Company Research: Whole Foods

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Introduction

The US organic food industry has remained relatively competitive throughout the 80s and early 90s. However, in recent years, Whole-food market has maintained a competitive advantage through various means (Nina, 2007, p.3).

Whole Foods tendency to merge with its competitors, or entirely acquire the operations and businesses of other organic food companies in the US has left Whole Foods with a near monopoly of the US organic foods market.

Whole Food Competitors

Trader’s Joe Company, head quartered in Monrovia California, has remained one of the main competitors to Whole Foods (Kroll, 2009, p.3). Over a three-year period between 2000 and 2003, Trader’s Joe posted annual profits that were near those of Whole Foods, and had an annual average increase in profits of about 14%, while Whole Foods had an annual average profit growth of 19%.

The two organic foods companies were also the only companies during this period to post sales figures in the realm of billions. The sales figures for Whole Foods over the stated period were $ 1.8 billion in 2000, $ 2.2 billion in 2002, $2.6 billion in 2003, and $ 3.4 billion in 2004.

For Trader’s Joe, the figures were $ 1.6, $ 1.9, $ 2.2 and $ 2.5 billion respectively. The third ranked organic foods company in terms of sales figures during this period, Wild Oats, posted annual sales figures in the realm of hundreds of millions, with its sales figure for the year 2003 being $960 million.

Therefore, the singular challenger and competitor of Whole Foods during this period was Trader’s Joe. However, since this period (2000-2003) there have been many changes in the US organic foods industry, mostly occasioned by Whole Foods tendency to merge with its competitors in order to gain a competitive advantage.

In the year 2007, Whole Foods acquired Wild Oats, effectively gaining a sales figure advantage over Trader’s Joe. Managerial and structural changes within Whole Foods have also seen the company change its corporate outlook slightly with the virtual retirement of founder and CEO John Mackey as the chairperson of Whole Food’s board.

Besides Trader’s Joe and Wild Oats (which Whole Foods subsequently acquired in 2007), Whole Food faces competition from rival supermarket chains such as Stop ‘N Shop and Shaws, with both these chains having the competitive advantage of engaging in sales promotion for their products.

Another company that offers competition to Whole Foods is Stonyfield, which while primarily involved in the production of yoghurt, also distributes fresh organic foods and vegetables.

General Introduction

All the four competitors of whole Foods mentioned above have certain general characteristics that provide a hint to their business and economic plans and desires. By the simply skimming through the websites of Stonyfield, Trader’s Joe, Stop ‘N Shop and Shaws, the common thread running is the interactive nature of these websites.

Therefore, one inference that a person can draw is that, these companies have put in place measures to interact with their suppliers, consumers and even employees in the most open, transparent and interactive format. As the business world invests more in online transactions, these companies will stand a good chance to capture as many online customers as possible.

Measuring performance: The Current key Initiatives of the Companies

The Shaw Supermarket chain is currently involved in initiatives to promote ‘zero waste’ of recycling materials – the promotion of green products that are not toxic to the environment. As part of the Supervalu stores chain, Shaws benefits from an extensive network supported by Supervalu, which as a corporate brand announced a profit of $ 37 billion dollars for the year ending 2010, which represents a 6.4% increase.

Stonyfield is currently involved in corporate-social efforts aimed at highlighting the benefits of organic foods. Through its Profit for the Planet Program (PFP), Stoneyfield last year donated upwards of $ 2,000,000 in countrywide awareness programmes. For the year 2010, the company posted annual revenue of $ 24 billion, representing a 7% increase.

Based on the situation, as it appears on the ground, Trader’s Joe is currently phasing out products from China. This is due to the questionable standards of organic products from China.

The company also busy advancing the terms of service of its employees, even though the work conditions for employees in the company are some of the best in the world, with Trader’s Joe ranked as one of the most ethical companies (Kroll, 2009, p.4). Trader’s Joe annual revenue for 2010 was $ 8.5 billion, an increase of 5% from the previous year.

The current corporate-social responsibility activities, for Stop ‘N shop, are in the areas of cancer research, famine relief, and educational grants. In 2011, Stop ‘N shop acquired about five key store outlets also opened another one in downtown Massachusetts in line with its expansion and growth initiatives. Stop ‘N Shops profit for 2010 was $ 11.7 billion, representing an increase of 6.1%.

All these companies are engaged in viable and meaningful expansionist programs as well as a community welfare projects. These sustainable business practices by these four competitors combined point to a likelihood of continuation into the near future. Therefore, barring acquisition by Whole Foods, which has a tendency to merge with its competitors, they are likely to continue offering competition to Whole Foods.

Analyzing the Competitive position of KFC, Pizza Hut, Burger King, and McDonald’s

KFC, Pizza Hut, Burger King and McDonald’s are all fast-food companies based in the US but with an international presence in virtually all continents. KFC (formerly Kentucky Fried Chicken), is based in Louisville, Kentucky. Pizza Hut is based in Plano, Texas. Burger King is based on Miami, Florida. McDonald’s is based in Oak Brook in Illinois.

The fast-food industry has continued to grow despite members of the medical profession and other nutritionists’ spirited campaigns of warning the public of the harmful effects consumption of such foods.

McDonalds has the largest global presence amongst the four companies, and reported revenue for the 2010 financial year at $ 24.7 billion (Smith, 2007, p.371), nearly 5 times higher than that of its nearest competitor Burger King. The latter announced revenue of $ 2.5 billion for the 2010 financial year (Wong, 2006, p.5).

Comparatively, Pizza Hut’s reported revenue was $ 800 million (Schoifet, 1985, p.14), while KFC had annual revenue of $ 520 million. All the four companies experienced increased revenues for from the previous financial year of 2009. In terms of employee numbers, McDonalds has about 400,000 employees distributed across the globe. Meanwhile, Burger King has 38,000, Pizza Hut 30,000 and KFC 24,000.

All the four companies, as stated earlier, have a global competitive scope. As the market leader, amongst these four companies, McDonald’s strategic intent is to maintain its current position.

The other three fast food selling companies: Burger King, Pizza Hut and KFC all have strategic intent of overtaking a particular rival, specifically McDonald’s, which is the market leader. However, amongst these three companies, a level of competition to outdo each other and attain a relatively higher level of market dominance exists.

The market share objectives of the different companies vary. McDonalds’ market share objective focuses on consolidating its current position and increasing revenues through diverse strategies. Since KFC is the company with the least market share, KFC’s market share objective involves expansion via acquisitions (Shanahan, 2005, p.7).

In fact, KFC has recently been involved in expansion programs that have seen it place a foothold in previously untapped markets in the third world regions, in Asia and Africa. The other three competitors already have branches in these mentioned areas of the world. The competitive positions of all the four companies are strong.

As they expand out of the US market into global markets, all the four companies have maintained relatively high standards of operation acquired in their home countries. In terms of remuneration, these four companies have been able to retain overseas employees due to the comparatively higher wage pay when juxtaposed with local companies throughout the globe.

McDonald’s competitive position mainly involves projecting its image as the trusted leader in the fast foods industry. Other differentiation strategies by McDonald’s base on quality, where the food served is of the highest possible standards. The other three companies have similar and more growth centred company strategies that aim to increase their market share.

References

Kroll, K. (2009). Consumer Reports ranks top supermarkets. Web.

Nina, W. (2007). “Whole Foods Market prepares Kahala site for store”. Honolulu Star-Bulletin.

Schoifet, M. (1985). “Pizza Hut kicks off $15M Priazzo campaign”. Nation’s Restaurant News.

Shanahan, A. (2005). “Anatomy of a dish: KFC Family Feast – eight pieces of chicken (known as the “finger lickin chicken”), four regular fries, gravy and corn cobettes, £9.99″. The Guardian (UK).

Smith, A. F. (2007). The Oxford Companion to American Food and Drink. Oxford University Press: Oxford.

Wong, G. (2006). “Burger King IPO set to fire up“. CNN Money. Web.

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