Woolworths Case Report: Analysis of Business Strategies and Structure

This report provides an in-depth analysis of Woolworths, a leading supermarket in Australia. It examines the company's background, mission, and strategies, including its competitive advantages and organizational structure, which is characterized by a decentralized approach with responsibility centers. The report highlights Woolworths' commitment to environmental responsibility, including recyclable packaging, sustainable sourcing, and environmental awareness initiatives. It also explores the company's performance measurement and reward systems, particularly the role of the people performance committee in setting remuneration policies for employees, with a focus on both fixed and variable components tied to Key Result Areas (KRAs). The report concludes by emphasizing the importance of effective strategies, organizational structure, and environmental responsibility in driving Woolworths' success. The report also covers competitors, responsibility centers, and provides a literature review on environmental responsibility, performance measurement and rewards, and non-financial aspects. Appendices are included to provide additional details.

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WOOLWORTHS CASE
REPORT
Accounting, Behavior and Organization
Student’s Name:
Institution:

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Executive Summary
The report examines Woolworths’ organization beginning with the introduction, the background of the
company and its competitors. In the report, it is established that Woolworths adapt decentralized approach
in its organizational structure. The reason is to shorten the line of command and allow services be
efficient in serving customers through creation of responsibility centres. Additionally, the company is
compliant with environmental responsibility and champions the course through the use of recyclable
packaging materials, source products through certified suppliers and advocate for environmental
initiatives through awareness. The performance measurement and rewards is another aspect examined and
Woolworths use people performance committee to come up with remuneration policies for its employees.
The remuneration of the executive and executive directors is set into fixed and variable remuneration
which can be through a short-term incentive plan (STIP) or long-term incentive plan (LTIP). The
executive and finance director get the remuneration calculated at the highest percentage of a fixed
remuneration and is the subject attainment of Key Result Areas (KRAs) of the company as well as a non-
financial. It is recommended that best strategies, the best organizational structure, and environmental
responsibility are key in the processes that lead to success.

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Table of Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Company Background.............................................................................................................................4
Mission....................................................................................................................................................4
Strategy...................................................................................................................................................4
Competitors.............................................................................................................................................4
Competitive Advantage............................................................................................................................4
Organizational Structure..............................................................................................................................4
Responsibility Centers.............................................................................................................................5
Literature Review - Environmental Responsibility......................................................................................5
Performance Measurement and Rewards.....................................................................................................7
The Non-Financial Aspect.......................................................................................................................8
Recommendation.........................................................................................................................................8
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9
Appendices................................................................................................................................................10

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Introduction
Woolworths is a supermarket that has captured a larger market share in Australia irrespective of
the fierce competition experienced. The leadership role in this sector of business is attributed to well laid
and executed strategies. The organization besides many other strategies is cognizant of environmental
responsibility. It is with this view that the report examines Woolworths beginning by the company
background and followed by its strategy, the competitors, organizational structure, responsibility centers,
environmental responsibility, performance measurement and rewards, recommendation and end by giving
a conclusion.
Company Background
Woolworth is an organization based in Australia with its head office in Melbourne. It is a leading
company in retails business operating as a supermarket. The organization has grown as penetrated the
Australian market and has built retail stores that are spread across Australia (Woolworths group, 2018).
Mission
The mission is to deliver the best products at the conveniences of their customers as well as
ensuring quality products and services.
Strategy
The organization’s success in Australia is due to the used business and corporate strategies. In the
utilization of business strategies, the organization has differentiated its products with the aim of capturing
all segments in the Australian market. It is evidenced by the categorization of its product and services to
different sections. Additionally, the organization has a strategic marketing technique that permits
penetrate the market with ease. On the other hand, corporate strategy gets employed by skillful
engagement with corporate responsibilities and sustainable environmental principles (Woolworths group,
2017).
Competitors
Woolworths irrespective of its market leadership, it has rivals in the same market. The competitor
in the second position rivaling Woolworths is Coles followed by Wesfarmers and ALDI, Distributor,
Safeway, Giant Eagle, Carrefour, Metro, and Supermercato24 in that order respectively (Woolworths
group, 2017).
Competitive Advantage
The organization uses pricing and product range strategy; and creation of new products with
better experience which is a competitive advantage for the organization.
Organizational Structure
This is an arrangement of a line of authority in a hierarchical manner in which shows the lines of
command and communication flow. It specifies how roles, duties, powers get assigned, coordinated and

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controlled (business dictionary, 2018). Woolworths adopts a decentralized type of organizational
structure. The degree of decentralization is divided into three lines. The organization uses the
decentralized system as is shown in appendix 4 in which the process of making the decision get
distributed to various sections. The reason for using a decentralized system is to reduce the complexity of
the system and make it simpler for serving customers effectively (Topic 6 Lecture slides, 2018). Also
with this approach, communication flows freely to and from the concerned parties for efficient delivery of
services (Topic 6 Lecture slides, 2018).
The organization employs a market-based approach. In the approach, every section has their own
specialized area of operation and distinct from other sections of the organization (Topic 6 Lecture slides
2018). At Woolworths, there is a supervisor in every section. For example supermarket and General
Merchandise section (Topic 6 Lecture slides, 2018). Every division has are capable and responsive to the
need of customers. There are two divisions that are segmented so that there is the improvement in the
management as well as specializing in the services or products for the customers. The director
supermarket has two managers, one responsible for supermarket and the other responsible for Mercury
program. And the director general merchandise has two general managers, one responsible for electronics
and the other responsible for Big W (Topic 6 Lecture slides, 2018).
Responsibility Centers
As per Topic, 6 Lecture Slides, (2018) responsibility centers are units that have been
decentralized so that the management can be accountable for its operations. Woolworths uses profits
centers where take charge of the revenues as well as the costs of that specific work unit. For example, the
general manager electronics is taking care of profits and expenses that are related to this unit. Alos, the
general manager Big W is responsible for costs and revenues associated with this unit. There get assessed
based on their capabilities to manage revenue, expenses and improve performance (Topic 6 Lecture
Slides, 2018)
Literature Review - Environmental Responsibility
The concern for the environment has become an essential component of everyday life and
individuals as well as businesses have a responsibility of making sure that the environment is taken care
of for the benefit of all human beings (Parsa et al., 2015, pp.250-260). As per Jo, Kim, and Park (2015),
the concept of environment began in the early 1980s when there was a call for conservation of the
environment in order to protect the ozone layer. The focus was on enlightening people on deforestation
since human work was heavily destroying the environment. Over time, this focus has shifted to business
entities because it came to the realization that consumption of energy cuts across and hence calls for
greener utilities of energy (Cai, Cui and Jo, 2016, pp.563-594).

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According to Hansen, Nybakk, and Panwar (2013), a large part of a commitment to sustainable
environment begin from the inside of the organization and these touches on shaping the principles of
operation beginning with the employee as an individual. The neutrality of carbon is now becoming an
aspect considered in businesses and it has now become the norm for businesses to offset the emissions of
carbon (Welford, 2016). Additionally, businesses opt to adopt environmental sustainability in their supply
chain. This is possible through adopting environmental friendly means and working with suppliers who
are also using environmentally friendly techniques (Orsdemir, Hu, and Deshpande, 2016). The uses of
greener methods in now a sustainable means of strategizing in order to make the company into the future
since these options are cheap and sustainable.
In the business world, environmental sustainability involves making decisions that have the
interest of keeping the environment. Even though critics may argue that this is not the role of businesses,
there are valid reasons that support environmental sustainability for businesses (Baumann-Pauly et al.,
2013, pp. 693-705). The impact and risks on business’s operations are low, there are implications of
penalty in future for not acting now, augments efficiency and reduces expenses and create a competitive
edge for business (Mack, 2013). Additionally, environmental sustainability is now a strategic means of
differentiating from the rivals in the competitive market. It is because a larger number of customers are
becoming sensitive to environmental sustainability and associates themselves with green products (Hart,
2017).
Woolworths is an organization that takes environmental issues at the heart of the business and
therefore the organization has adopted environmental sustainable strategies (Arli et al., 2013). The
organization has improved on the brand packaging recyclability with the aim of reducing non-recyclable
materials and hopes to eradicate polystyrene in the near future (Woolworths group, 2017). Additionally,
the organization has a plan to introduce recycling instructions that are clear and user-friendly so as to
protect the investment for both the suppliers and the organization. Woolworths is also cognizant of forest
protection and it is with this that they are sourcing, protecting people as well as reducing the impact on
the environment (Woolworths group, 2017). Also, the company is creating awareness through Good Egg
Guide initiative on the importance of sources sustainable products. The organization is a member of the
net zero deforestation campaign and the organization is committed to sourcing high impact commodities
like palm oil among others from certified independent supply chains (Ward, 2014). In addition, the
organization is committed to reducing the carbon footprint to 10% in response to the Paris Agreement. In
order to attain this, Woolworths is going to employ science-based targets in assessing the influences of a
two-degree world, as well as look at the applicability to the organization (Woolworths group, 2017).

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Performance Measurement and Rewards
The responsible section for the remuneration regulations are people performance committee.
They also acts with the advice of the remuneration advisors. The strategies of remuneration at the
organization get focused on the delivery transformation of business. Appendix 2 gives different
remuneration components that are in the framework. The remuneration of the executive has their
components structured such that they are rewarded in a progressive manner across the different time
frames as is shown in Appendix 1. The period over which the remuneration get delivered and awarded is
shown. The executive remuneration gets weighted with variable remuneration in order to ensure that there
is a focus on attaining the company’s transformation objectives as is shown in Appendix 3(Woolworths
Annual Report, 2017).
The people performance committee and the remuneration advisors are responsible for making
policies of remuneration in the organization and additionally ensure they make the remuneration of the
non-executive directors, senior executive as well as executive directors. The committee is charged with
the responsibility of revising the remuneration policies from time to time such that they are in line with
the companies objectives for the purpose of being consistent with the market competition, consistent and
in line with the roles played by each employee (Woolworths Annual Report, 2017).
The Woolworths remuneration is structured in terms of Total TFR, STI as well as LTI. The TFR
is set based on the prevailing market in consideration of the size, role’s complexity, and roles of an
employee, the skills as well as the experience. The STI is based on the performance of an individual; the
business and the get employed to give proper pay differentiation. The LTI is made such that it gets
aligned with the long-term performance of the organization and follows the drivers in business and the
return of shareholders (Woolworths Annual Report, 2017).
As per Woolworths Annual Report (2017), food and endeavor drink’s sales were strong and this
is attributed to price, service investment for the last eighteen months and the renewal programs. The sales
lie between the target and stretch for the year 2017. In the examination of Earnings before Interest and
Tax (EBIT), the performance went above the hurdle but did not reach the target which is attributed to
improvement in sales and stock loss that was counteracted with the competitive pricing. Moreover, EBIT
for Petrol and Hotels businesses was strong and that of Endeavour Drinks was in line with the sales.
There were trading challenges that were offsetting the results in BIG W. The results of working capital
were on top of the stretch and this is because of inventory improvement that was seen in good
improvement in average inventory realized by all the businesses (Woolworths Annual Report, 2017).
The inclusion of safety in the incentive program refocused the safety efforts. This has resulted in
the improvement of safety across the group as the concentrated on physical as well as the physiological
safety of the Woolworths team. This has led to great improvement in safety that has resulted in

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enhancement of performance stretch. The outcome is 20% improvement in TRIFR as well recording 29%
in LTIFR (Woolworths Annual Report, 2017).
The remuneration of the executive and executive directors is set into fixed and variable
remuneration which can be through STIP or LTIP. The executive and finance director get the
remuneration calculated at the highest percentage of a fixed remuneration and is the subject attainment of
KRAs of the company as well as a non-financial component and weigh 70% financial and 30% non-
financial. The KRAs are measures like EBIT, sales, ROFE, and the CODB.
The Non-Financial Aspect
On the non-financial aspect, the KRAs comprise safety, food safety compliance and reduction in
employee turnover rates in which all targets get set at the start of the year and deliver results at the end of
the financial year. This shows that the organization is cognizant of the safety of the employees, those
around and the environmental concerns. It is apparent in the corporate social responsibility where the
organization has championed to care for the environment by adopting green techniques as well as
advocating for better ways of reducing carbon footprint by recycling waste materials through good
techniques to reduce landfills and pollution of the environment (Woolworth's shareholder review, 2017).
Recommendation
In order to be competitive in the market, it is paramount to employ best strategic in business.
Adapting the best organizational structure permit the company to recognize different responsibility
centers for easy management. Additionally, environmental responsibility is key in the process of making
decisions and also in curving a niche which customers can easily identify with n the competitive market.
Moreover, it is important for the company to have best performance measurement and rewards in order to
motivate the employees to work towards KRAs.
Conclusion
Woolworths’ environmental responsibility, performance measurement and rewards and
decentralized organizational structure make the company stand amongst its competitors in the retail
business. It is through this and coupled with penetration and marketing strategies that it will continue to
remain at the top of the Australian market.

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References
Arli,V.,Dylke, S.,Burgess, R.,Campus, R.,& Soldo, E. (2013).Woolworths Australia and Walmart US:
Best practices in supply chain collaboration. Journal of Economics, Business & Accountancy Ventura,
16(1).
Baumann-Pauly, D., Wickert, C., Spence, L. J., and Scherer, A. G. (2013). Organizing corporate social
responsibility in small and large firms: Size matters. Journal of Business Ethics, 115(4), pp. 693-705.
businessdictionary, (2018). organizational structure. Available from:
http://www.businessdictionary.com/definition/organizational-structure.html [Accessed 13 May 2018]
Cai, L., Cui, J. and Jo, H., 2016. Corporate environmental responsibility and firm risk. Journal of
business ethics, 139(3), pp.563-594.
Hansen, E., Nybakk, E. and Panwar, R., 2013. Firm performance, business environment, and outlook for
social and environmental responsibility during the economic downturn: findings and implications from
the forest sector. Canadian journal of forest research, 43(12), pp.1137-1144.
Hart, T., 2017. The role for the personnel practitioner in facilitating environmental responsibility in work
organisations. In Greening People (pp. 185-198). Routledge.
Jo, H., Kim, H. and Park, K., 2015. Corporate environmental responsibility and firm performance in the
financial services sector. Journal of business ethics, 131(2), pp.257-284.
Mack, M. (2013). A sneak peek into Woolworths’ strategy. Available from:
https://www.supermarket.co.za/SR_Downloads/S&R%202013-9%20September%20Africa%20focus.pdf
[Accessed 13 May 2018]
Orsdemir, A., Hu, B. and Deshpande, V., 2016. Ensuring corporate social and environmental
responsibility through vertical integration and horizontal sourcing.
Parsa, H.G., Lord, K.R., Putrevu, S. and Kreeger, J., 2015. Corporate social and environmental
responsibility in services: will consumers pay for it?. Journal of retailing and consumer services, 22,
pp.250-260.
Tran, Q. and Tian, Y., 2013. Organizational structure: Influencing factors and impact on a firm. American
Journal of Industrial and Business Management, 3(2), p.229.
Ward, M. (2014). Woolworths brings back ‘Fresh Food People’ positioning in first brand campaign from
Leo Burnett. Available from: https://mumbrella.com.au/woolworths-brings-back-fresh-food-people-
positioning-brand-campaign-leo-burnett-243805 [Accessed 13 May 2018]
Welford, R., 2016. Corporate environmental management 1: Systems and strategies. Routledge.
Woolworths shareholder review, (2017). Woolworths Limited. Retrieved from
https://www.pc.gov.au/inquiries/completed/executive-remuneration/submissions/sub091-part2.pdf
woolworthsgroup, (2017). 2017 Corporate Social Responsibility Report - Woolworths Group. Retrieved
from https://www.woolworthsgroup.com.au/icms_docs/189425_corporate-responsibility-report-2017.pdf

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woolworthsgroup, (2018). The Woolworths Story. Available from:
https://www.woolworthsgroup.com.au/page/about-us/The_Woolworths_Story/How_We_Were_Founded/
[Accessed 13 May 2018]
Appendices
1. Remuneration Paid to Executives

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2. Remuneration Structure

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3. Remuneration Framework