Present An Evaluation Of Case Of Woolworths-Myassignmenthelp.Com

Question: Discuss About The Present An Evaluation Of Case Of Woolworths? Answer: Introduction The Woolworths Limited is recognized to be largest Australian company that has its operations in various sectors such as supermarkets, liquor stores, petrol, poker machines and finance. The company is regarded to be the second largest company in terms of revenue in Australia. It has largest takeaway liquor retail outlets and gaming poker machine operators in Australia. The super marketing giant Woolworths is realizing largest share of its revenue from its poker machines that are mainly concentrated in low-income areas. The company is known to operate about 6 per cent of the electronic gaming machines of Australia (Yocam and Choi, 2010). However, there have been several campaigns in Australia recently demanding a ban on poker machines of the company operating in clubs and hotels as they are mainly targeting disadvantaged people (Peatling, 2012). As such, the present report aims to present an evaluation whether Woolworths should contribute operate gaming machines in the country by supp orting the arguments from agency and stakeholder theory from the perspective of a business consultant. At last, the board presents recommendation on whether Woolworths should continue operating gaming machines. Evaluation of whether Woolworths to continue operate gaming machines in Australia Woolworths Gaming Machines in Australia Australia is known to have most poker machines than any other country in the world and on average Australians is estimated to loss about A$11 billion on poker machines in clubs and hotels. The Australians are regarded to lose more on gambling as compared to any other nation such as the United States and New Zealand. The increase in gambling related problems of Australians is putting pressure on the government of the country to ban the poker machines. There has been several media articles published demanding a ban on the poker machines as it is killing on an average an Australian in a day. The retail giant of Australia Woolworths is recognized to operate about 5594 poker machines in about 93 hotels or clubs that provides the company approximately annual revenue of $835 million. The company operates its gaming machines in low-income areas such as Brimbank, Hume, Monash and Wyndham. Thus, the retail giant earning heavy revenues from countrys poorest regions through operating poker machi nes is being heavily criticized by the media (Knox, 2015). Evaluation of Woolworths to continue operate gaming machines in Australia or not by supporting from Agency and Stakeholder Theory Woolworths is presently having the recognition of biggest poker machine owner in Australia that is in contradiction to its socially responsible company image and thus can negatively impact its growth and development in the long-term. The poker machines of the company provide it revenue of about $300 million from its pubs and clubs in areas with low average incomes. The media articles in Australia are emphasizing on the fact that gaming machines owned by the company are mainly targeting poor people of the country. Thus, local government is now putting cap on the number of poking machines being provided by the offer of pubs and clubs in country. The Woolworths is being heavily criticized by the media as people are not able to purchase food and groceries at its store due to their money lost on its poker machine (Hatch and Low, 2016). In addition to this, the companys owned poker machines are mainly located in the poorest regions and thus targeting mainly disadvantaged people. This is be cause living close to pokies venue drive poor sections more to gamble and thus impacting their lives largely. Therefore, more pressure is put on Woolworths to stop its contribution in operation of poker machines for securing low-income people from gambling problems (Peatling, 2012). In this context, agency theory can help in resolving problems that arise due to contradictions between the goal and desires of the principal and agent. As such, the company is presently facing dilemma of continuing its investment in poker machine sector as it realizes largest proportion of its income from the respective sector. The agency theory can help the company executives to take a better decision in the present situation in support of its shareholders (Solomon. 2007). The company can face conflict in the present situation between the company executives and shareholders to continue its operations in the poker machine sector or not. This is because company executives may plan to divest its operations in the poker machine sector for achieving long-term growth while its shareholders for achieving higher profit can intend to invest more in the gaming sector (Knox, 2015). Thus, as such agency theory can help the company to handle the situation regarding different conflict of interest between the company executives and its shareholders. The problem mainly can arise in the Woolworths in the present situation due to issue with incentives. The problem can be resolved as per the agency theory in Woolworths by reforming the compensation structure. As per the agency theory, the company executives should sacrifice their own self-interest against the shareholders benefit. Thus, the company executives should act responsibly towards the shareholders by paying them higher dividends even if it negatively impacts their own profitability (Yocam and Choi, 2010). The media articles published in Australia demands Woolworths to appeal to every person in the country to avoid gambling. The Woolworths is thus facing major risk factor if it continues to operate in the pokies sector as it can negatively impact its profitability and growth in the long-term. The company can im plement the agency theory proposition for successfully divesting its business operations in the gaming machine sector. The company executives must take decision that promotes the sustainable growth of the company by sacrificing their own profitability and acting in favor of the shareholders. The executives should aim to realize complete support from its shareholders for achieving success in its major decision of divesting from the pokies machine sector (Knox, 2015). In addition to this, the stakeholder theory can also help the company to take decision relating to its operation in the gaming machine sector. The stakeholder theory seeks to address morals and values related to the management of an organization. As per the stakeholder theory, the company owns huge responsibility towards all its stakeholders such as government and local communities other than only shareholders. The companys stakeholders include all those people that are impacted by the business actions in either way (Solomon. 2007). Therefore, as stated by the stakeholders theory Woolworths should restrict itself from the activities or actions that negatively impact its stakeholder interests. The gaming machine sector of the company is having a negative impact on the well-being of the people living in low-income areas. Thus, as per the stakeholder theory the company should not continue its operations in the gaming machine sector for supporting the well-being of its stakeholders (Sing leton et al., 2012). The stakeholder theory emphasizes on conducting the operations of a business organization in an ethical way. It is important for a business organization to promote its sustainable growth and development by effectively meeting the diverse needs and demands of its stakeholders (Solomon. 2007). This need to be recognized by Woolworths as it has maintained and promotes its socially responsible image to its various stakeholders and thus has to conduct its operations morally and ethically. The poker machines of the company are mainly concentrated in the poorest suburbs thus driving the weaker sections of the society towards gambling and thus affecting their life. The heavy losses suffered by the gamblers due to poker machines are impacting the quality of their life. Thus, the company has to act strictly in this direction to reduce the losses suffered by the low-income areas from the gambling problems. The company should determine the limits for the gamblers before they start playing to red uce the monetary loss suffered by them at the initial stage. The company should strive to invest in other profitable sectors thereby to continue its present profitability and then should eventually withdraw from the poker machines sector (Singleton et al., 2012). Recommendation On the basis of the above discussion, the Woolworths Limited is strongly recommended to divest its stake from the gaming machine sector of the country. As provided by the theory of agency and stakeholder, the continuing operations in the poker machines can provide short-term profitability to the company but eventually will negatively impacts its long-term growth and sustainability. The company at the initial stage should place a cap on the offers it provides on its pubs and clubs on the poker machines that drives low-income people from playing it and thus they become addicted to gambling. Also, it should determine a limit for the gamblers primarily before the game begins so that loss suffered by the people from gambling can be reduced. Also, the company should research other business segments where it can match its profitability from the poker machine sector so that it can divest its business segment of gaming machine easily (Too close to home: people who live near pokie venues at ri sk, 2013). The federal government is also actively involved on putting restrictions on the gambling activities after its drawbacks for the disadvantaged people has been published in various media articles of the country. The strong emphasis in the country to ban poker machines is causing a demand to Woolworths to adopt strong actions towards reducing the gambling activities from its gaming machine sector. As per the agency and stakeholder theory, the company is obliged to maximize the interest of its stakeholders that also include the people from the poorest suburbs where the poker machines owned by the company are located. Therefore, it should take strong actions towards upliftment of the people suffering from gambling problems caused by its poker machines. This can include participating in the campaigns seeking to promote awareness among the people about the gambling problems. The company is known from the past to provide fresh food to the people and thus should promote the necess ity f staying healthy by avoiding gambling activities (Nick Xenophon and Andrew Wilkie demand federal reform of gambling laws, 2016). Conclusion Thus, it can be concluded from the overall report that Woolworths should not engage in business operations that are against its socially responsible image. The company is a leading retail giant of Australia that is recognized among the customers for providing fresh food through its food and groceries items. Though, it has invested in various business sectors such as petrol, liquor and gaming machines but it need to cat responsibly and ethically towards its customers for maintaining its goodwill in the market. The company should divest its stake in the poker machine sector as it is causing gambling problems among the poorest suburbs of the country. The poker machines are responsible for causing gambling addiction among the poorest sections of the society that is running the quality of their life. They are unable to purchase groceries and food from the supermarket due to the heavy losses suffered by them by the poker machines owned by the company. The Australian media has published var ious articles related to the need of putting cap on the gambling activities in the country by the federal government for minimizing the gambling related problems. The federal government is also acting strictly in this regard to save Australians from gambling activities. Therefore, continuing operations in the gaming machine sector by Woolworths can prove to be risky business and therefore it should divest its stake in this business sector. References Barrows, C. and Hing, N. 2012. Club Management Issues in Australia and North America. Routledge. Hatch, P. and Low, C. 2016. Poker machine reform raises stakes for Woolworths supermarket chain. [Online]. Available at: https://www.smh.com.au/business/retail/poker-machine-reform-raises-stakes-for-woolworths-supermarket-chain-20160721-gqb4qz.html [Accessed on: 10 August 2017]. Kingma. S.F. 2009. Global Gambling: Cultural Perspectives on Gambling Organizations. Routledge. Knox, M. 2015. Supermarket Monsters: The Price of Coles and Woolworths' Dominance. Black Inc. Nick Xenophon and Andrew Wilkie demand federal reform of gambling laws. 2016. [Online]. Available at: https://www.theguardian.com/australia-news/2016/jul/14/nick-xenophon-and-andrew-wilkie-demand-federal-reform-of-gambling-laws [Accessed on: 10 August 2017]. Peatling, S. 2012. Woolworths' pokies 'target low-earners. [Online]. Available at: https://www.smh.com.au/national/woolworths-pokies-target-lowearners-20120929-26sem.html [Accessed on: 10 August 2017]. Singleton, G. et al. 2012. Australian Politcal Institutions. Pearson Higher Education AU. Solomon. J. 2007. Corporate Governance and Account. John Wiley Sons. Too close to home: people who live near pokie venues at risk. 2013. [Online]. Available at: https://theconversation.com/too-close-to-home-people-who-live-near-pokie-venues-at-risk-20771 [Accessed on: 10 August 2017]. Yocam, E. and Choi, A. 2010. Corporate Governance: A Board Directors Pocket Guide: Leadership, Diligence, and Wisdom. IUniver