Woolworths Limitation

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BAE BUSSINESS REPORT ON Woolworths Limited Company

Student name and number Anna (xingfang zou) 31121
Class name and number Bae 11
Date of submission: 8/1/2012
Teachers name Mary and Katty
Table of contents

Executive summary
The purpose of this report is to evaluate whether Woolworths worth investing from ethical issue and business issue. First, this report will introduce the base information of the Woolworths. Secondly, it will analyze corporate which operate the gambling machine that is unethical issue, but it has found the way to deal with it. Then, it will talk about the share price history from 2011 to 2012. Finally, from the result, it can be easily found that Woolworth is good choice for the investors for it has a increase on profit and it aim to have well responsibilities for the society. This report has some limitation, for Woolworth has lots of brand in the world, it just focus on the problem of the ALH group at this time.

Introduction
Choosing high profit company is very significant for investors, and ethical investment cannot be neglected. Ethical investment refers to investing into the company which takes responsibility for the society in order to achieve the favor of the customers. If the companies do something unethical to the society, most of customers may refuse to buy the product. This report will, firstly, give the background of Woolworths Limited Company. Then it will survey the evaluation of Woolworths Limited Company ethical issues and the share price history. Finally, it will make a recommendation for the ethical investment.

Founded in 1924, Woolworths is one of the largest supermarkets in the global community. Woolworths states that it is a versatile place where goods are cheap for every man, woman and child. Besides the supermarket, Woolworths also owns 6 other brands, such as Big W which has a range of products; Dan Murphy’s which specializes liquid goods; ALH Group which manages the hotels. Only in 2012, Woolworths has earned 2956.7 million dollars and 28 million customers are served in each week.

Evaluation of the Woolworths in terms of ethical issue
Although Woolworths aims to give its customers an excellent shopping experience, it still has some unethical issues. These unethical issues concerns Woolworths gaining hundreds of millions of dollars a year from poker machines. This is not responsible of the company because it targets lower-income consumers and this results in further inequality.

1.1 Woolworths Limited Corporate’s unethical issue
Woolworths is the largest single owner and operator of poker machines in Australia. It owns 12,650 poker machines which is 6% of the country’s electronic gambling machines through the ALH Group in Queensland, New South Wales, Victoria and South Australia.

There is a study showing that about 600,000 people play the poker machines each week but only 15% of them contribute to 40% of all the losses. That means 15% of players are addict to poker machines. It can be calculated that one player may lose $1,500 per hour on a standard Australian poker machine. These machines are mostly installed in the disadvantaged areas where low salary citizens live, such as Greater Dandenong, Hume, Whittlesea and Maribyrn.

Furthermore, Woolworths gambling machines created over $1,292 million net profit during 2010-2011. This profit stands for 12.4% revenue of whole country’s hotels and clubs poker machines. The most revenue from poker machines in disadvantaged areas belongs to Woolworths. For example, In Victoria, Woolworths operates 89 hotels contain 5594 poker machines. The machines have a $835 million net income per year, which represent 31.5 per cent of all revenue from poker machines in Victoria

1.2 The effect of unethical issue
Playing the poker machines is a legal business in Australia; however, it causes great negative effects on the lower-income players. The gamblers pay much more money on playing poker machines,and...
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