WHOLE FOODS MARKET 7
WholeFoods Market is a leading chain in the United States that exclusivelydeals with foods that do not have additional flavoring, sweeteners,or hydrogenated fats. The National Organic Program certified theenterprise for complying with the integrity of organic foods from thetime they are sourced from the producers to the time they arepresented to the final consumers. The first store opened in 1980 inAustin, Texas. Presently, the organization has over91,000 employees working in 431 units distributed across the UnitedStates, Canada, and the United Kingdom (, 2016).All along, has been operating in the competitiveenvironment by retaining a big number of loyal clients. However, theintegration with ABC Company necessitates the strategic analysis ofthe company to determine its position in the industry. For theexpected venture to be viable, a thorough examination of the internalfactors of each party is critical. The data will help in informingthe decision makers about the business state of each of the mergingenterprises. This paper will provide the strategic analysis of WholeFoods Market, its market position, and recommend whether there aresignificant changes that need to be implemented by the management.
Mission,Values, and Goal
Inthe business, the value of the products is a primary consideration.Since its establishment, aims at providing qualityfoods regardless of whether one is hungry or just food curious. Itsmission is inseparable from the values that make it unique in theindustry. The internal culture is oriented towards selling thehighest quality natural and organic foods to satisfy and nourish theconsumers (Meador et al., n.d). Its focus also extends beyond thelocal clientele and the management looks forward to establishingchains in other countries. The company also integrates environmentalstewardship in its programs and maintains a healthy relationship withthe suppliers. Another important value that the management invests inis promoting the health of the stakeholders through nutritioneducation.
Inaddition, the company outlined a growth strategy in 2002 in which themanagement resolved to open large stores rather than acquiring smallchain outlets that were previously owned by other parties (WholeFoods Market, 2016). The rationale for this progressive idea was toretain the liberty to brand the stores to become inviting andattractive to the consumers. The concept is also tied to theestablishment of “Third Places,” whereby clients would relax whenoutside their homes and workplaces (, 2016).
Currently,the company operates 413 units in America, Canada, and the UnitedKingdom. All its stores are 50,000 feet and larger to provide aconducive environment that inclines to its values (Meador et al.,n.d). The company has been recording a rather unstable profit patternsince 2006. In 2006, the company had a gross profit margin of 34.9%,and it increased to 35.0% in 2011. In 2015, the margin dropped to34.7% (, 2016). The significant reduction isattributed to the heavy borrowing, and it has led to a drop inranking among the top competitors.
Thephysical presence of continues to be felt in thedifferent places of its operations, mostly due to the customizedchain stores. Also, to provide a competitive environment, the companyoffers spacious places. On average, each store is approximately30,000 square feet (Meador et al., n.d). The presence in the UnitedStates, Canada, and the United Kingdom has helped to increase thesales over the years. In its first quarter of 2016, the companyaccomplished remarkable sales worth $3.7 billion (,2016). During the same period, the enterprise offered theshareholders $0.44 per unit and adjusted the revenue on investedcapital to 14% (, 2016).
Inaddition, the enterprise recruits staff with a wealth of experiencein the grocery industry. The workers are then introduced to aquality-oriented culture that has helped to achieve major expansionobjectives. The management has also been on the frontline ofretaining the best talents by providing supportive working conditionsand competitive salaries (Meador et al., n.d). However, they arestill slightly below that of major competitors in the industry. Themanagement believes that the workers are motivated by the healthbenefits that the company passes to their clients and the model workenvironment as opposed to receiving hefty perks.
WholeFoods Market Strategic Analysis
Amajor strength of the organization is the robust passion for wholefoods. Since its inception, the company has not dealt with anyserious reproaches regarding quality, and this has earned it adesirable international reputation (Thompson, 2016). Secondly, WholeFoods Markets has a competitive edge in the size and appearance ifits premises. By owning the buildings in which it operates, themanagement has the right to modify them to the required size andbrand them accordingly (Thompson, 2016). Each of the stores has acustomized layout that gives clients an attractive view of the foodson offer.
However,several drawbacks lacerate the competitiveness of the company. First,most of its stores are located in the United States. According toMeador et al. (n.d), changes in economic condition in the countrycould be injurious to the sales, and consequently the profits. Inaddition, the foods in the stores have a higher price compared tosubstitutes offered by competitors (Meador et al., n.d). With thegrowing number of whole foods stores, there is a possibility oflosing a significant number of clients to the alternative shops.
Peoplefrom different parts of the world have continued to embrace theconsumption of whole foods as a result of the increased nutritionawareness. The opening markets offer the company an opportunity toexpand and intensify its global coverage. The management can takeadvantage of the nutrition awareness campaigns and integrate theminto their promotion strategies (Meador et al., n.d). Also, theglobal presence can increase the supply chain and introduce new foodsin the stores. Currently, most of the foods are sourced from theUnited States. Venturing into the promising markets can increase thevariety in the stores and give the enterprise a competitive edge.
Thelocal grocers have continued to embrace whole foods, and they haveheightened competition in the market. They are likely to capture asignificant number of clients, thereby, leading to reduced sales madeby . Also, most of the grocers are convenientlylocated near the clients as opposed to the chain stores that targetthe business districts (, 2016). The smallretailers are likely to shop at the local stores. Also, the increasedcost of producing whole foods is passed on to the consumers. Some ofthe clients opt to procure non-organic substitutes that arerelatively cheaper.
PossibleChanges to Improve Performance
Although is a leading player in the industry, it is likelyto lose a significant relevance in the industry if the managementdoes not focus on the expansion strategy. The increasing number oflocal grocers should trigger the company to extend its services tomore towns to counter the competition (Meador et al., n.d). Thepopularity that the business has gained over the years for offeringquality foods would be instrumental in wooing new clients withoutincurring lot of promotional costs. Also, the company operates inthree major regions, with an emphasis in the United States. To shieldit from economic upheavals, the management should consider venturinginto new niches and increase the number of units outside the UnitedStates. The justification for this is that it is unlikely thatmarkets in different countries can suffer a similar economic crisisat the same time and with a similar magnitude (Meador et al., n.d).
Theintegration of and ABC would combine the forces oftwo dominant companies. brings in a wealth ofclients in three countries. Moreover, the skilled workforce thatmotivated by the company’s contribution to healthy nutrition wouldsupport the shared objectives. Also, the enterprise is well-paced totake advantage of the expanding whole foods consciousness. Therationale for this is that the NationalOrganic Programcertifies the company, and it has not faced any complaints aboutcompromising the quality. Also, strategy to own buildings in theareas of operation gives the company the liberty to rebrand or changethe interior appearance. Finally, although the profit margin has notgrown significantly over the last decade, it is notable that theorganization has made more sales than other competitors have attainedin the industry. By focusing on increasing the number of stores, themanagement can revert the growth pattern.
Meador,D., Britton, D., Phillips, P., & Howery, A. (n.d). Caseanalysis – Whole Foods market.Retrieved on July 28, 2016 fromhttp://pnphillip.asp.radford.edu/whole%20Foods%20Case.pdf
Thompson,A. (2016). Whole Foods market’s generic & intensive growthstrategies. PanmoreInstitute.Retrieved on July 28, 2016 fromhttp://panmore.com/whole-foods-market-generic-strategy-intensive-growth-strategies
WholeFoods Market. (2016). CompanyInfo.Retrieved on July 28, 2016 fromhttp://www.wholefoodsmarket.com/company-info
WholeFoods Market. (2016). reports second quarterresults. WholeFoods Market.Retrieved on July 28, 2016 fromhttp://investor.wholefoodsmarket.com/investors/press-releases/press-release-details/2016/Whole-Foods-Market-Reports-Second-Quarter-Results-542016/default.aspx