Sustainability Strategy for Woolworth - Term Paper Example

Summary Every company has negative or positive impact on people and environment. Larger companies have greater impact to people and environment. Woolworths is one of the leading retail companies in Australia with several brands (Woolworths Limited, 2007, P. 2). It has been in existence for almost 90 years since their first in the year 1924 establishment in Sydney’s Pitt Street (Woolworths Supermarkets, 2013). Due to their size all their stakeholders anticipate them to participate in environmental sustainability. Its major brands include Woolworths, Caltex and Woolworths Petrol, Safeway, Dick Smith Electronics, Tandy, PowerHouse, BWS, BIG W, Dan Murphy’s, Countdown, Foodtown among others. It has retail stores in almost all major cities in Australia as well as New Zealand. It has more than 3, 000 stores, distribution centers, petrol stations and administration offices. By the end of the year 2006 Woolworth had 2,707 retail stores and has an ambitions extension plan to have about 3, 557 stores by the end of the year 2015. Woolworths influences the lives of countless people both directly and indirectly. It has about 320, 000 shareholders, supplies 180, 000 employees and serves about 21 million customers every week (Woolworths Limited, 2007, P. 7). Activities of such a huge company is expected to have multiple impacts on people and environment Sustainability involves all aspects of conducting business. Successful business like Woolworths have to ensure is meets their needs as well as those of their customers without undermining the ability of the future generation to meet its needs. Sustainability strategy is therefore a multifaceted aspect. Contents Summary 1 Contents 2 2 Introduction 3 Sustainability strategy for Woolworths 4 SWOT Analysis 5 Impact of integrative approach on the future of Woolworth 10 Integrative approach and competitive advantages 12 Recommendation 14 Conclusion 15 References 16 Introduction Sustainability strategy ensures that a company engages in environmentally and people friendly activities in their manufacturing, distribution and procurement processes while still being able to maintain its competitive advantages. Most companies are embracing the concept of sustainable development (D’Amato, Henderson and Florence 2009, P.1). That helps to protect the company’s capital base, human resources and environmental resources sustainable development involves implementation of production and trade approaches and activities that ensure that a business maintain competitive advantages, acquire the targeted market share, satisfy the desires of their stakeholders while still defending, protecting, supporting and improving all its stakeholders and natural environmental resources thus ensuring that this resources are still available for future generation (The International Institute for Sustainable Development, Deloitte & Touche and the World Business Council for Sustainable Development, 1992) To achieve sustainability and economic growth has been an uphill task or most of the company (The International Institute for Sustainable Development, Deloitte & Touche and the World Business Council for Sustainable Development, 1992). Sustainability strategy must be aligned with business strategy and be integrated in the day to day company’s activities. Sustainable development ensures competitive advantages due improvement in the management, employees’ motivation, strong performance measurement tools, proper allocation of resources as well as good organization structure. It is clear that sustainability have a great impact on business (Berns at el, 2009, P.2). This report will analyze Woolworth’s strategic activities, SWOT analysis, the impact of integrated and offer recommendations to ensure their sustainability over a long period of time. Sustainability strategy for Woolworths Large companies like Woolworths limited come up with organizational plans, goals, management structures, organizational culture and technology that ensure sustainability (The Strategic Management Society, n.d.). Sustainability increases competitive advantage of a company. According to (The International Institute for Sustainable Development, Deloitte & Touche and the World Business Council for Sustainable Development (1992), most people seem to believe economic growth attribute to enormous environmental degradation and stern environmental laws and policy slow up economic growth. Most companies are therefore reluctant to allocate sufficient resources for environmental sustainability. Woolworths limited has established a framework that supports sustainability. Their sustainability strategy is implemented by Sustainability Executive Committee (SEC) (Woolworths Limited, 2011, P. 2). SEC ensures that sustainability strategy is implemented on the right time at a fair cost. Other employees that participate directly in sustainability are sustainability champions who manage the required changes in collaboration with Eco Ambassador. Woolworths seven years sustainability strategy from the year 2007 to the year 2015 is in line with government focus, customers attention and business responsibility to climatic changes thus their major focus is environmental conservation and waste reductions. In addition Woolworths are committed to its people who include supplies, customers, employees, shareholders and community. It’s committed to providing quality products to its customers; provide health, motivating and safe workplace for their staffs and conserving environment for the community. Woolworths is expected to respect the rights of is suppliers, employees and support the local communities. In the year 2004 Woolworths established Woolworths Australian Communities Foundation (WACF) to oversee their charitable activities through the support of its employees, customers and suppliers (Maseeha and Indu, 2008, P. 13). As a result of drought conditions of Australia, Woolworths has been supporting farmers since they are the main supplies of their fresh products. Woolworths has also been providing breakfast for school going children from less privileged families. Their Fresh Future Appeal and Big Heart community programmes has been supporting children’s hospitals to save the lives of ill children (Maseeha and Indu, 2008, P. 13). Its commitment to healthy community is supported by who adhere to international standards as well as their Woolworths Quality Assurance standards (WQA). To achieve environmental sustainability and social responsibility there is need to analyze how the company uses its resources, its business models and business environment. SWOT Analysis SWOT analysis is a management tool that helps to evaluate external and internal factors that affect a company and influence their profitability and sustainability. Internal factors are the company’s strengths and weakness while external factors are opportunities and threats (Dessler n.d., P. 79). Internal factors can be controlled by managers and directors while internal factors cannot be managed within the company since their effects cuts across different business (Downey 2007, P. 5). External factors include economical forces, political activities, technological factors, government regulations and competition (Strategic management insight 2013). Woolworths’ Strengths Employees Woolworths has more than 195, 000 employees (Woolworths Limited 2012, P. 5).Their employees have been supportive in their charity work. For instance the Woolworths Australian Communities Foundation (WACF) was established in the year 2004 with the support of their staff as well as customers and suppliers (Maseeha and Indu, 2008, P. 13). In the year 2007 Woolworth’s employees contributed funds that were channel to support 41 organizations through their Employees Matching Award Scheme (EMAS) (Maseeha and Indu, 2008, P. 13). Each year employee also supports programmes that support children’s hospitals and sick children. Woolworth has established teams of employees who are committed to their sustainability strategy. These employees are Sustainability Executive Committee (SEC), People Policy Committee, Safety and Health Executive Committee, Eco Ambassador and external professional and expert that advises the board members on environmental issues (Woolworths Limited, 2011, P. 2). Woolworths has also trained its employees on the energy saving behaviors such as switching of the air conditioner and bulbs when not in use Assets Woolworths operates more than 3000 stores, offices, hotels, petro stations among other facilities (Woolworths Limited, 2011, P. 7). Currently the company has introduced energy saving refrigerators, lighting system and air conditioners. 35 stores in Australia have also been fitted with energy reclaim systems that save energy. Their stores also use T5 lighting system that saves up to 90 percent of lighting energy (Maseeha and Indu, 2008, P. 8). From the year 2008 their new developments have been constructed under new energy saving guidelines. Most of their offices have water storage tanks to conserve water rain water and recycle that can be used for irrigation, car washing and toilet flashing. In their transport and distribution system, Woolworths had to redesign their trucks to use less harmful fuels and minimize their travel distance (Maseeha and Indu, 2008, P. 9). The gas fueled trucks produced less harmful gas. Their transport system used to consume a lot of fuel and in return emit carbon dioxide to the atmosphere which causes global warming. Concentration of CO2 in the atmosphere causes a rise in temperature, high temperature leads to melting of ice causing a rise in sea level. High temperature also makes the ocean to release CO2. This means that reduction in the amount of CO2 release to the atmosphere can have a huge impact on prevention of climatic changes. Any effort by Woolworths to reduce harmful emission has great impact on the environment. Woolworths has also introduced reusable creates that reduce wastage of wax and also minimize waste (Woolworths Limited, 2007, P. 24). Policies Woolworths has strong regulation and policies that ensures it delivers quality products to its customers. All their suppliers have to adhere to international and national standards as well as the Woolworths Quality Assurance standards (WQA) in their manufacturing, production, packaging, safety and cleanliness of their products (Maseeha and Indu, 2008, P. 15). Products The Woolworth Limited is committed to providing healthy products to its customers by ensuring their supplier meet the Woolworths Quality Assurance standards (Maseeha and Indu, 2008, P. 15). Their slogans implies that they supply fresh products to its customers at lower prices (Hassan Uddin and Bahauddin , 2012). Woolworth’s weakness Lack of consultation Woolworths has a huge number of stakeholders who include employees, customers, suppliers and shareholders. In the decision about sustainability the Group sustainability managers felt that she have sufficient data and information to guide her in drafting the seven year strategy without consulting the employees, customer and the surrounding communities who are expected to be the beneficiaries of the projects (Woolworths Limited 2011). Engaging the employees Involving all the stakeholders is a management strategy that creates a sense of ownership among all the involved parties. Involving all employs is key factors that promote motivation, equality and innovation (Woolworths Limited 2011). External factors- PESTEL analysis These are factors that cannot be controlled by the organization since they operate over a large area and affects all the business in that sector. The company can therefore adjust their strategy to take advantage of positive environmental factors while avoiding the negative factors. The external factors are analyzed using PESTEL analysis or SWOT analysis. External factors are both opportunities and threats (Downey 2007, P. 6). External factors include political stability, economic prevailing conditions, social, competition, cultural background, legal policies technology use and environmental factors. Other factors include interest laws, labour laws, money transfer rates, health laws, customers needs, environmental laws, use of technology (Duggan 2012). According ( Goi, 2009) to strategy should is affected by products, distribution channels, promotion and pricing strategy Opportunities Technology Australia is a developed country with high technology equipment. Woolworths was able to modify their trucks and cars to use natural gases as compared to fuel that produces harmful gases. This couldn’t be possible if the country does not have the natural gases fuelled engines (Maseeha and Indu, 2008, P. 9). The company has also been able to manage their supplies through global electronic marketing and merchandising network this has helped to reduce communication cost, use of printing paper, limited movement and there reducing cost. This help to reduce waste, carbon emission and thus sustainability. Retail market Australian retail market has been growing at an alarming rate and new companies are introducing completion in the market that has been dominated by few players (Ryan 2013). Woolworth is the leading supermarket but facing competition by international companies and other retail shops. Woolworth should take advantage of its current position as a market leader to support environmental sustainability and community charities in order to retain its customers who benefit from their community based projects. By supporting the farmer who produces fresh food the company also support its slogan on fresh food (Martec international 2008). Threats Competition Woolworths is currently facing stiff competition from international retail stores, small retail stores and online stores (Ryan 2013). Competition is beneficial to the customers who due to low prices, community supports and environmental sustainability. Impact of integrative approach on the future of Woolworth Integrated reports improve overall performance of the company. It helps the company to analysis both internal and external factors affecting the company. The company identifies its strengths and opportunities and uses them to improve its services delivery in a competitive environment. The company’s weakness are also indentified and eliminated while the threats are avoided. Sustainability may not have short term profits to Woolworths but future benefits on the business in regard to governance, mission and vision, organizational culture and ethics, organization external environment, competitive advantages, employee satisfaction, allocation and protection of resources and customer satisfaction cannot be underestimated. The reporting helps the company identifies its organization structure and focus on how to improve the company’s governance. Organization operations are based on their ethics, culture, management structure, external environment, products and competitions (Bekefi, 2008, P.2). Sustainability strategy ensures that an organization creates, support and preserve ethical practices in all its operations. The company management must evaluates is remuneration strategy, individual employees skills and talents and how the organization culture is reflected in services delivery. Australian retail market currently has many players including new international company. Woolworths risk losing its market share is its stakeholders are not satisfied. The integrated reporting will help Woolworths improve its management structure and support is employees who in turn will offer excellent services to its customers. The top managers have embedded environmental sustainability and community development in their day to day learning of the company. Sustainability improves the organization governance since resources are used effectively with the interest of all the stakeholders (Bekefi, 2008, P.2). Woolworths will be able to effectively use its resources such as strong workforce, policies and assets to improve its services delivery to its customers. Integrated report helps to analyze the company’s opportunities and risks such as quality of the products, availability of suppliers, purchasing power of the customers, market conditions, competition, government policies in regard to environment, labor rights and licensing, Woolworths management do not have control over opportunities and risks but they can take advantages of the current opportunities such as market share and advanced technology in Australia. The reports also help the company to develop a strategic plan. The plan helps to identify the long term, short term and medium term goals and develop ways to measure the achievement in regards to its goal. Organization resources are channeled towards achieving organizational goals, implementation of the strategy as well as meeting the needs and rights of its stakeholders by providing quality products to customers as well as promoting development and empowerment of the employees (Bekefi, 2008, P.2). The organization also allocates resources for community economic development projects as environmental conservation. The integrated reports help to measure the organization performance in regard to short term, medium term and long term goals. Sustainability is a long term goal and Woolworths should focus on achieve its long term goals of saving water, reduced carbon emission and energy conservation. Successful companies should understand current internal and external factors. the company’s management should also predict the future business environment and come up with a flexible strategy to ensure its success in future. Woolworths operates in unpredictable environment that is likely to attract new competitors. Integrated reports will help Woolworths develop a strategy that will ensure future success of the company. Sustainability also focus on improving economic performance of the company by increasing profitability thus the shareholders are fairly compensated for their investment while the capital resources are protected (Bekefi, 2008, P.2). Integrative approach and competitive advantages The overall goal of any organization is to be the market leader in their area of specialization. Woolworth’s strategy is to remain the market leader despite of the stiff competition from other retail stores. To maintain a competitive advantage, an organization needs to integrate sustainability with their business strategy by developing an integrated report. Organizations that engage in isolated and unplanned environmental and community sustainability activities do not benefit fully since sustainable business activities should focus on long term goals of the organization (Deloitte, 2010, P. 18). Effective sustainability is integrated into daily operations of the organization through a business strategy. Sustainability ensures integration of three aspects in an organization that include environmental, social and economical. The environmental aspects ensures that an organization support environmentally friendly activities. Woolworths should support green suppliers, use minimum energy and minimum waste. In the social aspect Woolworth should ensure well being of all its stakeholders and support economic development of the community. In return the organization reduces management cost and gains support from its customers, suppliers, employees, shareholders and the surrounding community. These increase its competitive advantages. Woolworths should ensure that its operations are in line with sustainable supply and demand chains, use of technology and loyalty to regulation to increase its competitive advantages. Woolworths serves more than 28 million customers per week (Woolworths Limited, 2011, P. 7). Therefore their strategy is to attract customers by offering fresh, health, and quality product to its customer at an affordable price. This can be achieved by changing their business model and source their products from green (The International Institute for Sustainable Development, Deloitte & Touche and the World Business Council for Sustainable Development, 1992, P. 2) .The business model is called Everyday Low Prices (Woolworths Limited, 2007, P. 2). Australian people are also weight and health conscious. Most people prefer fresh food with less fat, easy to prepare and organic foods and there their business strategy is to meet the needs of the people it serves (Hassan Uddin and Bahauddin , 2012). Integrated reports helps to improve organization structure, its governance, its strategic plan, understand its opportunities and risks, its resources allocation, performance analysis, business model and predict the future business environment. This will benefit the company in ensuring that it aligns its day to day activities to their short term and long term goals. Recommendation Woolworth is huge company and their business practices affect environments, its people and the surrounding community. To ensure sustainability Woolworth’s strategy must focus on people, environment and profitability. Its development and expansion activities have led to emission of harmful gases in the air, climatic changes, global warming, destruction of natural resources, displacement of people and water flow. Their business activities have also led to overcrowding of people in same area, CO2 emissions and landfills through waste material. Woolworths must therefore invest its resources to environmental activities and supporting its people. This will ensure business sustainability over a long period. It must develop an integrated report that involves all the business elements such as its resources, opportunities, weaknesses, performance analysis, organization structure, culture, ethics and values as well as its organizational goals. To ensure sustainability Woolworths must align its day to day activities with their business sustainability strategy through integrated reporting. Woolworths should actively involve all its stakeholders in decision making process. Employees are important company asset and therefore the company should develop a proper remuneration strategy, involves them in decision making process and promote diversity in terms talents and skills. Insist on selling only eco friendlily products and source their products from suppliers who are compliant with their Woolworths Quality Assurance standards (Maseeha and Indu, 2008, P. 15). The company should also disengage suppliers who disrespect labor laws, environmental laws, health standards and other international laws that support human rights. Conclusion Woolworths is a major retail company in Australia that focuses on the three major aspect of sustainable development that includes community, environment and profitability. It strategy is to ensure it meets the needs of its people using the available resources without undermining the possibility of future generation to meet its need. Development of integrated report is a multifaceted activities that involves analysis of internal and external factors and using the analysis to develop a strategy that ensure sustainability activities are integrated into daily activities of the company. Woolworth’s management has recognized that sustainability is the only way to ensure it remains competitive in a dynamic environment. However there it needs to develop plans that ensure its sustainability strategy is integrated in the day to day operations of the organization. It has been involved in environmental conservation, reduction of harmful gas emission and community development. There is need to invest more resources in environmental conservation and community project since their huge size have greater impact on the environment. For any leading company to maintain its competitive advantage in a dynamic environment with new entrants who may offer their products at lower prices, the company must have a comprehensive strategy that involve all aspects of conducting business. 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