Case Study: Whole Foods
The foundation of Whole Foods Market was laid as a local supermarket back in 1980 and since then it has established itself as the largest retail corporation in field of organic food supermarket. It is known for its high quality, natural food products with minimum chemical process and preservatives. The company has launched its own label of organic food and has good reputation amongst its customers around the world for delivering organic and natural products in a sustainable way.(Whole Foods Market, n.d.)
- What are the chief elements of the strategy that Whole Foods Market is pursuing?
Whole Foods Market has a simple yet very convincing strategy which is to aware the community about what they are intaking as food and following the awareness, it strives to provide the highest quality of food products that are natural and organic and have not gone through mass industrial processes that other companies have adopted for their food production. In doing so, Whole Foods Market promises to provide food products with their complete nutritional value. The company promises to provide fresh, natural, nutritional and aesthetically pleasing food products to its customers. This has helped the company to gain a competitive advantage over other companies functioning in the same business. This strategy is clearly highlighted in the company’s core value which states, “Whole Foods, Whole People, and Whole Plant.”(Mission & Values, n.d.)
Whole Foods Market has seen rapid growth due to its strategy of engaging small business holders into its corporation along with opening of new stores hence targeting all the suitable markets as well as minimizing management issues. The company started implementing this strategy in 1991 and has instilled it in its strategic plan due to its over whelming success.By adopting this strategy, the company has spread its name across regions as well as internationally and have managed to provide a diverse variety of food products to each of its target market. In doing so, the company has put in a lot of efforts to choose the appropriate food suppliers that comply with the high standards that Whole Foods Market promises to deliver. However, the corporation has also stressed to maintain equity and safer working and social conditions of the communities that help in supplying the highest grade of food products.Moreover, the company goes beyond the requirement in the areas of customer care which is an important aspect of their strategy as it makes the customers enjoy their experience and feel comfortable during the shopping due to which they have a higher probability of preferring Whole Foods Market over other leading retail stores. Its stores provide information regarding the products, thought provoking creative displays that stresses on the importance of consuming natural products as well as aesthetically pleasing interior so that the customers can well positive while shopping for their diet.
Furthermore, the company follows an inclusive and democratic process amongst its staff, encouraging them to forward their queries and suggestions in an open manner for the improvement of the company. The employees are offered different possibilities of work options, with flexible timings, benefits and profit sharing packages. This environment is practiced in all the stores of the company as per their strategy as Whole Foods Market strongly believes that productivity correlates directly with the job security and satisfaction of its employees.
- Is Whole Foods’ strategy well matched to market conditions in the food retailing industry (one of the criteria for a winning strategy discussed in Chapter 1)?
Whole Food Market was in fact a pioneer in laying the foundation of organic food products business. The company was conceived with the primary purpose of providing the public with food products that had high nutritional value. This concept was soon caught by other companies in the food retailing industry in the early 2000s but since the Whole Food Market was the first one to introduce the concept of organic foods, it maintained its competitive advantage in the business(Fung, Geng, Kim, Zhou, & Zou, 2016). The company continued to prosper with its competitive advantage as it continuously updated itself with the growing needs and demands of the public while staying true to its core values of providing natural food to its customers. The market conditions have since then stabilized with greater demand of natural organic food products than ever before and Whole Foods Market stays on top of its competitors as it was the first company to introduce this concept and the first company to acquire certification by Quality Assurance International of “Certified Organic”. However, since the demands of high quality organic food is highly dependent on the social demographics such as population, income and awareness, the company’s strategy is limited to a specific market and target audience hence is not always well matched with the market conditions(Zanoli & Naspetti, 2002). Whole Foods Market however, avoids this issue by doing a thorough assessment of the location before launching its store in any region thus maintaining a perfect match between its strategy and the market conditions.
- Do you think John Mackey has a good strategic vision for Whole Foods? Why or why not? What do you like/ dislike about the company’s mission “to promote the vitality and well-being of all individuals by supplying the highest quality, most wholesome foods available?”
John Mackey’s vision and the Whole Foods’ vision completely align with each other in terms of providing the public with the healthiest food options available so that the productivity, well-being and efficiency of the public is assured. However, John Mackey’s vision provides Whole Foods an extended direction to expand its market globally and into every community and society as the company’s mission itself states that the company is inclined towards promoting well-being of all individuals, beyond the territories and boundaries. John Mackey does justice to the company by wishing to set it as the most superior name in the food retailing business. John Mackey’s strategic vision and company’s mission statement address an issue that is greater that figures and is concerned about keeping human health intact in the era of industrialization by providing natural food, around the world.
The vision is very clear in all its aspects however, it should be further extended to promote equity as far as pricing is concerned, considering that the products that Whole Foods Market offers is above the average price as compared to the food products available at conventional supermarkets. Although the natural food products cost higher and cannot be justly compared with products that have been mass produced, the company does go against its own vision of making organic products available to all human. Hence the strategic vision and implementation plan should consider the pricing of the food products in order to stand by their mission.
- Do Whole Foods Market’s 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 company’s success? Why or why not?
Considering the consistent growth of Whole Foods and the widening consumer base of the company, it can be safely said that Whole Foods Market takes its core values very seriously and are most definitely real. Moreover, since the consumer base of the company consists specifically of people who are extremely aware of what they consume and hence are relatively harder to convince, the continuous growth of the company leaves no doubt regarding the deliverance of Whole Foods Market. The customers of Whole Foods Market get affected by core values of the company and hence it matters to them whether the company stands by what it states. Since the company primarily works to address the concern of public regarding health food products, it puts a lot of stress on assuring that it delivers its core values through its products, staff and management which is why, the management and staff of Whole Foods Market stores are readily available to answer queries of the customers with the suitable literature.
Whole FoodsMarket has complied with its core values by creating an environment which readily accepts and answers clients’ queries, provides the customers with diverse product line that is nutritional, organic and natural, providing a comfortable environment for the customers to shop in by hiring concerned individuals in the staff and by empowering its staff to be self sufficient at organizing and managing the clients and the stores.
The core values can be clearly identified in the way the stores and the company itself runs from top to bottom of the hierarchy. Exhibit 3 shows how well the company has incorporated its core values in every strategy, implementation and operating processes. The company has inculcated its core values and has developed an environment and a culture where the company’s mission statement is followed in each step and hence the corporation is flourishing with a consistent growth.
- Based on the financial statement data in case Exhibit 1, how would you assess the company’s financial performance since 2009? Use the financial ratio information in Table 4.1 of Chapter 4 (pages 81-83) to assist you in calculating a revealing set of` financial ratios and interpreting them.
Whole Foods witnessed a period of consistent slow growth rate between mid of 2000s. Its profit margin started to shoot during 2009-2013, where it reached the peak of 22.48 percent in 2012.(Whole Foods Market Inc , n.d.) This is because it took some time to aware the public about their diet and the benefits of consuming natural organic food. By 2010, people were aware and concerned about their food consumption hence the profit margins of the company rose exceptionally, even during the post-recession phase. However, during the recent years, the growth of the company has become slow and profit margins have declined greatly due to the economic competition. John Mackey concluded this situation by stating that the company has been unable to build bring in new clients due to the competitive environment.(Peterson, 2017)
- Based on the store operations data in case Exhibits 3 and 4, how well is Whole Foods Market performing from a strategic perspective? Does Whole Foods enjoy a competitive advantage over its 3 chief rivals—The Fresh Market, Trader Joe’s, and Sprouts Famers Market? Does the company have a winning strategy?
Exhibit 3 and exhibit 4 show that store size of Whole Foods Market is larger than that of Sprouts Farmers Market, Fresh Market and Trader Joe’s. Since the stores are located near to each other in many locations, having a larger store size clearly gives a competitive and strategic advantage to Whole Foods Market as it can accommodate a greater number of customers and could hold larger inventory than its competitors. Whole Foods Market has been frequently acknowledged in the industry for almost all of its functional areas such as product quality, sustainability, customer service and store organization. The company has also been termed as “Conscious Corporate” which further shows evidence of the winning strategy of the company in the competitive free market. The company has also made to the list of Fortune 500 List at Forbes and Business Ethics’ “100 Best Corporate Citizens” for its sustainable and conscious vision. (Awards and Recognition, n.d.)
- 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?
Whole Foods has been successful at maintaining its reputation in the food retailing industry. However, since the uniqueness of the company is now shared by many other brands that are promising to provide organic food products to public, such as; Trader Joe’s, Walmart, Fresh Market, Whole Foods Market faces severe competition (Wells & Heglock, 2008). The company has enjoyed the privilege of being the pioneer in the industry for a long time but due to increasing competition, it is very much likable for it to lose this competitive advantage over its competitors. Hence, to sustain the company’s growth and financial position, it is important for it to include cost effectiveness in its strategy without causing any compromise on the quality of its product. To achieve this, the company will have to be more inclusive than before and collaborate with local producers and farmers for consistent quality and large supply of organic food goods at a lower cost. The company will have to cut down its profit margins and will have to depend on mass trade to generate more profits.