Case Study on "Whole Foods Market"

Case Study 6 pages (1909 words) Sources: 6

[EXCERPT] . . . .

Whole Foods Market

Introduction of the organization

The food industry continues to expand, incorporating the advancement of technology in the processing and production process. Whole Foods Market is among the companies that invest in the industry. The company's headquarters is in Texas, America, and deals with natural and organic food products. It is the largest chain of supermarkets in its line of operation, with about 288 stores in 38 U.S. states and over 5 stores in the United Kingdom (Petusevsky, 2002). The organization runs supermarkets that only emphasize on the use of natural and organic products.

Identification of the industry and competitors

The whole foods industry is expansive and operates on the sale of organic and natural foods. This industry is quite competitive, with main competition coming from the direct dealers of organic food sales such as, Trader Joe's and Wild Oats Markets. However, the attractive margins of the industry bring in other global and national retailer such as Wal-Mart, and BJ's Wholesale Club. Therefore, the company faces stiff competition that it aims to overcome with strategic initiatives for the organization.

Potential profitability of the industry

Whole foods industry depends on the availability of a strong market, which is readily available, as the health concerns related to eating lifestyle cause people to turn to natural foods. Therefore, the industry has a ready market, which is continuously growing (Petusevsky, 2002). The industry has good potential for profitability in the present and the future market. Whole foods market as accompany is stringently selective about the quality standards of its products, which gives it potential in the industry.

Who has succeeded and failed in the industry and why?

The organic food industry is expanding rapidly, and as such, the various participants in the industry face stiff competition from each other. For this reason, some investors such as Wild Oats sold out to Joe's after having a hard time adjusting to the rising competition. The quality of service should be high; hence, the reason Wild Oats Markets did not succeed. Others that succeeded in the industry include Safeway, Kroger Company and Joe's. They succeed because they understand the requirements of the industry. They maintain the competitive quality of the industry.

What are the critical success factors?

The success factors in the industry for whole foods organization include adequate market analysis, which gives the organization-limited competition and market for distribution of products (Petusevsky, 2002). Another factor is reasonable regulations, with few and effective regulations on exports and product quality requirements, the organization can succeed accordingly. Another factor is effective and reliable distribution and shipping channels. With no barriers, reaching the market is easy.

What political/legal forces affect the industry?

The industry faces stiff and heavy regulations. The legal aspects related to the health, sanitation and food labeling regulations pose risk to the success of the industry. The Food and Drug Administration, the Federal Trade Commission, the Consumer Product Safety Commission and the Environment Protection Agency and United States Department of Agriculture, set stringent standards of marketing, packaging and processing organic products. Failure to meeting these standards leads to confiscation of license, hence limiting the industry.

What economic forces affect the industry?

The recent economic crisis and recessions of the economy affect the food industry largely. They pose challenge to the pricing of the commodities, hence affecting the market, as consumers turn to alternative cheaper foods when the prices of organic foods hike. Thus, the economic fluctuations affect the organic industry significantly.

What social forces affect the industry?

The society emphasizes on the use of organic foods to maintain the quality of health. Therefore, the organic foods market gets customers. Additionally, the cultural practices and beliefs that traditional foods have better nutritional value. This influences the market positively. Moreover, some religious beliefs promote certain foods, whereas others prevent others, hence determining the place where the organization gets market.

What technical forces affect the industry?

The technological advancements influence every sector of life. The whole foods industry gets boost from the technical developments, as mechanized farming means that the products are readily available. Mechanized processing and manufacturing equipment promote the industry's success (Rahel, 2012). Moreover, technology is useful in marketing, analyzing the market and putting in place effective strategic plans, therefore, the whole foods industry benefits with the technical forces.

The current firm-level strategy

The firm level of the Whole Foods Market in the development of the organizations leadership is that, it has several presidents that run the various geographic divisions of the organization (Rahel, 2012). This allows the management to make decisions and implement strategies that work for each store in each region.

The current business-level strategy

Whole Foods Market has a level of connection built from the long years of operation. The reputation of the organization, from its handling of resources, the market involvement and the suppliers and customer base is strong. The organization boasts of a strong base in the whole foods industry.

Business-level strategies presently employed by competitors

The competitors such as Joe's and the others are exploring the industry by applying quick expansion plans that aim at tapping the wide market available. Additionally, they are using the pricing factor to establish a strong customer trust, to ensure that they have more customers than Whole Foods Market (Denning, 2013).

The organization's marketing strategy

The marketing strategy of Whole Foods market involves the use of technology to tap into the online market, advertising their products from the internet. Additionally, the company is using the price to value base, with no intentions of employing lower prices to achieve competitive advantage (Rahel, 2012). They emphasize that the quality of their products markets them and not low price. The organization also uses its relation to the environment to market, as it already enjoys a strong foundation in the market.

The organization's financial position and financial strategy

The company currently has a large financial base, observing steady returns over the years. The profitability of the industry is working to its advantage, and thus, it has a good financial position (Annual Stakeholders' Report, 2012). The organizations financial strategy focuses on lowering and regulating the operational costs.

The organization's production and purchasing strategies

Whole Foods Market has a strong bargaining power due to the large number of suppliers. The organization owns and controls several significant subsidiaries, hence keeping the bargaining power of suppliers in control (News Releases, 2010). Consequently, they purchase goods and supplies at considerable prices. Additionally, the company is increasing its stores to a larger capacity to accommodate its large production levels.

The current strategies in other functional areas such as HR and information systems

Whole Foods Market strongly has a foundation in maximum freedom and minimum governance. The organization uses the team members have freedom to operate; hence, the HR does not limit the abilities of the workers (Annual Stakeholders' Report, 2012). Additionally, the organization is investing largely in technology to utilize the information systems for its success. The organization is also investing in marketing over the technical information systems.

SWOT analysis for Whole Foods Market

Strengths

The company enjoys the following strengths. Whole Foods Market has a strong management and working team. The freedom of the workers to engage accordingly allows them an advantage in the market. Secondly, the organization enjoys the market share leadership (Annual Stakeholders' Report, 2012). It also has a strong brand quality, and a strong financial position. Additionally, it has a long supply chain, effective communication, and innovation team and asset bank. Lastly, the organization has an increasing online growth (Ryan, 2012).

Weaknesses

The weaknesses of the organization include, that the organization is slowing on the expansion percentage basis (Annual Stakeholders' Report, 2012). It is only opening one new unit in every quarter, hence slowing the growth process. Additionally, the competitiveness on the pricing is not effective. The prices of its products are quite high, hence loosing the price advantage.

Opportunities

The organization has opportunity to expand to the international market, as it only concentrates on the local market currently (Annual Stakeholders' Report, 2012). It has stores only in Canada and Britain, leaving large market unexplored. The target of its sales are remarkably low, thus it has opportunity to improve on its sales.

Threats

The competition from the incoming competitors from general operations such as Wal-Mrt is the greatest threat in the industry. The climate change in the world is influencing the supplies prices.

Strategic alternatives are available for the organization

The organization has the alternative of improving the expansion of its stores to cover larger markets. This will work from the industry as it has a wide potential market that it can exploit. Therefore, it can focus its strategy on the expansion of its operations.

The pros and cons of these alternatives

The advantages of expanding to a larger market is that it will increase its income in the long run, it will diversify its market and also, the company will achieve more international foundation and enjoy larger market share. The disadvantage of this alternative is that, it will initially increase… READ MORE

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