Analysis Of Woolworths Limited: Looking Beyond National Boundaries

Background and Introduction

Question:

Discuss About The Looking Further Beyond National Boundaries?

There are a number of large scale retail chains in Australia and Woolworths Limited is one of them. This organization grew from a simple street-side store to one of the largest organizations in Australia. The reason for using this particular organization as a case study for this research is that Woolworths has been successful in Australia for quite some time now and is now looking to grow further beyond the national boundaries.

In this report, an analysis has been conducted on Woolworths Limited and different aspects of business operations like new accounting system and software acquisition packages have been explored.

The chosen organization for the analysis is Woolworths Limited, which is a one of the largest retail supply chains in Australia. Woolworths began with just one single street-side store where all the business operations were performed manually. With exponential growth over the years, the company is currently the largest retail supply chain in Australia and one of the largest in the world (Arli et al., 2013). With the growth in the business, the organization structure also increased rapidly in order to manage all the complex business operations. The current organizational structure at Woolworths is reflected in the following picture.

The current director of the company is Robert Corbett who also presides over the role CEO of the company. He is advised by the directors’ board that consists of Adrienne Clarke (Non Executive Director), Roderick Deane (Non Executive Director), James Strong (Chairman), Diane Grady (Non Executive Director), Leone L’Huiller (Non Executive Director) and John Astbury (Non Executive Director) (Lawley, Birch & Craig, 2016). Under the director’s board, there is the management board where all the management officials have been appointed in different roles namely Chief GM Project Refresh Stage 3, Director Supermarkets, Chief Logistics and Information Officer, GM Human Resources, Chief GM Freestanding Liquor and Petrol, Director General Merchandize & GM Big W, Chief Financial Officer, GM Property, GM Corporate Services and GM Business Development. All the management board members preside over their own departments and the subordinates work under them.

Analyzing the entire organization structure, it can be said that company might face some operational problems during the course of the business operations. The first main problem arises from the fact that there are an excess number of officials in the management team. There is a large number of general managers in a large number of departments that may result in internal conflict between the managers. There are some unnecessary general manager posts that could have been avoided by integrating some of the smaller departments (Ali & Soosay, 2015). Although the company has created this number of posts to simplify the duties of each of the managers as well as reduce the internal operation time, some of the duties of the general managers often overlap, resulting in conflicts of ideas. Again, the company has appointed a large number of non-executive directors who are poised to provide advices to the director and CEO regarding policy making and planning of projects and operations. As they are not directly linked with the regular executive operations, their duties are to analyze the operations and different factors related to the business of the company and suggest suitable planning and changes to the director. However, due to a large number of officials on the same role, there will be conflict of ideas that can be both beneficial and harmful (Devin & Richards, 2016). More diversity in ideas will allow the director to choose the best option whereas too many ideological differences will not bring the best and the most feasible solution to the director.  Another problem identified in the organizational structure is the communication system. Due to the existence of too many departments, most of the time, one department is not able to communicate with others. Moreover, the internal operations portal often crashes due to the simultaneous online activities of all the departments. These communication errors often cause significant problems in the operations of the company. Finally, the most significant problem in the current organization system is the unavailability of any suitable system acquisition method. In the current system, all the acquisitions and data entries are done manually. Hence, the process is slow and many errors occur during the process. Hence, these issues must be addressed immediately in order to maintain the growth of the company.

Organizational Structure

There are a number of system acquisition methods that can replace the existing manual operations. These acquisition methods are driven by suitable softwares and are extremely efficient in handling all the data without producing any errors. There are two main advantages of these acquisition methods – the manual errors are removed and the operation time reduced significantly. There are a number of system acquisition methods and the most suitable one that will aid Woolworths is ERP (Enterprise Resource Planning) (Juan Ding et al., 2014). ERP is very helpful in integrating all the business processes in one system and hence, it can be a very useful tool for a company like Woolworths where there are a large number of departments with a large number of managers in overall. With the implementation and use of the ERP system, all the servers will be integrated into one with all the departments working in one common portal. In order to implement security of each of the departments, each department will have separate sub-servers that will be connected to the one common server (Ariyawardana, Ganegodage & Mortlock, 2017). If a user from one department needs to access the system of another department, he will need to verify his identity and then he will be allowed to enter into the system. Another advantage of the implementation of ERP is that it will reduce the need of the physical storage spaces and the ERP creates the common database in the online interface i.e. the cloud.  

In the above diagram, the system flowchart of sales at Woolworths has been shown. According to the picture, the initial sales process starts with adding the price tags and identification number in form of bar codes to the products. After this, the bar codes are scanned and the product listing automatically enters the sales database for keeping record of the inventory. After that, the shoppers visit the store and select the products of their choice. When the products are chosen and the shoppers find them affordable, they will proceed to the counter for payment. At the counter, the attendant will scan the bar code of the product that will display the amount needed to pay on the screen. Also, this will automatically update the inventory by checking out the product from the stock. After the payment process, the attendant will close the payment window in the computer screen as it will record the received amount and update the financial record accordingly. However, the problem with the existing system at Woolworths is that, these processes are executed under different database servers. Hence, a lot of internetworking needs to be applied in order to bring continuity within the operation of business entries and records. The application of the ERP system will provide integration into one common database where all the details of inventory and payments will be processed automatically.

Operational Problems

There are certain problems in this system as due to lack of sufficient monitoring of the entire system. As there are a number of departments working together including the sales department, the inventory department and the human resources department, there is no sufficient monitoring of the system. As a result, even if there are errors in one particular department, it is carried over to the other without anyone controlling and solving the issue. For instance, if by mistake, the stock is not updated properly, the inventory records after a purchase are also not updated accordingly. Hence, even if a customer cannot find a particular product, it will show “AVAILABLE” in the company database. This will cause dissatisfaction among customers. The main reason for occurrence of this error is that there is no one to control this problem and find suitable solutions.

According to Rajabian Tabesh, Batt and Butler (2016), adoption of accounting software packages are extremely essential for the organizations that are looking to grow beyond the limits of one particular country. The researchers argued that the accounting softwares completely eliminate manual errors as every accounting operations are done by the computer in the virtual storage interface. Moreover, the process is also extremely time efficient and reduces the operation time of the system. However, adoption of the accounting software packages require significant amount of budget and hence, the organizations should plan ahead and take suitable steps for implementing a development project for accounting software packages.

Jie, Parton and Chan (2015) said that owing to globalization of commerce, the current market size is huge. Moreover, most of the large organizations are pushing their business limits to other countries as well, resulting in the increase in competition in the market. Woolworths is a retail chain company and even a few years ago, the market size of retail chains was limited to a few cities only. However, as these organizations including Woolworth are venturing outside the country as well, the market size is constantly growing. Having a reputed brand value also aids this process significantly.

According to Sullivan and Gouldson (2017), the competition in the retail market in Australia is constantly increasing with a number of large sized companies are joining the market. Initially, there were separate small and medium size organizations that dealt with the retail market. However, owing to the success of Woolworths, numerous large organizations are also opening retail chains. The leaders in retail chain in Australia include Coles, Amazon Australia, Alibaba Group, David Jones, Dyson and Metcash to name some. All these companies are flourishing in the Australian market and most of them also ventured into other countries to gain access to the international market. These companies gain competitive advantage because of budget efficient implementation of suitable information systems as well as accounting softwares resulting in very efficient handling of the business operations.

System Acquisition Methods

The main challenge faced by the users of accounting softwares is the cyber security issue. Since the entire operation in the software is hosted online, it is vulnerable to the external cyber security attacks (Richards, Kjærnes & Vik, 2016). Moreover, there is the challenge of lack of sufficient intelligence of the software. Efforts have been made by researchers recently to integrate artificial intelligence in the accounting softwares to gain even more efficiency from the system. It is recommended that the users should implement security softwares before the use of the accounting softwares to protect the transaction details and financial data from external and unauthorized users.

Conclusion

In this report, the existing business system of Woolworths Limited has been analyzed in order to identify the problems arising from the organizational structure of the company as well as other issues related to the business operations. Moreover, the possibilities and advantages of implementation of accounting softwares and acquisition software packages have been analyzed. From the analysis, it has been found that Woolworths will benefit from both as it will give them sufficient competitive advantage in the market. Hence, Woolworths should consider replacing the existing system with the system recommended in the report.

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