Whole Foods Market Strategic Analysis

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Table of Contents

Company Background
Values of the Firm
Mission and Vision
Current Set of Strategic Goals
Critical Assessment of the Competition and the Competitive Environment
Competitive Environment
Recommendations
References

Company Background

Headquartered in Austin, Texas, Whole Foods Market Inc. is a publicly traded American food supermarket chain, which specializes in the sale of natural as well as organic foods. The firm was established in 1980. Specifically, the incorporation trades in grocery, meat, poultry, bakery, beer, wine as well as body, floral and pet products.

Over the years, maintenance and adherence to quality standards in the industry have formed the cornerstone of the firm’s operation. The firm operates in over 300 stores in the United States, Canada and the United Kingdom (Whole Foods Market, 2012).

Values of the Firm

Whole Foods Market Inc. conducts and operations are based on the provision of the highest quality natural as well as organic produce. Besides, gratification and captivation of consumers through meeting the expectation of clients are also core values of the firm. Additionally, wealth creation through profits and growth via voluntary exchanges with guests is a significant value of the firm.

Moreover, the corporation engages in environmental stewardship through supporting sustainable agriculture, participating in recycling programs along with encouraging environmentally sound cleaning programs.

The philosophy of mutual dynamism and the abilities of team members are essential for the success of the firm (Whole Foods Market, 2012). As such, Whole Foods Market Inc. inspires contentment and distinction of the team members.

Mission and Vision

The firm’s mission is centered on the stimulation of liveliness along with the comfort of every individual by offering the highest quality, least processed, most flavorful and naturally preserved foods. On the other hand, the vision of the enterprise entails becoming the nationwide trademark, which is indistinguishable with natural and organic foods in addition to growing into the finest food chain store.

The definition of the firm’s mission encompasses the slogan of ‘Whole Foods’, ‘Whole People’ and ‘Whole Planet’. In principle, ‘Whole Foods’ indicate that the firm obtains products both locally and internationally from small and distinctively committed food specialists. ‘Whole People’ entails that the firm’s team is made up of qualified individuals.

Regarding ‘Whole Planet’, the corporation acknowledges the existence of an association amongst individual lives, communities along with the environment. Essentially, ensuring a sustainable future characterized by human resourcefulness, multiplicity along with individual choice forms the basis of the firm’s vision (Whole Foods Market, 2012).

Current Set of Strategic Goals

Provision of Healthy Products to Clients

The fundamental tactical goal of operations encompasses the provision of products that have no additives, oil and sugar as well as other chemical elements, which are normally present in treated foods. In other words, the firm aims to offer natural foods that have low calorie levels. Over the last two decades, the firm has continued to encourage naturally raised meat along with poultry products.

The corporation has also been involved in enlightening clients on the side effects of added hormones and antibiotics in products. As such, the firm in conjunction with ranchers and farm producers undertakes the development of hormone and antibiotic-free products for clients to purchase.

In fact, the enterprise ensures that manufacturers deliver goods that meet the quality standards of the firm (Hill & Jones, 2012). Whole Foods Market Inc. recognizes that healthy products are significant in enhancing individuals’ well-being as well as lifespans thereby attracting more clients.

Strategic Acquisitions

Undeniably, the success of Whole Foods Market, Inc. can be attributed to the purchases of various enterprises that the firm has earned over the past. For instance, the corporation continues to buy different similar entities in order to increase its market base and remain competitive.

For example, in the 1990s, the firm bought several natural food stores including Wellspring Grocery, Nature’s Heartland, Fresh Fields Markets and the Merchant of Vino.

Such acquisitions have enabled the firm to expand operations thereby accruing increased proceeds. More importantly, the merger between Whole Foods Market Inc. and Wild Oats Markets in 2007 enabled the former to assume over 100 stores of the latter in the US, British Columbia and Canada.

Critical Assessment of the Competition and the Competitive Environment

Competition

Whole Foods Market, Inc. faces intense competition from established grocery food chains including Trader Joe’s, Wal-Mart and the Safeway Lifestyle. First, Trader Joe’s, a Monrovia-based grocery firm dealing in private label staple foods, organic foods and specialty products.

Additionally, the firm boasts of over 400 stores in the US. Second, Wal-Mart Stores Inc. is an international retail corporation with over 11,000 discount department and warehouse stores. The establishment trades in footwear specialty, warehouse club, discount stores and supermarkets. Last, Safeway Lifestyle is a supermarket chain headquartered in Pleasanton, California.

The firm deals in bakery, grocery, lottery, pharmacy, photographic processing, seafood, snack food, liquor and flowers. Moreover, the corporation boasts of over 1330 stores in the US.

Such firms offer intense competition to Whole Foods Market in terms of market share since the firms offer similar products to clients. The competitors are significant in enhancing the quality of products offered in the market in order to attract consumers (Hill & Jones, 2012).

Competitive Environment

The analysis of remote and operating environments of Whole Foods Market Inc. utilizes PESTEL and Porter’s five forces as well as SWOT analyses.

PESTEL Analysis

A PESTEL analysis encompasses the political, economic, social, technological, environmental and legal factors affecting the firm’s operations. Regarding political factors, Whole Foods Markets Inc. sells products within and without the US. As such, the macro-operations of the firm are affected by tariffs imposed on products.

On the economic front, the pecuniary downturn experienced in the US negatively affected the firm’s profits and growth. The effect was decreased rate of turnover. Besides, on sociocultural factors, the firm makes sure that the requirements of clients who are currently concentrating on natural and healthy food are met.

Concerning the technological factors, Whole Foods Market Inc. utilizes the innovative expertise that enhances customers’ contentment. Specifically, the firm uses cheaper and environmentally efficient technologies, which improve the operations of the enterprise. On the environment front, the corporation’s operations adhere to environmental practices and regulations touching on the green and safe environment (Hill & Jones, 2012).

Legally, the firm had to deal with an antitrust suit by the Federation Trade Commission of the US due to the acquisition of Wild Oats because of the possibility of losing competitiveness within the market. In other words, the firm experiences legal constraints in its operations.

Porter’s Five Forces

Threat of new entry

Given the elevated outlays in addition to a low-margin environment of the grocery industry, the competitive landscape is skewed towards great establishments, which function proficiently and offer goods for sale in large volumes. In this regard, the entrance of new firms into the grocery industry is truncated.

Bargaining power of suppliers

Large firms within the grocery chain trade control higher proportion of the market. Additionally, the control of larger segments of the market gives power to the World Foods Market Inc. since the firm can create scarce strategies to the suppliers by switching to potential vendors that abide by its strict quality standards effortlessly and cheaply (Bamford & West, 2010).

In principle, the suppliers in the grocery industry enjoy low bargaining power.

Bargaining power of buyers

Consumers can effortlessly surrogate the products and services offered by the firm in the grocery industry through purchasing the products provided by other companies in the industry. As a result, the organization’s share of the market can be abated. Therefore, the buyers have high bargaining power in the industry.

Competitive rivalry

Companies operating in the grocery industry are very aggressive. However, due to the market leadership capabilities of Whole Foods Market Inc. in the industry, establishment of operations of the firm is uncomplicated (Bamford & West, 2010).

In other words, the firm utilizes its technological advancements as well as financial strengths to increase its competitive edge over other firms. In this regard, the rate of competition in the industry is high.

Threat of substitute products

Companies in the grocery industry offer diverse and similar products. The existing firms in the industry offer convenience and low prices where clients can obtain healthy products thereby augmenting substitute threats. In principle, the level of threat of substitution is high due to increased competition in the grocery industry.

SWOT Analysis

Strengths

The fact that World Foods Markets Inc. holds the largest grocery chains in terms of value enables the firm to benefit from the leading competitor positioning. In addition, the firm’s broad geographical reach increases the capabilities of broadening the customer base.

Moreover, the firm has a diverse brand portfolio, which consists of various trademarks of organic and natural foods. The firm also offers excellent and high quality services to customers (Whole Foods Market, 2012).

Weaknesses

The brand image of the firm’s products is often affected by product recalls. In fact, recurrent product recalls due to contamination normally results into the stumpy devotion of clients along with brand equity. Further, the firm has a weak presence in both developed and emerging economies with only six and five stores in Canada and the UK respectively.

Opportunities

The firm is offered with the prospects of augmented demand for organic products. Specifically, over the last decade, the sales of organic foods have recorded massive increases. Besides, the firm should take advantage of the increasing approval of private label brands to enhance the rates of turnover (Whole Foods Market, 2012).

Threats

The major threat facing Whole Foods Market Inc. results from augmented competition emanating from existing chain stores including Wal-Mart and Safeway Lifestyle as well as Publix. Additionally, the economic recession experienced in 2008 was characterized by increased food costs and inflation rates.

The slump in economy drastically reduced the disposable income which in effect decreases the buying power of clients. As such, the firm was forced to offer deep price cuts leading to cannibalization of current sales, lower proceeds and turnover limits (Bamford & West, 2010).

Recommendations

Given the challenges emanating from the economic recession, Whole Foods Market Inc. and ABC have to change strategic plans in order to augment financial performance and competitiveness. First, reassessment of services, which are critical in the operations of the firms, is essential.

Essentially, the re-evaluation will enable the firms to cut further costs by doing away with outlays that are insignificant in the organizations’ undertakings. Second, the firms should rebrand their trademarks in overseas stores through developing quality brands along with principled practices to thwart the perception of ostentatious, impersonal and expensive services among clients.

Third, the firms should also acknowledge the importance of advertising and marketing on increasing the proceeds of establishments and spend more on advertising and public relations. Last, the firms should enter into untapped markets and utilize such opportunities instead of engaging in flooded markets along with cannibalizing present chain stores.

References

Bamford, C. E., & West, G. P. (2010). Strategic management: value creation, sustainability, and performance. Boston, MA: Cengage Learning.

Hill, C., & Jones, G. (2012). Strategic management cases. Boston, MA: Cengage Learning.

Whole Foods Market. (2012). Annual Stakeholders report 2011. Retrieved from: https://www.wholefoodsmarket.co.uk/

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