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Chaniqua Hewlett
The case study analysis presented in the preceding pages explores how the company`s value
chain, differentiation strategy, and organizational culture affects the company`s value
proposition, ability to sustain a competitive advantage, execute a winning strategy, and achieve
performance targets. Whole Foods Market, which was cofounded by John Mackey in Austin,
Texas, is a food and drug retailer that features a wide selection of natural and organic products.
The company operates in 379 stores that are located in 41 states, the District of Columbia,
Canada, and Great Britain. The case study analyzes the core values, driving forces (competitors,
suppliers, customers, etc.), the company`s mission statement, and business approaches that
defines a company`s strategy. The results of the case study illustrate the following: Whole Foods
Market must implement strategies to realize attractive profits while maintaining a competitive
advantage.
The minor problems that Whole Foods Market may have include John Mackey`s temper,
food spoilage, and employee retention. Supermarket chains` ability to copy Whole Foods`s
pricing strategy may reduce sales by price-sensitive consumers and may become a future
problem. Moreover, the major problem that Whole Foods faces is high prices for products and
their ability to globally expand operations. To emphasize, the apparent causes of the problems
involve the suppliers` costs and Whole Foods primary reliance on U.S. suppliers. Moreover, an
assumption made in the case was that Whole Foods faces inventory spoilage due to perishable
products and its sales are significantly affected by price sensitive consumers. These assumptions
were made during an analysis and evaluation of the competitive power of the company`s
resources to develop recommendations and available options that Whole Foods could implement.
Problem and Opportunity Statement
Whole Foods Market must implement a strategy that enables it to become an international
grocery chain that offers high quality natural and organic foods while maintaining a competitive
advantage.
Questions
1. What are the chief elements of the strategy that Whole Foods Market is pursuing?
Whole Foods strategy is based on their selection of products, and is tailored to its mission
friendly way. The primary elements of the strategy that Whole Foods Market is pursuing
include the following: establishing large stores that sell 10,000 to 50,000 items;
establishing stores in upscale and highly populated metropolitan areas with favorable
profit projections; establishing weekly price reductions, store-brand coupons, and product
samples; using word-of-mouth advertising along with brochures and e-newsletters about
product quality, health eating, and environment; and empowering employees to provide
exceptional customer service by offering discounts, stock option plans, life and health
for natural foods, and the revenues the company generates from fresh produce and other
perishables, Whole Foods strategy is well matched to market conditions in the food
retailing industry. During 2009 and 2013 the company`s strategy has allowed increase
sales by $4,885 million (12,917 8,032). Whole Foods also maintains a competitive
advantage with in-store eating venues, distribution centers, baking facilities, coffee
roasting operation, value prices and coupons on specific products. Consumers` demand
for organic goods is increasing; Whole Foods operates 379 stores that stocks an average
of 21,000 items which ranges from 10,000 to 50,000 and includes minimally processed
farm raised poultry and meat, fresh produce, and other preservative free products.
3. Do you think John Mackey has a good strategic vision for whole foods? Why or why
not? What do you like/ dislike about the companys mission to promote the vitality and
well-being of all individuals by supplying the highest quality, most wholesome foods
available?
John Mackey has a good strategic vision of becoming an international retail chain that
offers the highest quality natural and organic goods. Mackey`s strategy illustrates the
company`s performance targets, long term goals, and aligns well with the company`s
organizational culture, tangible and intangible resources, and consumers` demand for
nutritious goods.
The Company`s mission is memorable, focused, and indicates a directional path that
aligns well with the current market conditions, the company`s competitive resources and
capabilities, and goodwill. Ultimately, the mission is likable because it is not generic and
can be effectively communicated to employees to achieve the company`s long term goals
4. Do Whole Foods Markers core values as presented in case Exhibit 2 really matter? Are
they real or just cosmetic window dressing? What evidence can you cite to support
your answer? Have Whole Foods core values contributed to the companys success? Why
or Why not?
Whole Foods core values are not just cosmetic windows; The company`s core values
represent the organizational culture, illustrates the company`s vision, and shows the key
rewarded employees with 25 to 35 percent discounts based on their biomarkers of good health score.
Whole Foods has established the following organizations that benefit the local and global
communities: Whole Planet Foundation, Whole Trade Guarantee Program, Whole Kids Foundation,
In addition, Whole Foods`s core values aid the company`s operational and financial performance, and
contributes to the company`s success in the market. The core values contribute to the success because
they promote loyal customers which translates to attractive profits, they promote a healthy working
environment which translates to exceptional customer service, and they promote the expansion of the
5. Based on the financial statement data in case Exhibit 1, how would you address the
internal funds to pay its current liability on a timely basis and finance store expansions
without borrowing excessive funds or increasing the equity capital. In contrast, the 234
million change in net working capital from 2012 to 2103 may have occurred due to
creditworthiness, strong balance sheet strength, the ability to borrow additional funds,
6.07% and the Return on Stockholders` equity shows that investors are earning an
average return.
The return on invested capital illustrates that Whole Foods is effectively using their
Based on Whole Foods`s sales trends and earnings growth, the company has transcended
from being burden with debt after the 2008 recession to having a good financial performance.
Since 2009 to 2013, Whole Foods has increased its ability to cover operating expenses and
6. Based on the store operations in Exhibit 3 and 4, how well is Whole Foods Market
advantage over its 3 chief rivals? Does the company have a winning strategy?
Although the rapid expansion of stores reduced after the recession in 2008 and the
unsuccessful acquisition of Wild Oats tradename and stores, Whole Foods Market is still
performing well from a strategic perspective. Whole Foods strategy to scale back store
expansions has allowed the company increase their total square footage at lower
development costs than the development costs in 2007. The growth strategy along with
the pricing strategy, store location strategy, and merchandising strategy has contributed to
the sales increases. To emphasize, the sales increases resulted from the following: loyal
and new customers, and increase in brand awareness from nonprofit activities and
Whole Foods has a competitive advantage over its competitors (The Fresh Market, Trader
Joe`s, and Sprouts Farmers Market) based on the following: larger product selection,
larger stores, more local and international geographic locations, product merchandising,
and in-store restaurants. Based on the fit test, the competitive advantage test, and the
performance test, Whole Foods has a winning strategy. The company`s strategy aligns
well with company`s resources, the market conditions, value chain activities, the
achieved a sales revenue of $12.9 billion which is higher than the 2013 sales revenues of
7. What recommendations would you make to John Mackey regarding the actions that
Whole Foods` management needs to take to sustain the company`s growth and financial
performance?
The management team should use strategic group mapping to analyze competitors`
market position to determine if Whole Foods has a stronger market position and to
awareness and to create a brand image that encourages the consumption of organic and
Alternative Solutions
Open restaurants and bakeries that are separate from the stores
Partner with grocery chains to sell Whole Foods private label products
Recommendation
The recommended action for Whole Foods is to broaden its market niche by collaborating
with suppliers to reduce costs, expanding the private labels products, and establishing
small groceries that are tailored to price sensitive shoppers. The positive effects include
eating to the company. The negative effects include lease obligations and import
regulations.
SWOT Analysis
Implementation
In order to maintain a competitive advantage and expand the market niche, Whole Foods
management should conduct an analysis of their competitors` position in the market and analyze
the competitiveness of the company`s resources. Next, management should create a budget that
will allow the buying team to extend the company`s supplying network internationally to
negotiate better costs and purchase more exotic produce. Once the buying team has successfully
lowered the suppliers` costs, management should collaborate with the producers of the Whole
Foods brand product to expand the product line. Secondly, management should collaborate with
the finance team and board members to establish small stores that would sell the Whole Foods
Ultimately, Whole Foods Market should continue to revolutionize how consumers associate
organic goods to the company by implementing a strategy that broadens the market niche and
offers more value priced goods that maintains the company`s guarantee of fresh, natural and
organic goods