Australia and customers’
preference. Woolworth limited has acquired a substantial amount of retail market in
Australia, however, the regulatory framework established by the government require to
business to meet specific standards. The regulatory framework ensures that products of the
firm are not hazardous for customers, and they are environment-friendly. The Consumer law,
GST, Food Safety regulation, and Corporation tax are few of the regulatory frameworks that
influence the business and policies of Woolworth limited. The company expands its business
by entering a new market through new agreements and contracts. The new contracts and
agreements also influence the existing products and services of the business. The agreements
focus on maximising shareholders’ value and increasing market share of the company.

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