What are the principles of Corporate Governance? Explain.
The organizations are facing challenges in the business environment and the function of social responsibility means to facilitate and support the goal of the society. It is important for the organizations to apply the sustainable principles in the business. Woolworth is the supermarket chain in Australia and operates more than 965 stores all across the country and having more than 112,000 staff in distribution centers, stores and supporting the offices in order to provide the customers with quality services, convenience and value (Woolworths Online, 2016). The company understands the needs of the consumer and looking for simple, new ways to shop. The company has more than 3,500 stores all across New Zealand and Australia that span liquor, food, home improvement, hotel and general merchandise. The core business of the company is to provide financial and retail services to middle and upper income groups. The company main focus is to provide quality products to their customers and focusing on policies, development and educate opportunities, recognition and reward programs, providing balanced work life and career opportunities (Elliott and Elliott, 2008).
The corporate governance of Woolworth is to enhance the value of the shareholder and protecting the funds of the shareholders. The company is committed to ensure that the practices and policies is implemented in critical areas of remuneration reporting, financial reporting and meeting the high levels of compliance and disclosure. The organization requires that all the senior executive, employees and directors should act responsibly and ethically all the times (Epstein and Lee, 2011). Woolworth is governed by the board of directors and is elected by the shareholders of the company.
It is the responsibility of the board to create value and implementing strategies to meet the goals within the framework. The board of director has established committees in order to exercise its responsibility for the corporate governance and the activities of the company. The committees are Nomination Committee, compliance, risk management and audit committee (Fifield and Power, 2011).
The board committee includes the key responsibilities, roles, membership and composition that are provided in the statement. The main role of the board is to serve and represent the interest of the shareholders. The structure of the board includes majority of non executive directors and providing necessary depth of experience and knowledge to meet the objectives and responsibilities of the board. The board recognizes different skills, experience and backgrounds represented among the directors which are important to ensure the effective governance and decision making (Holton, 2012).
The code of conduct is applied to all senior executives, employees and directors and setting out other things. It confirms the standards of integrity, fair dealing and honesty with all the employees and enhancing interaction with suppliers, community, customers and competitors. The code of conduct and the range of activities and programs all across of the organization designed to encourage and promote the accountability and responsibility for the individuals for unethical and reporting practices (Kieso, Weygandt and Warfield, 2011). The board has established the committee for sustainability in order to monitor the actions of management and decisions in achieving the goals of the company. The culture and diverse is essential for the success of the company.
The audit, risk management and compliance committee play an important role to provide assistance and advice to board in relation to governance framework of the organization which includes internal control systems and risk management, compliance systems and policies, accounting practices and policies, external and internal audit functions as well as financial reporting of the company (Kieso et al., 2010). The responsibilities of the committee are as follows:
The risk management committee performs the functions in order to assist the board to oversee the system of the risk management of the company. The review of the effectiveness of the initiatives and policies will help to determine the materials risks of the company (Kimmel, Weygandt and Kieso, 2007). Reviewing the disclosures in corporate governance in relation to management and recognition of the material business risk is the main role of the risk management and also the effectiveness and adequacy of operating, accounting and administrative controls use by the company. The risk management department reviews the material risk which includes exposure of the fraud of the organization (Sharma, 2010). The role of risk management committee is to review the adequacy of the provision for compensation of the workers, general insurance and public liability. The monitor of the changes expected for the business and economic environment.
Corporate social responsibility is one of the most important strategies that have been adopted by the company. With the implementation of the CSR, the company had been able to create goodwill in the society. With the help of the CSR it has been possible to create a positive sense in the society (Spiceland, Sepe and Nelson, 2011). The different ventures that they have been applied by Woolworths have been able to bring about a global recognition of the company. The different CSR attempts that have been done by the company are as follows-
With the help of the CSR ventures the company is able to create great reputation among the people of the world. So it is evident that Woolworths is maintaining an efficient CSR strategy to gain goodwill among the people (Winters, 2008).
The company of Woolworths believes in gaining the trust of the customers. This is done by acting responsibility and doing the proper thing for the people. Not just the customers but the company also maintains a good relation with the suppliers as well. The company is dedicated towards upholding the human rights (Wolf, 2008). The ethical sourcing policy revolves around comprehensive criteria of anti-corruption, fair and safe working conditions labor rights and environmental compliance. Woolworths is a participant of the United Nations Global Compact and the Ethical Sourcing Policy revolves around comprehensive parameters of human rights, anti-corruption and environment. The ethical sourcing policy respects and associates all related conventions of the international labor organization and the principles of the United Nations universal declaration of human rights (Zopounidis, 2008). The strategy aims to communicate a clear set of requirements for the suppliers and work with them to enhance the working conditions for the workers and to protect the corporate reputation as well as trust in the brands. It is expected that suppliers respect and fulfill with the criteria that is set out in the policy and they will continue to work with the assistance of the suppliers that demonstrate continual improvement.
Woolworth positively influences the chain of retail supply in order to reduce the carbon foot print and sustainability. The company is the leaders to make the trucks, stores and other facilities less energy and greener. The targets of the company are to reduce the carbon emissions from the stores by 40 percent by 2015 that means the emissions would be same in the year 2015. The current progress of the company is to reduce the carbon emissions (Zopounidis, 2008). The company has implemented innovative technologies in existing and new stores in key areas of air conditioning and lightening and refrigeration. The organization depends on logistic networks to transport groceries and food to the customers all around the country. The target of the company is to reduce 25 percent in the carbon emissions delivered by the company (Elliott and Elliott, 2008). As retailer providing fresh food is the aim of the company and making sure that the producers and farmers are using the water and the stores also uses the water efficiently. Woolworth is the largest recyclers of the materials in the country and diverting more than 262,000 tomes of materials from the landfill.
The conflicts within the Woolworths Company come to the sight when investigating the annual report of the company. The board identifies its accountability to ensure that there are apt policies in place to control the confidentiality of price sensitive data as well as ensure that the person do not benefitted by the inside information (Epstein and Lee, 2011). In order to mange this , the firm has inside traders as well as price sensitive data policies in term of are more restricted compared to the requisite by the JSE listing needs. The conflict of the interest policies need the senior management for declaring details of their firm’s interest as well as confirmation that they are in compliance with the needs of the conflict of the interest policy (Holton, 2012).
Conclusion
The Woolworths Company provides great effort to the sustainability of the company. The company provides great emphasis on developing effective CSR Strategies in order to mitigate the environmental, social, and legal issues, that help in making the company environmental friendly, social friendly as well as legally Compliance Company. The conflicts of the company can be minimized by the effective management strategies that help in minimizing the issues of the company.
References
Cinnamon, R., Helweg-Larsen, B. and Cinnamon, P. (2010). How to understand business finance. London: Kogan Page.
Elliott, B. and Elliott, J. (2008). Financial accounting and reporting. Harlow: Financial Times Prentice Hall.
Epstein, M. and Lee, J. (2011). Advances in management accounting. Bingley, UK: Emerald.
Fifield, S. and Power, D. (2011). Managerial finance. [Bradford, UK]: Emerald.
Holton, R. (2012). Global finance. Abingdon, Oxon: Routledge.
Kieso, D., Weygandt, J. and Warfield, T. (2011). Intermediate accounting. Hoboken, NJ: John Wiley & Sons.
Kieso, D., Weygandt, J., Warfield, T. and Kieso, D. (2010). Intermediate accounting. Hoboken, N.J.: Wiley.
Kimmel, P., Weygandt, J. and Kieso, D. (2007). Financial accounting. Hoboken, NJ: John Wiley.
Sharma, N. (2010). Business finance. Jaipur, India: ABD Publishers.
Spiceland, J., Sepe, J. and Nelson, M. (2011). Intermediate accounting. New York: McGraw-Hill Irwin.
Stittle, J. and Wearing, B. (2008). Financial accounting. Los Angeles: SAGE Publications.
Warren, C., Reeve, J. and Fess, P. (2005). Financial & managerial accounting. Mason, Ohio: Thomson/South-Western.
Winters, D. (2008). Managerial finance. [Bradford, England]: Emerald.
Wolf, M. (2008). Fixing global finance. Baltimore, Md.: Johns Hopkins University Press.
Woolworths Online. (2016). Woolworths Supermarket – Buy Groceries Online. [online] Available at: https://www.woolworths.com.au/ [Accessed 26 May 2016].
Zopounidis, C. (2008). Managerial finance. [Bradford, England]: Emerald.
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