Analyzing organizational congruence at Whole Foods Market using the Nadler-Tushman model

Business

Outputs at Whole Foods Market

Organizational Level Outputs

Group Level Outputs

Individual Level Outputs

Is There Congruence?

Whole Foods Market is one of the preeminent organic food retailers in the U.S. The Nadler-Tushman Congruence Model provides an effective framework for The Excellence Consulting Group (XCG) to analyze the organization, and assess the outputs to determine how the performance of the firm stacks up against the goals. The Nadler-Tushman Congruence Model examines outputs by looking at three levels; the organizational, group, and individual level. Examining these outputs will also allow an examination of the overall congruence that is archived by the firm.

2.

Organizational Level Outputs

At an organizational level there are a number of outputs. As Whole Foods Market is a retailer of organic healthy food, the first and most apparent output is the sale of the firms' products to its customers. This is an output that is the primary purpose of the organization, achieved with the firm acting as an intermediary between the food producers, such as famers and food manufacturers, and the customer. Whole Foods Market actively manages its supply chain, carefully looking upstream for suppliers of high quality organic and healthy products, including potential suppliers to provide own brand products for the firm. There shops sell in excess of 2,400 product lines, out of its' 403 worldwide stores, of which 384 are in the U.S. (Wu, 2014).

The way that the products are sold also creates a different type of output, the perception of an experience the firm provides for the shoppers. The strong ethic of the firm allows shoppers to feel good about their purchases, which supports the psychosocial aspects of buyer decision making and the creation of brand loyalty and associations (Kotler et al., 2013). The experience has been enhanced by the firm with the provision of additional services, such as wine bars, and in some of the newer building there is even a putting green (Wu, 2014). Older stores are also being revitalized to enhance the experience felt by the shoppers.

Another major output for firms quoted on the stock market will be the financial outputs. In the financial year ending in 2014 the firm had sales of $14,194 million, up from $12,917 million in the preceding year, and a net income before tax of $579 million, up from $551 million in 2013. While this was an increase in the amount, it was a slight decrease in terms of the profit margin, falling to 6.66% in 2014 from 6.92% in 2013. However, even with this decrease the firm is still providing an impressive profit output, with an industry average being 2.33% (MSN Money, 2014). For the shareholders there has been an increase in the way profits may be assessed by looking at the earnings per share; the diluted earnings per share increased from 1.28 in 2012, to 1.48 in 2013 and 1.57 in 2014, supported with a reduction in the number of shares outstanding as well as increased sales. In 2014 the firm paid out dividends of $0.48 per share, equating to an annual projected yield of 1.07%, the output that is paid directly to the stockholders. The majority of earnings are generated by the firm reinvested as the company has an agressive growth strategy, growing by an average of 40 stores a year, with the creation of these new stores and the service they offer also another kind of output, with a stated target 1,000 stores across the United States (Wu, 2014; Whole Foods Market, 2014).

2014 was a record year for Whole Foods Market, and the outputs have been increasing consistently over the last five years; with sales growth averaging 12.6% per annum over the last five years, compared to 9.15% for the industry average, and net income increasing by 31.6% per annum, compared to 6.97% for the industry average (MSN Money, 2014). Overall, is the firm has shown significant growth over the last five years, providing very satisfactory outcomes for most investors, with the share price in 2009 being $13.61, and the current share price for the opening on 22 December 2014 being $48.80 (MSN Money, 2014). The outputs of the firm in 2003 to suffer from decline, especially as the organization entered into some price cutting in order to become more competitive (Wu, 2014), but the increase in overall sales has seen the share price rebound and the organization is now recovering.

While the sale of groceries, and the financial outputs may be defined as the primary outputs, there are also other types of output which should be considered. One type of output which supports sales is the communication output, primarily for its marketing and public relations exercises. The organization seeks to support healthy food decisions by both customers and employees with the provision of information; this is seen in the organizations' mission and value statements, as well as the marketing messages. As seen in the next section, it is also seen at a group level. The marketing messages have successfully differentiated a firm, creating an image associated with healthy, high-quality, organic groceries, which is noted as facilitating a high level of loyalty within its consumer base (Whole Foods Market, 2014).

The outputs of the organization may also be seen in the context of the local communities, where specific strategies are seen, partnering with local suppliers, as well as the large national supply. The company undertakes a number of contracts with smaller supplies, such as local farms or smaller producers, to supply a limited number of stores, supporting local businesses as part of the organizational strategy. Local communities are also supported through the approach to corporate social responsibility, including approximately 5% of the after-tax profits being donated to charitable causes, the provision of loans to fair trade and local producers, and the development of foundations such as the Whole Planet Foundation, The Whole Cities Foundation (Whole Foods Market, 2014).

3.

Individual Level Outputs

At an individual level, programs such as the total health immersion program provided for employees may provide both physical and psychological benefits for the individual to take part in those programs, improving the overall well being (Ogden, 2012).

Key individuals within the organization also provide important outputs; the organization has two CEOs that act as co-CEO; John McKay and Walter Rob make statements that are interpreted by the markets and investors, and used as one type of information in the examination of the firm that is an output, as it impacts on perceptions of the firm by the different stakeholders. Within the micro context, it may also be argued the decisions made by managers will have a potential impact, especially where there are determining which community programs to become involved in, as well as which local suppliers to contract, that individual output can also have a significant impact. In all cases, with the mission and vision statements, managers are encouraged to lead by example.

The output of the individual employees, such as the creation of local display, the support of special interest evening and community events, and the individual help they provide for customers are also important outputs, they are the face of Whole Foods Market and it is their service that has helped to create the differentiation.

5.

Is There Congruence?

The firm has a stated goal of agressive growth, with the aim of having 1,000 stores in the U.S., although they have not put a time scale to that goal. The strategies adopted at the different levels appear to have a high level of alignment; for example, when looking at the promotion of healthy eating and healthy living, this is supported at an organizational level in the very mission and vision of the organization and in the goods they sell. It is also supported at a group level through the development fop the HR departments programs to support the healthy eating and well being of employees, and the community programs, such as the placing of salad bars in schools. The use of social media and the way communication take place also support the healthy message, and the outputs at an individual level, such as the support and advice or help given by employees also supports the healthy message.

The healthy message and the marketing as well as the service at all these levels also support the financial goals by providing one of the elements of differentiation. Differentiation supports the organizations ability to grow; increasing sales and profits to support growth. Good local reputation that are undertaken under the corporate banner and mission, such as involvement in charities and community events help to enhance the firms reputation and make them more attractive to consumers. There is a high level of interdependency of all the different outputs, supporting each other as they converge with the organization goal, leaving the impression of a high level of congruence existing.