MGT501 Business Environment Assignment On Internal and External Analysis of Organizations
Introduction and background information
Stakeholders can be comprehended as organizations, individuals or groups having concerns revolving around the activities of a business. Stakeholders can be categorised into internal or external stakeholders group, with each having a varied interest within a company. One can define internal stakeholders as individuals or groups in a business like employees, owners, shareholders and management having a vested interest in the company while external stakeholders, on the other hand, are groups, individuals or organizations outside of a company e.g. customers, creditors, suppliers, government, and society. Eskerod, Huemann & Savage (2015) The key purpose of business stakeholder analysis revolves around indentifying the stakeholders and getting their needs analysed with intent of developing and delivering a quality product in the very first attempt thus, creating a strategic view of the human and institutional landscape, and the relations amidst the different groups of stakeholders and issues cared by them most. During stakeholder analysis for determining to examine which stakeholder interest, qualitative information is collected. It has been observed that stakeholder analysis is important in determining all stakeholders’ interests who might impact or get affected by the business operations of Woolworths; possible issues that may give rise to disruption within the business; indentifying methods of reducing probable adverse impacts and managing the negative stakeholders, staying ahead of the competitors through stakeholder expectations anticipation in order to produce outcomes that are desirable. McMullan, et al., (2018)
Founded in 1924, with its headquarter in Woolworths – a large-scale supermarket chain, is a prominent name in Australian retailing industry covering a huge fragment of the complete industrial domain. Owned directly by Woolworths Group, Woolworths Supermarket has witnessed an exponential growth in overall scale of operations. Operating from 995 stores across Australia, Woolworths is the biggest supermarket chain in the country. For ensuring the availability of best and quality products to consumers, the retailer works in close association with the growers and farmers of Australia to source 96% of fresh fruit and vegetables and 100% fresh meat for establishing the brand Australia’s Fresh Food People. The specialities of Woolworths revolves around groceries – packaged foods, meat, vegetal and fruits besides the retailing of magazines, household products, pet supplies, and health & beauty products. Renowned as one of the most innovative retailers of Australia, comprehending the consumers look out for newer and simpler ways of shopping, an online store also has been initiated by Woolworths with intent of providing comfort and convenience to buyers in getting different products ordered with ease and grace thus, delivering their groceries straight away to their kitchen. A subsidiary of parent company Woolworths Group, Woolworths Supermarket has large-scale interest within Australia and New Zealand. In terms of revenue, Woolworths after Wesfarmers is Australia’s second biggest company, having generated overall revenue over AUD 39 Billion in 2019. Woolworths Group (2020)
Perceived as an intrinsic part of project management, stakeholder analysis will significantly contribute in enabling Woolworths Supermarket into getting identified different parties and entities that are either influenced or influence its business activities and operations, and their interests within the company for developing adequate policies for satisfying their vested interests based on their power and influence on business operations. The stakeholders’ interests differ from one industry to another besides having difference between the power and influences possessed by them. Throughout this report study, the focus will be on analysing the power and interests of Woolworth’s different stakeholders’ groups and comparing it to that of the power and interests of stakeholders’ groups within a banking sector and develop a stakeholder matrix for Woolworths accordingly. Arbogast, Deng & Maumbe (2017).
Below outlined are the functional areas of Woolworths Supermarket:
Human Resource: Woolworths HR department contributes in ensuring the hiring of proficient employees besides engaging a right person for a right job/function or task through recruitment of right level of expertise, experience and qualification fitting needs of the retailer. Moreover, with Woolworth’s success relying on its workforce, a critical role is also played by the HR function in overseeing the areas related to employees’ compensation and benefits, training and development, employee relations and corporation development. Sevilla (2015)
Accounting and Finance: this organizational function deals with all of Woolworth’s financial affairs that comprises of account receivable and payable. Matters related to employee payroll are also overseen by this department for ensuring adequate and timely payment besides liable for financial reporting of statement and handling budget estimation and decision making.
Marketing and Advertising: effectual marketing and promotions of Woolworth’s products is ensured by this organizational function thus, playing a critical role in the achievement of company’s mission and vision. In addition, the function of product packaging, pricing and promotions to targeted market segments is overseen by this department besides conducting market research for comprehending the needs of customers; brand management, administering content of its social media pages and corporate website; and serving as media liaison. Sevilla (2015)
Operations: this organizational function is liable for overseeing, designing and controlling production/procurement process to run the business for delivering higher quality products or services.
Information technology: this organizational function keeps eye on Woolworth’s internal business architecture, hardware, software and networking thus, supporting employees in maintaining of crucial information and resources besides managing information security, IT infrastructure, data management and operations development.
Purchasing: this organizational function revolves around procurement of materials, supplies and equipment for maintaining business operations; handling warehousing and distribution to ensure product availability across stores.
Legal: this organizational function is liable of overseeing legal affairs of Woolworths; advising and handling contract, litigation, business affairs, customer claims against damage or defect, employment legislation etc. Sevilla (2015)
Woolworth’s internal and external stakeholders
Employees/Managers: employees and managers are perceived as one of amongst key internal stakeholders, having significant contributions in smoother execution of routine business operations. The retailer is primarily accountable for satisfying the needs and interests of its workforces, including the manager which mainly revolves around appropriate and timely remuneration, equal opportunities of growth, and job satisfaction through regular communication for instilling loyalty and commitment towards the company. Biswas, et al., (2017)
Owners/Board of Directors: they are also an important internal stakeholders group, having core interest vested in profit-makings adherence to business rules and legislations, operations and issues faced by the business, corporate governance and increasing share value and hence, they are regularly communicated about the business activities and progress.
Investors: as a key internal stakeholder liable to invest into Woolworth’s and purchase company shares, a higher power and influence is enjoyed by them in the form of selection of company’s directors, with interests vested into profits, growth of share price and receive high dividends and returns on their investment.. Woolworths is accountable of meeting the investors’ interests through securing higher returns in their investments besides communicating the organization’s progress and performance on a half-yearly or annual basis. Biswas, et al., (2017)
Customers: having interests lying around products quality and availability, value for money, and customer services, customers are an important stakeholder, having higher power and influence over its business performance getting reflected from revenue generation, repeated purchase and word of mouth promotion and recommendation to others. By offering them with best quality products and service at lowest pricings possible, and updating them about running offers and other benefits is Woolworth’s accountability.
Suppliers: with moderate power and influence revolving around products pricings, quality and availability, these stakeholders can affect Woolworth’s business operations, having interests vested in long term contracts, prompt payments and growth of product purchase. Hence, Woolworth is accountable to provide timely payments and establishing occasional communication to update them about its needs and quality requirements. Biswas, et al., (2017)
Government: Australia’s federal and state government are also Woolworth’s key stakeholders, with interests focusing on business operating legally, compliance with legislations and regulations, tax receipts and employments creation ; exerting limited power and influence over its business operations in terms of regulations, subsidies, taxation and planning hence, keeping them informed about adherence to business regulations and legislations and communicate through the company’s annual report is important.
Society: having interest focusing on environment protection, generation of local jobs and positive local impact, the societies Woolworths is operating within is also an external stakeholder, getting influenced by its business operations, exerting indirect power and influence in terms of local planning and opinion leaders hence, the retailer is responsible for monitoring the society and prompting their development. Biswas, et al., (2017)
Stakeholder analysis of banking industry
Customers: its customers comprises of both retail and corporate customers using the banking services. With almost every Australian family enjoying the banking services, the stability of a bank greatly depends on their preferences, with their interests vested in accessing different beneficial banking products and services, exerting a higher power and influence on banking operations thus, enforcing them in offering products and services to suiting their financial needs. Vorster & Marais (2014)
Shareholders and Investors: government investment, retail and institutional investors are the investors within a banking industry, exerting higher power and influence on its operations determined through laws applicable and corporate governance practice of a bank, with interests focusing on increasing market capitalization, financial and non-financial performance in short, medium and long-term.
Bank Representatives: comprises of bank’s employees, suppliers and partners, exerting higher power and influence on its operations owing to their liability of timely delivery of banking products and services; with interests revolving around payments and/or remuneration on-time; growth and development opportunities, job security and long-term partnerships.
Policy Makers: comprises of politicians, government and regulators accountable to take-up issues via consultations and reforming policies thus, exerting higher power and influence over banking operations. Having the responsibility to make recommendations, regulations and laws, it is critical to manage them through close communicational relations. Vorster & Marais (2014)
Media and public voices: having the liability to develop a bank’s image and reputation in the market affecting its popularity, they are an important stakeholder, which includes journalists and social media influencers highlighting the concerns affecting the customers, communities and public at large via multiple channels.
It is stated by the stakeholder theory that an organization’s stakeholders comprise of all groups and individuals getting influenced by it and its operations. It further suggested by the theory that creating value as much as possible for stakeholders is a business’s purpose. For succeeding and being sustainable over time, the interests of customers, suppliers, employees, communities and shareholders must be kept aligned and get going in same direction by the business leaders thus, emphasizing that value should be created by all stakeholders by organizations, and not just the shareholders. Greenwood & Mir (2018) The stakeholder theory disagrees with the shareholder theory asserting on capitalism by stating that companies should only be caring about their shareholders, with them being their bottom line as the theory stands on a belief that a company is forced in reaping profits in its target markets for satisfying the shareholders interests revolving around higher return on investments and continued business growth. In a stark contrast to shareholder theory, it has been observed that the stakeholder theory perceives the stakeholders as a group in the absence of whose contributions and support a company may be failing to exist, and because of this corporate environment is taken into account as an ecosystem of interconnected groups, where the interests of all stakeholders needs to considered and fulfilled with intent to keep a company growing successful and strongly in the long run. Hence, it can be stated in the context of Woolworths that stakeholder theory is followed in its business practices, which gets reflected from the involvement of both internal and external stakeholders analysis for ensuring how they impact or get affected by its business activities further bringing into light that during the process of policy-makings and development the interest of all stakeholders group are considered on the basis of their power and influence on its future planning. Freeman & Phillips (2018)
One can come to a conclusion from the above report study that business stakeholder analysis has significant contributions in comprehending individuals or groups of people who will either be helping or hampering the operations of a business like that of Woolworths. In addition to this, stakeholder analysis also plays a key role in getting the communication and management strategies identified that are required for securing organizations success in the long run. It has been further concluded from the study that a stakeholder analysis when done properly is one step towards guaranteed success by providing the requisite resources and support. It has been become evident from the comparison of stakeholder analysis of retail industry with the banking industry that the power and interest of different stakeholders groups differ from one sector to another and hence, diverse approach regarding stakeholder benefits is adopted by companies from different sectors besides adopting varied approaches of communication for different stakeholders groups depending greatly on the role and influence exerted by them on the business operations and activities. One can also conclude that stakeholder approaches adopted by organizations about their interest belonging to different sectors adheres with the stakeholder theory.
Arbogast, D., Deng, J., & Maumbe, K. (2017). DMOs and rural tourism: A stakeholder analysis the case of Tucker County, West Virginia. Sustainability, 9(10), 1813.
Biswas, U. N., Allard, K., Pousette, A., & Härenstam, A. (2017). Implications for Stakeholders and Recommendations for Attractive Work. In Understanding Attractive Work in a Globalized World (pp. 297-308). Springer, Singapore.
Eskerod, P., Huemann, M., & Savage, G. (2015). Project stakeholder management—Past and present. Project Management Journal, 46(6), 6-14.
Freeman, R. E., & Phillips, R. A. (2018). Efficiency, Effectiveness, and Ethics: A Stakeholder View. In Human action in business (pp. 65-82). Routledge.
Greenwood, M., & Mir, R. A. (2018, July). Critical Management Studies and Stakeholder Theory. In Academy of Management Proceedings (Vol. 2018, No. 1, p. 10042). Briarcliff Manor, NY 10510: Academy of Management.
McMullan, P., Ajay, V. S., Srinivas, R., Bhalla, S., Prabhakaran, D., & Banerjee, A. (2018). Improving access to medicines via the Health Impact Fund in India: a stakeholder analysis. Global health action, 11(1), 1434935.