Situation Analysis
Discuss About The Target Australia Pty Ltd Of Wesfarmers Group?
Public relations are the efforts put in by companies to maintain a favorable public image. It is a strategic communication process that benefits relationships between organizations and public. Reputation of any organization is essentially the perceived value of the firm by its stakeholders as compared to its competitors. Strong positive reputation often attracts a larger customer base and hence increased market share (Lange, 2010). Any gap in the expected value and the real value offered by the firm risks a company’s reputation. These risks can be internal as well as external but it is imperative that a firm works towards hedging these risks in the most efficient manner.
Reputation is considered an intangible and invisible asset of the firm. It is an equally important asset and hence care must be taken to preserve it. Most of the firms make the mistake of focusing their energies on handling risks that have already surfaced. This process is crisis management and not risk management (Harvard Business Review, 2007). Organizations must work upon their listening skills to be sufficiently aware of ongoing and upcoming issues; to strengthen their understanding of, and current relationships with, significant stakeholders; and to take steps beyond traditional PR by activating a network of supporters who can influence key constituencies (McKinsey, 2009). This report throws light on the issues faced by the firm Target Company Pty Ltd which is a part of Wesfarmers group in Australia. It is a leading brand and currently facing certain issues which have adversely hampered its public relations. This report provides a detailed insights about the issues faced and recommended strategies to fix the damage done.
Wesfarmers is a renowned conglomerate with diversified businesses in the field of Department stores, Liquor, Chemicals, Energy, Fertilizers and office supplies. Target Company Pty Ltd is their trademark department store brand that has successfully established a name for itself by offering a sundry variety of apparels, home wares and merchandise. The giant brand functions across 300 outlets in Australia with assistance from a 16000 member team (Wesfarmers, 2017).
Target is a flagship brand of ‘Wesfarmers’ and has been gifted with a strong brand name since its inception (Wesfarmers, 2017). This brand name has no doubt helped Target establish a positive goodwill for the company. However, this calls for a greater responsibility to protect and preserve the reputation that comes with the legacy of Wesfarmers. Target Company Pty Ltd along with Wesfarmers therefore invest in various strategies for their reputation management.
Target Publics
Wesfarmers group’s Target Company Pty Ltd is currently going through radical changes in terms of preserving its reputation to its stakeholders. No doubt, the company is backed with the Wesfarmers brand to hold on to, yet the recent issues faced by the firm have drastically impacted its positioning in the market. There are three specific issues that are discussed in the report and strategic recommendations are offered for the same. However, it is imperative that Target Company Pty Ltd jumps the bandwagon and resolves the issues at the earliest.
Asian markets still continue to be subjected to extreme cases of child labor and underpaid labor. This is the reason most Australian nations including Wesfarmers are shifting to direct sourcing by eliminating the agent. This requires setting up direct sourcing offices and enhanced knowledge of local businesses. This process is usually time consuming and demanding (Journal of Superannuation Management, 2012).
This adversely impacts the reputation of Target and at this moment, the brand is looking for alternative sources of raw materials. Also the cost of raw materials is increasing at a high pace. Their main sources of raw materials are China and Bangladesh. China government’s 5 year plan focuses on increasing labor wages and domestic consumption. This automatically makes raw materials sourced from there expensive. On the contrary, Bangladesh has a bi lateral trade agreement with Australia and which allows duty free imports (Bangladesh high commission, 2016). But sweatshops and infrastructural issues are abundant which limits the advantages of the agreement and also hampers Target’s reputation.
For the 6 months ending in December 2015, it was brought to light that Wesfarmers’ department store Target has fraudulently inflated income by $21 million. This mishap not only led to resignation of then MD Stuart Machin but also diminished the brand’s goodwill (ABC news, 2016). This incidence was covered by all leading newspapers, news channels and magazines and created a major havoc in the brand’s reputation.
Every time any such fraudulent activity by the firm comes to notice, it becomes the talk of the town and disrupts the goodwill of the company, hampers its sale, reduces customer footfall in the stores and diminishes customer loyalty. Richard Goyder went to the extent of saying that the entire brand of Wesfarmers has been hit by ‘Stupid’ target (The Australian, 2016). Firstly no organizations should ethically involve in such practices and secondly, in case of such a crisis, immediate actions must be taken by the firm to resolve it and reduce the damage.
Traditional and Social Media Approach
CEO Richard Goyder confirmed that after the accounting scandal of 2015, the business required a physical shift. Which is why Target Company Pty Ltd’s office is to be shifted from a small town of Geelong to Melbourne. This will lead to a loss of 900 local jobs. Also any physical shift requires immense adjusting and is a time consuming process (ICAS, 2016). But most importantly, if not handled well, it can hamper the firm’s reputation immensely. Especially with the increasing unemployment rates in Australia, people are very sensitive towards this subject. A sudden loss of 900 jobs by a single firm will lead to a negative image in the consumer’s minds.
Primary and secondary stakeholders of the firm as identified are:
|
Primary Stakeholder |
Secondary Stakeholder |
|
· Customers |
· Potential customers |
|
· Employees |
· Competitors |
|
· Leadership |
· Families of employees |
|
· Other Wesfarmers group companies |
· Real estate agents |
|
· Clients |
· Potential employees |
|
· Suppliers |
· Contractors |
|
· Media houses |
|
|
· Public relations |
|
|
· Government bodies |
Every time a company faces issues as mentioned above, it adversely affects its relationship with all of its stakeholders. Media plays an important role in this entire procedure. The traditional media strategies include using television, media releases, articles, magazines and newspaper as a means of communicating with stakeholders. Owing to rapid development in technology and increased use of internet, various social media strategies include the following:
- Social media: Facebook, twitter and Instagram have all become brilliant sources of communication between the organization and its public. They can be used to fix the issues by increasing their brand awareness and improving their brand presence on these platforms.
- SEO/SEM: Search engine optimization is an efficient technology to make sure that people are able to find details about the organization easily. This helps in increased brand awareness.
- Google Ad Words: Google ad words involves the art of listing down certain specific words. When anyone uses these words on their Google search, Target Corporation Pty Ltd will be suggested.
The overall objective of this plan is to ensure the brand with a long lasting reputation that attracts customers. The idea is to resolve the above mentioned issues in the most efficient manner and ensuring that Target Company Pty Ltd develops a positive goodwill among its customers. The strategic goals are as below:
- To find more efficient sources of raw material procurement within 12 months
- To resolve sweatshop and labor issues in Bangladesh within 18 months
- To rectify the bad marketing caused due to accounting scandal within 2 months
- To ensure no accounting scandal takes place in the future by forming a committee to check all reports published. This committee should be formed in 1 month.
- To have a more transparent accounting system in place within 3 months
- To ensure sustainable handovers by 900 employees in Geelong within 3 months
- To ensure the employees do not face disruptions in their careers within 6 months
|
Goals |
Objectives |
Tactics |
|
· To resolve ethical issues related with raw material procurement |
· To find efficient sources of Raw material · To resolve sweat Shop and labor issues in Bangladesh · To ensure a positive reputation in the market in terms of raw material sourcing |
· Conduct researches and explore further Asian markets for raw material procurement · To establish offices in Bangladesh and employ effective human resource department to check these issues in place · Zero tolerance towards forced labor · Fair remuneration must be practiced across the firm · Surprise visits to Bangladesh facilities · Release media reports and documentaries demonstrating effective raw material procurement. |
|
· To ensure efficient and responsible shift to a new office in Melbourne from Geelong |
· Ensure job safety of 900 Employees at Geelong · Effective turnover by these employees |
· Offer jobs at other Wesfarmers group companies · Offer jobs at the new location in Melbourne · Offer a minimum 3 month notice period to find other job · Offer relocation bonuses to families willing to shift · Offer jobs to spouses of employees who are willing to shift · Recommendation letters must be given to all employees · Full and final payment settlement must be done without any delay |
|
· To resolve the aftermath of accounting scandal in the firm |
· Avoid Accounting scandals in the future · Rebuild the reputation ruined by the scandal |
· Fire employees responsible behind the scandal · Publicly release the correct accounting details of the firm · Public punishments to ensure no employee indulges in similar actions · Future reports must be monitored by a team before release to a general public · Board of directors must release a letter of apology · Media houses must be invited for public statements by the company |
Target Company Pty Ltd.’s accounting scandal was one of the biggest cause of negative publicity and put the firm in a bad light. The decision to immediately fire the CEO saved some grace (Sydney Morning Herald, 2016). However the after effects were rather catastrophic. It is a classic example of a black propaganda. Public relations play a vital role in managing, protecting and further rebuilding the reputation of a firm in such a scenario. Using these public relation tools efficiently becomes increasingly important. The following evaluation plan is recommended to the firm.
|
Stage |
Measurement |
Purpose |
|
Pre implementation |
· Back check all accounting records of the company for the last 5 years |
· To ensure that no such mistake has been made in the past |
|
1 months |
· Committee formation to reach the depth of the issue |
· To recognize people responsible behind this scandal. Make sure they are punished to establish reputation among people. |
|
2 months |
· Fire the employees · Apologize publicly |
· To ensure no one commits such a mistake again · To ensure the public knows that the firm is taking responsibility |
|
3 months |
· Release correct accounting numbers |
· To gain trust among the public again and save the company’s reputation. |
Raw materials and their sourcing has been a major issue faced by Target Company Pty Ltd in the last few years. The increasing number of reports published by various leading magazines throwing light on sweatshops and worsening labor conditions in the Asian markets are now reaching a wider audience. This has created a dent in the reputation of the firm. Steps recommended to the Target Company Pty Ltd to remedy this are:
|
Stage |
Measurement |
Purpose |
|
Pre implementation |
· Identify all the issues related to procuring raw materials from Bangladesh |
· To ensure the issues can be resolved in an efficient manner and the company’s reputation can be saved from further harm. |
|
1-2 months |
· Committee formation to reach the depth of the issue |
· To recognize the causes responsible behind the issues there |
|
6-8 months |
· Establish offices in Bangladesh · To conduct surprise visits |
· To monitor workings of the office · To make sure these issues are not repeated else it will majorly affect the company’s goodwill. |
|
1 year |
· Continue to evaluate better sources of procuring raw material |
· To gain trust among the public, improve reputation and reduce cost |
Goals and Objectives
Due to growing opportunities and market size of Target, it is no doubt important that the office be shifted to a more developed city like Melbourne. Also the CEO opined that the firm needed a physical shift post the accounting scandal (Brisbane Times, 2016). However, the loss of 900 local jobs must be compensated for. It was observed by leading news channels that the frustration among employees post the announcement was evident (Geelong Advertisers, 2016). Recommended steps to remedy that are as below
|
Stage |
Measurement |
Purpose |
|
Pre implementation |
· Identify the total count of job |
· To ensure these lost employees are addressed efficiently and they develop a goodwill for the company |
|
1-2 months |
· To offer jobs in other Wesfarmers companies in Geelong |
· To ensure employees don’t lose jobs. If they do, they will spread a bad name and hence affect the company’s reputation |
|
3-4 months |
· To write recommendation letters · To provide a two month notice period · To effectively complete the full and final settlement |
· To make sure employees are not frustrated or helpless |
|
6 months |
· To provide relocation bonus and paid leaves to employees who are willing to shift to Melbourne |
· To gain trust among employees leading to improved reputation in the market |
Conclusion
The functions of PR play a very vital role in establishing, sustaining, protecting and rebuilding this reputation if the need be (Griffin, 2014). Reputation management is an essential part of working with any business. Reputation defines what the stakeholders’ perceive about the organization. Marketing is a tool to promote products whereas PR can be efficiently used to influence the business environment in order to build a positive reputation.
This report has mentioned three major issues faced by Target Company Pty Ltd of Wesfarmers group in Australia. These issues include a massive accounting scandal, shifting of their office and other ethical issues faced in the process of procuring raw materials from Asian markets. This report critically throws light on these issues and recommends strategies to overcome the same. The detailed evaluation plan also affirms the working of these strategies and the time taken to completely build the reputation again.
References
Bangladesh High Commission, 2016, ‘Bangladesh Australia trade relations’, https://www.bhcanberra.com/trade-investments/bangladesh-australia-trade-relations, viewed on 30 September, 2017
Brisbane times, 2016, ‘Target to shift from Geelong’, https://www.brisbanetimes.com.au/business/companies/target-could-cut-up-to-25-per-cent-of-geelong-head-office-staff-20160413-go57d5.html, viewed on 30 September, 2016.
Geelong Advertiser, 2016, ‘900 Geelong target jobs in lingo’, https://www.geelongadvertiser.com.au/news/geelong/900-geelong-target-kobs-in-limbo-as-new-boss-guy-rosso-searches-for-melbourne-base/news-story/6ca2d242326c2bb173d1dbc56cbe69e3, viewed on 30 September, 2017.
Griffin, A. (2014). Crisis, Issues and Reputation Management: A Handbook for PR and Communications Professionals. Kogan Page Publishers.
Harvard Business Review, 2007, ‘Reputation and its risks’, https://hbr.org/2007/02/reputation-and-its-risks, viewed on 28 September, 2017.
ICAS, 2016, https://www.icas.com/ca-today-news/target-accounting-scandal, viewed on 30 August 2017.
Lange, D., Lee, P. M., & Dai, Y. (2011). Organizational reputation: A review. Journal of Management, 37(1), 153-184.
McKinsey, 2009, ‘Rebuilding Corporate reputations’, https://www.mckinsey.com/global-themes/leadership/rebuilding-corporate-reputations, viewed on 30 SepteConclusionber, 2017.
Sweeny, M, 2012, How Sustainable are Australian retailers’ new sourcing strategies. Journal of Superannuation management 04(03), 22-26.
Sydney Morning Herald, 2016, ‘Outgoing Target boss Stuart Machin quits’, https://www.smh.com.au/business/retail/outgoing-target-boss-stuart-machin-quits-ahead-of-investigation-findings-20160408-go27nt.html, viewed on 30 September, 2017.
Sydney Morning Herald, 2016, ‘Wesfarmers takes action against staff over target rebates’, https://www.smh.com.au/business/retail/wesfarmers-takes-action-against-staff-over-target-rebates-20160411-go3il5.html, viewed on 30 September, 2017.
The Australian, 2016, ‘Wesfarmers’ takes a hit from stupid Target’, https://www.theaustralian.com.au/business/companies/richard-goyder-wesfarmers-takes-hit-from-stupid-target/news-story/267f4fc82b653b6f298a53af694cccc9, viewed on 28 September, 2017.
Wesfarmers, 2017, ‘Our Businesses’, https://www.wesfarmers.com.au/our-businesses/our-businesses, viewed on 28 September, 2017.
Wesfarmers, 2017, ‘Target’, https://sustainability.wesfarmers.com.au/our-businesses/department-stores/target/, viewed on 30 September, 2017
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