Case Analysis Whole Foods Corp

1. Case Analysis

2. Vision/Mission Statements
Vision:
“Whole Foods, Whole People, Whole Planet”
Mission:
“Our purpose is to nourish people and the planet. We're a
purpose-driven company that aims to set the standards of
excellence for food retailers. Quality is a state of mind at
Whole Foods Market.”

3. INTRODUCTION:
• Whole Foods Market Inc. is the world’s
leading natural and organic foods
supermarket.
• United States' first certified organic
grocer
• September 20, 1980
• Austin, Texas

4. INTRODUCTION:
• Founders:
John Mackey
Renee Lawson Hardy
Craig Weller
Mark Skiles

5. INTRODUCTION:
Main growth strategy:
MERGERS AND ACQUISITION
Houston Dallas
New Orleans California
United Kingdom

6. INTRODUCTION:
Main growth strategy:
MERGERS AND ACQUISITION

7. EXTERNAL ASSESSMENT
PESTEL ANALYSIS
• Political: Proper labeling of organic and GMO-free products, free
trade agreements, Whole Trade Guarantee
• Economic: Economic recession, rising unemployment rate
• Social: Healthy lifestyles trend, rising cultural diversity of its target
consumers, rising wealth gap
• Technological: More automation technologies, patenting of
genetically modified organisms (GMOs)
• Environmental: Global warming, waste disposal, pollution
• Legal: environmental protection laws, inadequate employee laws in
developing nations, antitrust laws.

8. EXTERNAL ASSESSMENT
EXTERNAL FACTOR EVALUATION (EFE) MATRIX
External Strategic Factors Weight Rating Weighted
score
Opportunities
Growth through acquisition .20 3 .80
A vast varieties of item selection .20 3 0.6
Distribution of retail store in such place where competitor’s
store is unavailable
.15 4 0.6
Threats
Local grocers increasing organic food options .15 3 0.45
High price of product .15 2 0.3
Economy troubles: customers switching to lower cost products .15 1 0.15
Total 1.0 2.9

9. EXTERNAL ASSESSMENT
CPM (Competitive Profile Matrix)
Critical Success Factor Weight
Whole Foods Market Kroger Walmart
Rating Score Rating Score Rating Score
Brand Recognition 0.20 4 0.80 4 0.80 4 0.80
Product Quality 0.13 4 0.52 4 0.52 3 0.39
Management 0.10 2 0.20 4 0.40 4 0.40
Price Competitiveness 0.15 2 0.30 3 0.45 4 0.6
Financial Position 0.15 2 0.30 3 0.45 3 0.45
Customer Loyalty 0.15 3 0.45 4 0.60 4 0.60
Global Expansion 0.12 2 0.24 2 0.24 3 0.36
Total 1.0 2.81 3.46 3.6

10. EXTERNAL ASSESSMENT
Porter’s Five Forces Model

11. INTERNAL ASSESSMENT
Corporate Governance
Board of Directors
 John Mackey as a cofounder and CEO
 Dr. Ronald Chwang (Chairman and President, iD Ventures America, LLC)
 George C. McNamee
 Dr. Jacques S. Gansler (Director, Center for Public Policy and Private Enterprise, University of Maryland)
 General Paul J. Kern (U.S. Army, Retired) (Senior counselor, The Cohen Group)
 Deborah G. Ellinger (President, Ellinger Enterprises)

12. INTERNAL ASSESSMENT
Corporate Governance
Top Management
John Mackey: cofounder and CEO
John J. Leahy: Chief Financial Officer
Jeffrey A. Beck: Chief Operating Officer
Glen Weinstein: Senior Vice President and General Counsel
Dr. Tom Wagner: Chief Technology Officer
Alison Dean: Senior Vice President of Corporate Finance and Principal Accounting
Officer

13. INTERNAL ASSESSMENT
Corporate Resources
VRIO ANALYSIS Resources Is it
valuable?
Is it
rare?
Is it
imitable?
Is it
substitutable
?
Strong local presence (Marketing) Yes No No No
Strong expense control (Financial) Yes Yes No Yes
High quality product (Operations) Yes Yes Yes Yes
Employee satisfaction (HR) Yes Yes No No
280 stores totaling 10.3 million
square feet (Logistics)
Yes Yes No No
Social Responsibility Yes Yes No No
Strong leadership Yes Yes No No

14. INTERNAL ASSESSMENT
Corporate Resources
 The world’s leading natural and organic foods supermarket.
 Has a very strong local presence not only among customers
but also the national media
 Enjoys lofty profits in a very price-competitive industry
 Despite the declining sales, it was able to exhibit strong
expense control which resulted to 10% increase in income in
the first half of 2009
 Remained committed to organic certifications to a wide
variety of products such as produce, meat, cheese, and
salad bars despite stricter federal requirements

15. INTERNAL ASSESSMENT
Corporate Resources
 The world’s leading natural and organic foods supermarket.
 Has a very strong local presence not only among customers
but also the national media
 Enjoys lofty profits in a very price-competitive industry
 Despite the declining sales, it was able to exhibit strong
expense control which resulted to 10% increase in income in
the first half of 2009
 Remained committed to organic certifications to a wide
variety of products such as produce, meat, cheese, and
salad bars despite stricter federal requirements

16. INTERNAL ASSESSMENT
Corporate Resources
 It was able to expand its stores while maintaining costs at
low level and not raising prices
 Continually earned accolades such as 2009 Socially
Responsible Retailer Award and Top 25 Green Power
Partners
 Participated in community involvement by donating at least
5% of its net profits yearly to charitable causes

17. INTERNAL ASSESSMENT
Internal Factor Evaluation (IFE) Matrix
Key Internal Factors Weight Rating
Weighted
Score
Strengths
 Brand Recognition
 Good Quality
 Huge Selection/Variety
 Positive Employee Environment
 Large, customized stores
 No. 16 on Fortune’s World’s Most Admired Companies list
0.12
0.15
0.10
0.08
0.10
0.05
4
4
4
3
4
3
0.48
0.60
0.40
0.24
0.40
0.15
Weaknesses
 Concentrated just on US market
 Relative slow growth
 Limited number of suppliers
 Advertising budget is very low
0.15
0.05
0.10
0.10
1
2
1
2
0.15
0.10
0.10
0.20
Total 1.00 2.82

18. SWOT ANALYSIS
STRENGTHS
 Market leader in the industry
 High quality products
 Strong brand equity - the Whole Food’s brand is known
worldwide for its organic products
 Strong public image because it has a sense of Corporate
Social and Environmental Responsibility
 Has wide reach of customers due to numerous stores in
the US, UK, and Canada
 Strong expense control
 Motivated employees due to above average salary, good
benefits of employees
WEAKNESSES
 Premium price
 Limited operations overseas
 Limited supplier
 Diseconomies of scale
 Inability to reach targeted revenue and flat sales year by year
 Struggle to maintain pricey image and higher margins
 CEO’s opinion has caused public drama which hurt the
company’s image and business.

19. SWOT ANALYSIS
OPPORTUNITIES
 Increasing trend of healthy living
 Lower income customer base
 Capitalize on Whole Trade Guarantee
 Local and international expansion and take advantage of
free trade agreements
 implement more automation technologies to increase
business efficiency
 provide improved online services through consumers’
mobile devices
THREATS
 Increased competition from existing supermarkets that are
re-branding in order to compete with them
 Recession: the rising unemployment rate in the US may lead
to deeper retrenchment shopping pattern for consumers
 Low spend per trip due to high prices. Individuals buy the
specialty item and not the essentials
 Changes in government regulations on organic food would
impact consumer spending even further
 In low income areas, consumers are avoiding any products
that might be considered lavish or more than a necessity

20. STATEMENT OF THE PROBLEM
As much as Whole Foods Market Inc.’s historical growth
was achieved through mergers and acquisition, how can
it maintain its market leader position despite high
threat of rivalry within existing competitors and future
threat of new entrants in the organic food industry?

21. ALTERNATIVE COURSES
OF ACTION
Grand Strategy Matrix

22. ALTERNATIVE COURSES
OF ACTION
Grand Strategy Matrix

23. ALTERNATIVE COURSES
OF ACTION
Grand Strategy Matrix

24. ALTERNATIVE COURSES
OF ACTION
Alternative 1:
Market Penetration
 Focuses on selling existing
products into existing markets
to gain higher market share
 Offering better prices than
rival’s price may result to luring
out customers.
 Increase its market share in the
existing market
X organic products are expensive to produce
and trying to produce enough while lowering
production cost and price at the same time
may not be possible

25. ALTERNATIVE COURSES
OF ACTION
Alternative 2:
Market Development
 Targets audiences they have not
yet reached or are not yet
currently serving
 Can explore new markets like
expanding internationally such
as in Europe, Canada, and UK
X typically requires capital investment as it
builds new stores
X becoming successful internationally may
take time

26. ALTERNATIVE COURSES
OF ACTION
Alternative 3:
Product Development
 Creating or introducing new
product in the market to create
new business
 Remain relevant with its
customer base
 Creating innovative product may
drive a higher value proposition
to customers
X risk of failure of developing successful
product
X shelling out money, time, and effort which
may not payoff

27. CONCLUSION
Employ a primary intensive growth strategy to
maintain its strong market share and revenues
Phase 1: Market Penetration—
To strengthen its market share and ensure a strong customer loyalty
Phase 2: Market Development—
Enter the international market for further growth

28. RECOMMENDATION
Phase 1: Market Penetration Strategy
a. Intensify its marketing campaign-“We Believe in Real Food”
b. Strengthen customer loyalty base- incentives and initiatives
through customer feedback, Loyalty Point Cards
c. Go online- revamp its website and partner with e-commerce websites like
Amazon
d. Consider offering promotional coupons- offer affordability
through discounts

29. RECOMMENDATION
Phase 2: Market Development Strategy
a. Enter overseas market- Asia, Europe, Australia
b. Create stronger supply chain operations overseas- enhance
foreign relationships and add value to store operations
c. Franchise in International Markets- but keep management and
operations in order to ensure quality products and services

30. Thank you.