Case Strategic Audit on Whole Foods Term Paper
- Length: 11 pages
- Sources: 6
- Subject: Business
- Type: Term Paper
- Paper: #94380930
Excerpt from Term Paper :
Whole Foods Market
Significant key points
Key financial indicators
Graph of sales growth from year 2002 until 2011.
SWOT and TWOS analysis
TOWS Strategic Alternatives Matrix
Pros and Cons
Evaluation and control
The Whole Foods Market is a progressive and focused corporation with presence in three developed markets including U.S., United Kingdom, and Canada. The company has achieved growth since its inception. The increasing market share of the company has enabled it to expand in international markets. The company envisions becoming global leader in organic and natural foods market. The competitors in the sector are large stores, supermarkets, and retail outlets with increased presence. The product range of these companies includes a number of related products along with the natural and organic foods.
The company requires maintaining its double digit growth strategy and aims to expand in global market. However the cost of natural and organic products is relatively high. Perishable nature of the products is also a concern in attaining exceptional expansion. The products also require conformity with the applicable standards and government regulations. The business requires reducing cost and increasing its profitability through innovative technology and applicable solutions of supply chain management.
A strategic analysis approach is taken to identify the internal and external business environment of the organization. SWOT analysis is performed to analyze strengths, weaknesses, opportunities and threats. The applications of TWOS matrix enables the identification of a strategic direction for the business. Furthermore the recommendation and necessary actions required to achieve its objectives are detailed. The recommendations are based on the critical review of strategic position and available resources.
The recommendations are mainly regarding the application of technology and innovative techniques to achieve growth. Supply chain managements system especially for perishable goods is recommended. The global presence of the business can be achieved through efficient implementation of e-commerce solutions. The businesses around the globe are targeting large markets through business process automation and innovative techniques in cost reduction.
The company was a partnership venture of two enthusiastic college graduates, starting a supermarket for natural and organic foods. The company stared in 1980 with its current name as Whole Foods supermarket. The natural calamity hit their store in Austin, within the first year of inception. The organization faced a critical situation regarding inventory and losses (Whole Foods Market). The surrounding neighborhood, vendors, suppliers, and customers helped stores revival within 28 days. Thereafter the company embarked on a journey of expansions throughout USA.
Since 1984 the company expanded its branches in various states including Huston, Dallas, New Orleans and Palo Alto. The expansion efforts included building stores form ground up to mergers and acquisitions with other organic food companies. The expansion of the corporation was heading towards international markets including Canada and United Kingdom. The international presence was also created through a mix of acquisitions and ground up stores (Whole Foods Market).
Significant key points:
The company has entered the market with a vision to tap into the market of organic and environmentally healthy foods. Their philosophy is also aliened with their operations and strategy to grow within local as well as international market. The company is also regarded as world leader in organic and natural foods markets (Whole Foods Market). The company is also focused to provide quality food product to its customers. Its strong financial position and dedicated management is also a unique asset for the organization.
The stores are leading the industry with most number of branches in U.S. As well as acquisition of large natural foods chain in United Kingdom. The company is also a socially responsible corporation as their existence is already an effort to develop a sustainable plant with the help of ecological agriculture and assurance of natural products. However the organization has to establish a robust mechanism to assure that products are in compliance with the industry and government regulations (Whole Foods Market).
Key financial indicators:
The organization is regarded as a fortune 500 company with a standing of 273rd rank. The average growth is at 7% as compared with the last ten years available data. Total sales of the organization amounts up to $10,107,787 with a cost of goods sold at $6.571,238 for the year ended at 25th, September, 2011. The net income from its operations is $342,612 with basic earnings per share at $1.96 for 2011. The sales comparison reveals that the company is adding dollar one billion each year since 2009 up to 2011. The total of sales is $10, $9, and $8 for the years 2011, 2010, and 2009 respectively (Form 10-K, 2011).
Figure: Graph of sales growth from year 2002 until 2011.
Source: (Form 10-K, 2011)
Hence it can be analyzed that the financial position of the company is stable as reflected by their statements of accounts. The comparison of growth rates of year 2010 compared with the last year reveals that the sales growth is reported as 14% increase having a significant on net sales increased at 78%. The debt equity ratio is calculated at 16% and net profit margin is recorded as 3%. The average net profit margin for last five years is 2.4%.
The analysis of Strengths, weaknesses, opportunities, and threats provides an overview of the company's internal as well as external factors influencing its growth and strategic positioning. The organizations analyze their current state as well as the desired state of business with the help of SWOT matrix (Lederer, Schott, Huber, & Kurz, 2013). The SWOT analysis of Whole Foods Market presented reveals key information regarding their business.
Focused Product Range
Lack of Global presence
Only supplying Organic Products
Quality Assurance and Conformity
Increased awareness for natural and organic foods.
Developing brand awareness and brand image
Focus on global presence and expansion.
Replica products from competitors considered better.
Batter Price is offered by the competitors
Economy recession is U.S. And world.
Changing regulations for organic classification.
The organization can take advantage of the increasing awareness regarding use of natural and organic foods. The genetically modified (GM) foods are not recommended for healthy living. Geological framing is also promoted for efforts to preserve environment. The market for organic and natural foods is increasing which is the major business line of Whole Foods Market. The company should also focus on creating brand awareness as well as creating a brand which is recognized universally for organic foods. The presence of the organization is limited to United States, United Kingdom, and Canada. It should be expanded in Gulf, Asia, Australia, and other parts of the globe to make it a globally recognized food store.
The governments and regulatory authorities of agriculture and food are rapidly improving regulations for organic classification of products. The rapid changes in regulations are a serious concern for the business strategy of the corporation. The competition has also copied product of the company and they are marketing these products with lower prices. The organization should take effective action to create awareness regarding originality and quality of the products. The global economy including U.S. is facing recession. The customers require value for money hence it is essential for companies to return valued products to progress during economically strained periods.
The company is a well placed business which has a strong product focus. The focused approach for products is essential to target require market. One of the important features for growth is named as financial position and continuous growth in terms of sales, number of stores, profitability, and profit margins. The business has a long history of continuously gaining market share through its effective strategy. The corporation is also regarded as market leader in natural and organic food products. The specialized set of human resources is also one of the notable strengths of the business facilitating its expansion and growth.
The organization is present in limited number of countries which is not a standard business practice for progressive corporations. It is required to enter new markets with increased potential. It can also expand through e-commerce solutions which should be carefully designed to cater perishable products. The organization is only focused on providing organic and natural products, whereas the competitors are multi-focused. The quality assurance and conformity to the standards of organic foods is essential in order to gain market share. The demonstration of such components is also essential to gain customer confidence.
SWOT and TWOS analysis:
SWOT analysis is useful for planning as it focuses on strengths, weaknesses, strengths, and opportunities. The situations and scenarios are analyzed using TWOS approach. The development of TWOS matrix also provides a significant insight of strategic options and their combinations. These combinations can be efficiently used to draw alternatives for the business. It is also regarded as an action tool for corporations. It is recommended to map overall direction of the corporation (Hitt, Ireland, & Hoskisson, 2012).
TOWS Strategic Alternatives Matrix:
External Opportunities (O)
1. Awareness for natural and…