Case Study on "Whole Foods Michael Porter Five"

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Whole Foods Case Study

Michael Porter Five Forces analysis

Supplier Power:

Once upon a time, the organic supermarket Whole Foods had a high level of power as a supplier. It was difficult for consumers to find the type of organic foods and foreign and luxury goods Whole Foods provided in many areas of the country. Whole Foods stocks gluten-free, vegetarian, and other specialty goods and services once impossible to find at the local Piggly Wiggly.

However, 'once' is the operative word. Now such products are becoming more and more common in everyday supermarkets. Even Wal-Mart has begun to stock organic produce. Also, as the consumption of organic produce and other products, such as international cheeses and peanut-free nut butters, becomes more accepted, natural food stores and other natural foods chains may open up branches in underserved areas of the country.

Organic farmland has become more accessible and more common for other suppliers. While this is good for the sustainability movement as a whole, it could make it easier for competitors to supply these items at lower cost than does Whole Foods. Additionally, the expansion of farmer's markets nationwide can make local produce far cheaper and just as ethically uncompromised as commercially-grown organic foods.

Buyer Power:

Whole Foods consumers have been stunningly ineffective, up to this point, at driving prices down. Even dedicated Whole Foods shoppers often call their favorite venue to buy organic cleansers and baby food 'Whole Paycheck' because of its expense. Whole Foods almost never deploys sales or produc

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ts at a low price point, but by clinging to its image that consumers 'feel good' shopping there, it has thus been able to remain successful. It has begun to sell some of its own market-branded products, but while lower in cost than its high-end items, these goods are still far more expensive than what can be found at the local Wal-Mart.

A point against Whole Foods' favor in terms of having a captive audience of buyers is that in the end, Whole Foods is still selling -- food. Buyers can competitively drive prices down by switching to other venues. When the economy sours, eschewing going out to eat is one of the first moves of any frugal customer. Even if Whole Foods consumers are more affluent than their Kroger's counterparts, no one is immune from losing his or her job. Consumers cut back on eating prepared foods (a key driver in Whole Foods' business) and eating out at expensive places. Switching supermarkets is relatively easy in the food industry, and even if food is a necessity, eating at Whole Foods is not. The personal costs of switching to eating somewhere else are likely to be low.

Competitive Rivalry:

Competition is heated in any facet of the food business, because of the fluidity of buyers. Whole Foods' uniqueness was once its strength, but no more. Now other competitors that are cheaper but model themselves upon a similar healthy, organic model have made incursions into the market. These include companies such as Trader Joes. And the organic lines of Wal-Mart and standard supermarkets are real competitive threats.

Threat of Substitution:

Substitution threats are increasing. As the products that Whole Food customers can buy are less rare than before, customers can use their new leverage to 'substitute' a cheaper version of organic peanut butter or organically grown tomato from another retailer. Also, specialty shops that stock international foods that are a staple at Whole Foods are proliferating in new areas of the nation, as being a 'foodie' has become more popular as a hobby. As a 'plus,' however, as interest in eating at home grows, Whole Foods products could… READ MORE

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Quoted Instructions for "Whole Foods Michael Porter Five" Assignment:

“

Conduct an analysis of a company situation Case #1 Whole Foods Market (p. C-2) and prepare a 4-5 page, double-spaced report to complete the following:

Discuss the trends in retailing of organic foods and the impact of these trends on Whole Foods Market.

Evaluate the competitive environment of the firm: Apply Porter*****s model and analyze each factor relative to the company.

Discuss which environmental factor poses the most significant threat to Whole Food and what the company can do to combat it.

Complete a SWOT analysis and identify significant opportunities and threats facing the organization.

Discuss how Whole Foods can use it strengths and opportunities to achieve a sustained competitive advantage in the marketplace.

The assignment will be graded using the following rubric:

Outcomes Assessed

Analyze the external and internal environment for opportunities, threats, strengths and weaknesses that impact the firm*****s competitiveness.

Grading Rubric for Assignment # 2 ***** Competitive Forces and SWOT Analysis

Criteria

0

Unacceptable

20

Developing

30

Competent

40

Exemplary

1. Discuss the trends in organic foods and how it may impact Whole Foods.

Does not attempt assignment, nor discusses the organic food trends and it impact on strategy.

The organic food trends were discussed and the related impact on strategy, but with less than 60 - 79% accuracy and some of the trends identified were inappropriate or were not identified.

The organic food trends were discussed and the related impact on strategy, with 80 - 89% accuracy and appropriate information was discussed.

The organic trends were discussed and the impact to strategy with 90 to 100% accuracy and all appropriate information was identified and discussed clearly.

2. Evaluates the competitive environment using Porter*****s 5 Forces Model.

Does not attempt assignment, nor discusses the competitive environment trends and it impact on strategy.

The competitive environment elements, but with less than 60 - 79% accuracy and some of the trends identified were inappropriate or were not identified.

The competitive environment elements were discussed and the related impact on strategy, with 80 - 89% accuracy and appropriate information was discussed.

The competitive environments were discussed and the impact to strategy with 90 to 100% accuracy and all appropriate information was identified and discussed clearly.

3. Discuss the most significant environmental threat and how Whole Food*****s may combat it.

Does not attempt assignment, nor discusses the most significant environmental threat.

The most significant environment threat was discussed, but with less than 60 - 79% accuracy and some of the trends identified were inappropriate or were not identified.

The most significant environment threat was discussed, with 80 - 89% accuracy and appropriate information was discussed.

The most significant environment threat was discussed and the impact to strategy with 90 to 100% accuracy and all appropriate information was identified and discussed clearly.

4. Complete a SWOT analysis and identifies significant opportunities and treats.

Does not attempt assignment, nor discusses the SWOT analysis and it impact on strategy.

The SWOT analysis elements were discussed and the related impact on strategy, but with less than 60 - 79% accuracy and some of the trends identified were inappropriate or were not identified.

The SWOT analysis elements were discussed and the related impact on strategy, with 80 - 89% accuracy and appropriate information was discussed.

The SWOT analysis elements were discussed and the impact to strategy with 90 to 100% accuracy and all appropriate information was identified and discussed clearly.

5. Discuss how Whole Foods can use its strengths and opportunities to achieve a sustained competitive advantage.

Does not attempt assignment, nor discusses how strengths and opportunities can be used to achieve a sustained competitive advantage.

The strengths and opportunities were discussed and the related impact on strategy, but with less than 60 - 79% accuracy and some of the trends identified were inappropriate or were not identified.

The strengths and opportunities were discussed and the related impact on strategy, with 80 - 89% accuracy and appropriate information was discussed.

The strengths and opportunities were discussed and the impact to strategy with 90 to 100% accuracy and all appropriate information was identified and discussed clearly.

6. Clarity

Did not complete the assignment or explanations are unclear and not organized.

(Major issues)

Explanations generally unclear and not well organized.

(Many issues)

Explanations generally clear and/or organized. (Minor issues)

Explanations very clear and well organized.

(Added helpful details.)

7. Writing ***** Grammar, sentence structure, paragraph structure, spelling, punctuation, APA usage.

Did not complete the assignment or 8 or more different errors in grammar, sentence structure, paragraph structure, spelling, punctuation or APA usage. (Major issues)

6 - 7 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation or APA usage. (Many issues)

4 - 5 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation or APA usage. (Minor issues)

0 - 3 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation or APA usage.

*****

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“Whole Foods Michael Porter Five.” A1-TermPaper.com, 2010, https://www.a1-termpaper.com/topics/essay/whole-foods-case-study-michael/92898. Accessed 4 Oct 2024.

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1. Whole Foods Michael Porter Five. A1-TermPaper.com. https://www.a1-termpaper.com/topics/essay/whole-foods-case-study-michael/92898. Published 2010. Accessed October 4, 2024.