Вы находитесь на странице: 1из 47

CASE STUDY & ANALYSIS:

Whole Foods Market in 2010:


Vision, Core Values and Strategy
Ahona Azad Choyti (59)
Ayasha Sultana (62)
Shamroze Nurul Abedin (68)
Rakshanda Zihan (72)
Raka Tabassum (76)
Anas M.A. Sami (78)
Md. Shabit Shafiullah (80)
Wasiur Rahman (96)
Ashhab Zaman Rafid (97)
Farhan Khaled (109)
Md. Mehedi Hasan (112)
Nabil Ahmed Khan (114)
BBA 19 B-5
Institute of Business Administration, University of Dhaka
INTRODUCTION
Company Overview
Whole Foods Market, Inc. (Whole Foods Market),
incorporated on August 15, 1980, is a retailer of
natural and organic foods.

The Company operates in one segment: natural and
organic foods supermarkets.

It is a leader in this segment with 8 billion USD sales
in 2009

It operates 289 stores in the United States, Canada,
and the United Kingdom by 2010
Core Values
Selling the highest quality natural and organic
products available
Satisfying and delighting our customers
Team member happiness & excellence
Creating wealth through Profits & Growth
Caring about our communities & our environment
Creating on going win-win partnerships with our
suppliers
Promoting the health of our stakeholders through
healthy eating education
Vision



To set the standard
for excellence in
food retailing
Mission


Whole Foods,
Whole People,
Whole Planet

Mission & Vision
Core Competencies
Of the resources and capabilities of Whole Foods,
its core competency lies in its dominance of the
organic market
With close to 289 stores, and the ability to target its
locations towards smarter, more health conscious
consumers.
The company is better managed and employed to
provide the information an organically inclined
customer would need as compared to traditional
stores carrying only some organic products.
Critical factors for Whole Foods' success include its
reputation, trust, and friendship among its customers
and suppliers,
INDUSTRY ANALYSIS : EXTERNAL
Industry Overview
$4.9 billion sales
in 2008
20% Annual
Growth Rate
$52 billion global
sales
13% increase
every year
Industry Overview
9% growth of the
organic Industry
4.1Acres in 2005
17,600
certified farmers
35% more
profitable
Porters Five Forces
Bargaining
Power of
Suppliers
Low to
Medium
Sourcing from local small
producers

Strict quality parameters

MNCs are gradually
buying up the small
producers
Porters Five Forces
Bargaining
Power of
Buyers
Medium
to High
Market demand
rapidly increasing

Many sellers but most
of the buying
happens at
recognized chains

Buyers do not have
any switching cost
Porters Five Forces
Rivalry
HIGH
Independent
Supermarkets

Merchandisers Super
Centers

Wholesale Clubs

Fast food chains

Natural food stores
Porters Five Forces
Threat of
Substitutes
Medium
to Low
Non Organic Products

Patronizing local farmer
markets
Porters Five Forces
Threat of
New
Entrants
LOW
High cost low margin
nature of the industry

Big Economies of Scale

Largest 50 companies
responsible for 70 percent
of revenue
Opportunities and
Threats
Opportunities

Nation wide appeal
Niche market
Niche product
Small number of competitors
Increasing awareness of organic product
Potential market segments
Leading organic producer
Retail innovation and capitalism
Growth in private label product
Opportunities and
Threats
Threats

Peoples ignorance about organic product
High profit provokes new entrant
Competitors
Substitute product
Government takeover
Labeling and other regulations
High bargaining power of suppliers of
natural and organic foods
Weak economic result
COMPANY ANALYSIS : INTERNAL
Strength & Weakness

Strength

Pioneers in natural food supermarket
Sustainable growth over the years
Successful win-win acquisition contracts
Clearly defined motto
Well classified niche market focused strategies
Wide Range of Products
Smooth Distribution Channels



Strength & Weakness

Weakness

High Priced Items

Acquired Debt as a result of acquisition

Increased store expenses




Financial Conditions
$ (000) 2009 2008 2007 2006
Sales 8,031,620 7,953,912 6,591,773 5,607,376
Gross Profit 2,754,310 2,706,705 2,296,603 1,959,642
Net Income 146,804 114,524 182,740 203,628
Basic EPS 0.85 0.82 1.30 1.46
Net Worth $ 3,783,388
Financial Conditions
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
2009 2008 2007 2006
Sales Gross Profit
Financial Conditions
0
50,000
100,000
150,000
200,000
250,000
2009 2008 2007 2006
Net Income
Net Income
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2009 2008 2007 2006
EPS
EPS
BCG MATRIX
Product Development
Market Penetration
Market Integration

Product Development
Divestiture
Market Integration
Market Penetration

Diversification
Product Development
Divestiture
Retrenchment

Divestiture
Retrenchment
Liquidation
Market Analysis
Organic, 4%
Non-Organic,
96%
US Grocery Market Size by Sales, 2011
Organic Non-Organic
Despite only 4%, sales
are increasing

Organic industry
summed to a sale of
$31.5 billion, resulting in
a growth of 9.5%
Market Analysis
Whole Foods Market Map
Present widely
in USA
Presence in
certain states of
Canada and UK
Customer Analysis
Higher the earning,
lower the
unemployment rate
Customer Analysis
According to Great
Gatsby Curve, USA
is especially
unequal and has
low mobility
CURRENT STRATEGIC POSITION
Value-added pricing strategy

Delighting customers with service they
cannot get anywhere else

A narrow market niche where buyers
needs and preferences are distinctively
different

Features and attributes tailored to the
tastes and requirements of niche members
General Strategy
Expansion and Acquisition e.g. Purchased the
struggling Wild Oats Markets, their biggest
competitors
Creating Barriers for entry
Expansion into new and existing areas. Opening
new stores in upscale areas and suburbs of
major metropolitan areas and also to acquire
existing stores
Expanding into International market
Relocating smaller stores to larger sites with
more visibility and parking.
Operations Strategy
Stock repurchase of up to 200 million
USD over 4 years

Very strong cash flows from operations
prior to wild oats acquisition making new
stores possible without any substantial
long term debts
Financing Strategy
Advertising
o Word of Mouth
o TVC
o Print, online, billboard, in-store ads

Website
o E-newsletter
o Cooking tips, company blogs, store
locator
o Facebook/Twitter Page
Promotional Strategy
Product and brand selection does vary
from store to store

Large scale stores include around 30,000
natural, organic, and gourmet food and
nonfood items
Product Line Variety
EVALUATION OF CURRENT STRATEGY
FIT TEST

Growth strategy complements industrys exponential
growth
Caters to the go green and healthy eating trends
Motto of Whole Foods backed up by actions
o Whole Foods best quality natural produce
o Whole People customer and employee
satisfaction
o Whole Planet community development
How Sound is the
Strategy?
COMPETITIVE ADVANTAGE TEST

Number 1 player in the natural and organic foods
market
Specializes in providing a different lifestyle and
making it appealing

o Customers are in for a healthy experience groceries
along with restaurants, educational classes, juice bars,
etc.
o Giving customers what they want varied product line
and merchandising options
o Employee empowerment transparency and decision
making
How Sound is the
Strategy?
PERFORMANCE TEST

Delivering on each promise
o Selling highest quality food at competitive prices
o Touching the lives of customers and employees
o Team member happiness
o Helping the environment
o Profitable return on investment
How Sound is the
Strategy?
How Sound is the
Strategy?
FIT TEST
COMPETITIVE
ADVANTAGE
TEST
PERFORMANCE
TEST

Well Matched, Winning Strategy
Key Strategic Question

How can Whole Foods Market remain
successful by

increasing their customer base
attracting nonorganic buyers?

drawing away customers from
competitors?

increasing purchase volume and
frequency?
Strategic Problems

Economic downturn in the US

Increasing competition saturation of
conventional, lower priced grocery chains

Rising demand for high quality low priced
foods

Scarce supply of naturally grown food

Uncertainty about the future of organic
market

New Strategic Issues
ALTERNATIVES & EVALUATION
CONS



Increased advertising cost

Increased employee involvement in
marketing and promotional
activities- tying up human resources
PROS


Increase in market size.

Increased brand awareness.

Improved public relation leading to
customer acceptance and employee
attraction.

Emphasize on Marketing
Strategies
CONS



Reduction of growth

Possible reduction in store size

PROS


Efficient Use of Buying Power

Possible deflation of prices

Increasing customer base
Increasing Profit &
Cutting Costs
CONS

Reduced profit due to reinvestment
of internal cash flows

Market analysis may prove to be
costly

Inventory will be limited.

PROS


Steady growth maintained

Economically suitable for smaller
places

Allows expansion without increasing
long term debt
Building on smaller store
strategy
CONS

Increased complexity of
management

More employees required

Production will be seasonal

Increased storage and inventory cost

PROS


Absence of middle man

Lower cost products

Creation of employment
opportunities
Vertical Integration of
Supply Chain
THANK YOU