The Global Social and Environmental Opportunities and Risks Facing Woolworths - Case Study Example

? The Global Social and Environmental Opportunities and Risks Facing Woolworths Supermarkets in the Next 10 Years Task The Global Social and Environmental Opportunities and Risks Facing Woolworths Supermarkets in the Next 10 Years Woolworths is one of the largest retail supermarkets in Australia (Surhone, Tennoe & Henssow 2010). Being such a large-scale retailer exposes it to a glut of corporate social responsibilities, social, environmental opportunities, and risks. Being consumer-facing serving lots of clients, and with products that are household brands and with numerous suppliers mean Woolworths has wide-ranging potential issues to address. On a global front, Woolworths needs to keep identifying risks and prospects that keep emerging as well as those already in existent. A noteworthy characteristic of the retail industry that Woolworths face is the rising intensity of competition and domination by few companies (Seth & Randall 2001). Therefore, accurate evaluation of social and environmental opportunities and risks is very critical to enable the company to adopt apposite strategic measures. Understanding of these opportunities and risks helps in establishment of effective growth policies and expansion plans or in a more threatening environment measures that pre-eminently upholds the current position or if need be, allows pull-out from markets. Understanding of future opportunities and risks also helps toshape how the management base their strategic decisions. This is because they need to balance and in consideration of other factors, they determine a realistic and sustainable direction to the retail business. Opportunities and risk analysis enables a retail chain, such as Woolworths, to identify the global markets and areas that are viable to open up new ventures and how exactly to take care of the needs of the clientele (Richardson & Williams 1995). In addition, they determine the allocation of resources.Opportunities and risks can be in any aspect of the company. They can be in skills and abilities of the employees, location and environment of operation, products and branding, financial and informational management. Social Opportunities and Risks One of the most noteworthy social opportunities is the global Woolworths Trust EduPlant programme (Burch & Lawrence, 2007). In collaboration with other organizations and educational institutions in several countries, for instance South Africa the programme sponsors and funds educational institutions in the growing of healthy foods in a sustainable system (Burch & Lawrence 2007, p 24). For over the last ten years, EduPlant programme has supported thousands of educational institutions to boost food security in the societies and to improve the nutrition of their students (Burch & Lawrence 2007, p 24). The programme runs annually and begins with an invitation to various stakeholders in the education sector to go for one day all-expense paid permaculture training.Those who are trained on various permaculture techniques become food security campaigners in their societies. They are then sponsored to grow food gardens that produce much-needed food for the schools within the communities. Land portions within the schools are converted into healthy greened environments and the trained educators are empoweredto share their permaculture skills with other members of the community (Burch & Lawrence, 2007). After the learning institutions have grown their gardens, they register them into a national competition. They continue to get support and guidance from trained permaculture specialists who visit the institutions and finally choose 63 finalists. All selected finalist institutions are awarded with cash rewards and environmental, health and agricultural resources. Further rewards- in both cash and resources are given to the winners of various other categories. This programme is a great opportunity to market and promote Woolworths and make it a great brand name across all generations as well as boost its corporate social responsibility regarding environment and the principle of giving back to the community. In addition, it helps to market and boost the sales in their grocery sections as well as other healthy alternative products. Besides, such programmes help to develop a positive perception of Woolworths as well to give the company publicised recognition and other benefits as naming rights (Bhatia, 2008). Woolworths, just like other retailers, depend heavily on employees as the main interface with clients (Seth & Randall, 2001). Therefore, customer care and relations are classified as important risk and opportunity. It is in the interest of Woolworths to collect as much information about their clients in different areas as they can so as to ensure that the products and services they sell are always meet the customers’ needs. All shoppers are potential clienteles to a retail chain such as Woolworths; nevertheless, the more apposite thing for management is the identification of a set of consumers who are prospective to become actual clients or buyers within their own outlet (Seth & Randall, 2001). These consumers may be categorized in terms of their geographical location. Retail chainsthat are aware of their clients and their wants and needshave a higherlikelihood to find retail formulas that are relevant to their customers. Hiring and retaining of the right employees is critical to ensure that this opportunity is fully exploited and the associated risks avoided. Responsible selling and ethical behaviour is also a noteworthy potential risk and to retail chains such as Woolworths ought to reflect the local community through their workforce (Anderson, 2011). For instance, when opening new retail outlets in a certain area, they must ensure that a sizeable percentage of the staff are members of the local community. One notable risk that is on the rise is insecurity and threat of terrorism. A report on various retail consortiums shows manufactured goods stewardship and safety is a great priority for many of the retailers. This includes safeguard against product misuse, cataloguing and end-of-life responsibility for goods. The variety of fears covered by product-related concerns is quite wide, with problems ranging from internet security to cell phone security to compounds in various products. Research indicates that various crime conferences held yearly, such as Action against Business Crime (AABC) and Retail Crime and Security conference have had the highest turnout, underscoring the incessant problem of crime against retail (Freund & Ornelas, 2010). During the conferences, various security innovationsin retail industries were revealed including Woolworths’ queue-bursting technology. The menace of terrorism has been growing over the last few decades. Due to the Australia’s stand and support for anti-terror campaigns, the terrorists could easily target her citizens and multinationals such as Woolworths. The government has on numerous occasions issued travel advisories against travelling to various destinations globally (Miller, 1992). This is a real threat and risk that retail chains, such as Woolworths, are dealing with currently and it is bound to escalate in the future. Environmental Opportunities and Risks Woolworths has excelled in various environmental programmes and has numerous opportunities to sustain these efforts. Woolworths has various key projects that have provided them with immense opportunities now and in the future. They include natural and free-range foodstuffs, healthy nutritionchoices, and conservation of environment, animal husbandry and welfare, water conservation, recycling of waste and improving packaging (Kotler, Fitzroy & Shaw 1980). They strive to support and practice environment friendly agriculturalmethods to the extent of making sure that the farmers supplying them with various products and goods shift to and practice ecologically sensitive agricultural methods and natural production techniques. Woolworths and its suppliers are committed to retailing goods that causes no harm to the environment in the manner they are produced, and they are collaboratingwith their suppliers to better farming methods. The biggest opportunity Woolworths face is in the field of farming; Woolworths have developed a new approach to farming called Farming for the Future (Hoover 2005). It is a pioneer all-inclusive approach to agriculture that is already yielding the intended results; that of helping farmers to cultivatehigh quality foodsbutstill safeguarding the ecosystems, conserving natural resources and decreasing reliance on artificialmanures, herbicidesand insecticides – altogether without increasing the retail prices of the products the customers pays (Burch & Lawrence, 2007). Essentially all aspects of the agricultural process are methodically and technically managed. Instead of depending onconventional practices and blind formulas, activities, such as irrigation or the use of artificial manures, are centred on real measurements and studies. Therefore, resources like water and fertilisers are only applied if and when necessary. According to Bhatia (2008), most recent research done on Woolworths’ fifteen biggest fresh produce farmers, who account for about 40% of Woolworths’ fruits and vegetable supplies, indicate: a twenty per cent decrease in the application of artificial fertilisers;upsurge of thirty-four per cent in compost use for every kilogram of produce farmed; a three per-cent rise in soil carbon content; reduction of water usage by about 720.9 million m3 in the past 3 years; an eighteen per-cent decrease in burning of fossil fuel; application ofecological pest control methods such as biological pest control, has caused a significant cut (by about fifty per cent) in the use of insecticides and herbicides, growth of biodiversity; and a thirty per-cent rise in recycling as well asa thirteen per-cent reduction in solid wastes dumped in landfills. Another future environmental opportunity is the palm oil project. In the Republic of South Africa, Woolworths was the first retail firm to join the global Roundtable on Sustainable Palm Oil (RSPO) (Richardson & Williams, 1995). The RSPO has established numerous guidelines collectively referred to as the Principles & Criteria whichoutlines the standards for ecologically friendly palm oil cultivation and processing. These guidelines describe the legal, commercial, ecological and social requirements of venturing into sustainable palm oil production. Woolworths, which utilizes six hundred tons of palm oil annually in its different goods, has joined the roundtable to support and increase awareness on the necessity for ecologically friendly palm oil production. This obligation comprises buying certified sustainable palm oil permits for the loads of palm oil utilized in Woolworths’products. By purchasing these palm oil permits the company is Woolworths is backing the RSPO plans to motivate major global palm oil producers, such as Indonesia and Malaysia, to join the noble cause of producers producing palm oil sustainably (Freund & Ornelas 2010). The company has affirmed to substitute palm oil with better eco-friendly alternatives wherever conceivableand has additionally devoted to utilizing only certifiedecologically-friendly palm oil by 2015 (Seth & Randall, 2001). Environmental pollution is one of the imminent risks that Woolworths faces in the future. International agreements and environmental declarations demand that protection of the environment be a central part of development. When environmental pollution becomes trans-boundary, the pollution can generate transnational externality and may need formal agreements among the affected countries. The risk that exists for the company is that in global trade, lax and weak labour laws and environmental pollution laws coupled to poor wages in some countries may give other global competitors an undue advantage, which may create an environment pollution effect. Another imminent risk is the threat of globalization, which has a significant effect on the environment in regards to pollution. Among the social and environmental costs of globalisation are environmental pollution and an ever-increasing gap between rich and poor countries. The company will have to pay more for the environment problems caused by other companies thus increasing the costs of operation. In conclusion, large retail chains such as Woolworths are faced with numerous future opportunities and risks due to the emerging trends and the ever-dynamic global business environment. The management will have to develop and adopt various dynamic and innovative measures to counter these risks and be keen to identify the emerging opportunities to maintain the profitability of the company. In addition, Woolworths must adopt various approaches to diversify their services to keep up with business on the global front. References Anderson, J.E., 2011, International Trade Theory. Viewed 12/10/2011: < https://www2.bc.edu/~anderson/PalgraveTrade.pdf> Bhatia, S.C., 2008, Retail management, Boston: Allyn and Bacon. Burch, D & Lawrence, G., 2007, Supermarkets and agri-food supply chains: transformations in the production and consumption of foods, London: Cromwell Publishers Freund, C. & Ornelas, E., 2010, Regional Trade Agreements: Blessing or Burden? Viewed 12/ 10/ 2011, Hoover, G., 2005, Hoover’s handbook of world business, Sydney: Hoover’s incorporated. Kotler, P., Fitzroy, P & Shaw, R., 1980, Australian marketing management, Essex: academic press. Miller, K., 1992, A Framework for Integrated Risk Management in International Business, Journal of International Business Studies, 23 (2), 311-331 Richardson, M & Williams, P., 1995, The law and the market. New Jersey, Pearson Merrill prentice Hall. Seth, A & Randall, G., 2001, The grocers: the rise and rise of the supermarket chains. Sydney: Routledge publishers Surhone, L. M., Tennoe, M. T & Henssonow, 2010, Woolworth’s supermarket. Sydney: Pearson Education Inc. Read More