Strategic analysis of Whole Foods Market for potential merger consideration

Strategic Review

Over the last several years, the food industry has been consistently changing. In the case of grocery stores, these challenges have become even more pronounced. This is because of increased competition and consumers who are focused on receiving value. These different factors have led to the sector realizing tighter profit margins and the ability to make adjustments in order to maintain their market share. ("2011 Supermarket Trends," 2011)

In the case of ABC Company, they are considering a possible merger with Whole Foods. To determine how a possible integration will occur requires focusing on Whole Foods and the business model they are using. This will be accomplished by carefully examining the firm's mission / vision / values, identifying strategic goals, conducting a critical assessment of the competition, describing the opportunities / threats and analyzing the company's strengths / weaknesses. Together, these elements will highlight if ABC should make any kind of strategic changes or simply maintain the status quo.

Whole Foods Market's mission, vision and values

Whole Foods Market's is focused on providing customers with the finest organic and natural food available today. This means that the company has a mission of providing customers with the highest standards for quality and encouraging environmentally sustainable agricultural practices. These factors are illustrating how the firm will not purchase any products grown or sold through the lowest cost provider. Instead, there is an emphasis on ensuring that every piece of produce or food related merchandise is meeting these objectives at all times. ("Company Info," 2013) ("Annual Stakeholders Reports," 2012)

The vision of the company is to create a new standard for quality, safety and freshness within the industry. This requires seeking out producers and whole sellers who share a similar interests. Yet, it also means setting the example for the employees, communities and competitors within the industry. ("Company Info," 2013) ("Annual Stakeholders Reports," 2012)

The values of the firm are to embrace those practices that will support healthy eating habits, benefiting everyone in the community and creating a friendly atmosphere in their different locations. These objectives are achieved by working with different stakeholders in order to set the example for others to follow. For instance, one of the ways that Whole Foods is able to support these goals is through encouraging various programs. That are dedicated towards social responsibility. This is when employees and managers will work with the community to create programs that will help everybody to realize the positive long-term benefits. A few of the most notable include: providing low interest loans to farmers who will utilize environmentally friendly practices, providing nutrition education / programs and working with the communities to support the poor. These elements help the company to achieve its larger values by ensuring that they are creating win -- win situations for everyone they are involved with. ("Company Info," 2013) ("Annual Stakeholders Reports," 2012)

The Current Strategic Goals of Whole Foods

Whole Foods has strategic goals that are focused on maintaining and supporting sustainable practices. The most notable include:

Engaging in actions that are creating and maintaining environmentally friendly procedures.

Respecting all life forms.

Regulation, enforcement and high levels of accountability.

Education and public participation.

Working to improve the practices that everyone is utilizing beyond the areas of food (which are ecologically sustainable).

These different areas are showing how the company is concentrating on creating practices that will protect everyone. This occurs through setting the example inside the firm and serving as an advocate for others outside of the food industry. ("Sustainability and Our Future," 2013) ("Annual Stakeholders Reports," 2012)

The opportunities and threats Whole Foods is presently facing

The biggest opportunities for Whole Foods is the ability to create a unique marketplace. That can reach out to consumers based upon their approach and practices. This means that they can promote more healthy living and offer cliental with the ability to purchase organic foods they demand. This allows them to know that they are working with a firm which cares about their communities, the farmers they are working with and is helping to support the environment. These factors will address the needs of customers, who want corporations to become more responsible in way they are interacting with different stakeholders throughout this process. (Burch, 2007) ("Annual Stakeholders Reports," 2012)

The greatest threats facing Whole Foods is from increasing competition inside the industry. This is taking place with many firms following similar approaches to show that they are giving something back to communities and care about the quality of merchandise they are providing. At the same time, there is a focus on offering customers with lower prices. This is problematic for Whole Foods, as some of the larger retail chains can undercut them in these areas. This means that they will have to resort to discounting, in order to offer consumers with the same kind of benefits. (Burch, 2007) ("Annual Stakeholders Reports," 2012)

Moreover, the company is continually being impacted by higher food costs. This is will hurt their bottom line results by making it difficult for them to offer cliental with stable prices. When this happens, a large number could begin shopping at other locations in order to address these objectives. (Burch, 2007) ("Annual Stakeholders Reports," 2012)

Whole Foods Strengths and Weaknesses

The biggest strengths for Whole Foods are that they have an established history of creating a unique market niche among consumers. This helps them to be seen as one of the innovators in encouraging other firms to follow their example of: supporting sustainable environmental, food and community related practices. At the same time, they have a number of locations, which are seeing strong demand for the unique products they offer to cliental. This allows the company to build upon its image and continue to innovate in enhancing its business model even further. ("Global Food Retailing Industry," 2013) (Burch, 2007) ("Annual Stakeholders Reports," 2012)

The greatest weaknesses for the firm are from increasing competition and prices. In the case of competition, a number of companies have been taking a similar approach when it comes to the products they are selling to cliental. This is challenging, as it will require Whole Foods to continue to adapt in order to make themselves stand out. Prices can have a negative impact on the firm's bottom line results. This is occurring through increasing costs on the wholesale level and tremendous amounts of discounting. Over the course of time, these factors can hurt the company's earnings and ability to maintain their competitive position. ("Global Food Retailing Industry," 2013) (Burch, 2007) ("Annual Stakeholders Reports," 2012)

Recommendation

Clearly, ABC should integrate with Whole Foods. This will allow the company to maintain its market share and augment the products they are selling into the firm's strategy. At the same time, the management team could help Whole Foods to more effectively address the challenges they are facing from: increased competition and pricing. This will enable both firms to take advantage of each other's cost structure and create a unique atmosphere which is offering everyone with more. These factors are the keys for ensuing that they can remain economically viable and continue to evolve with new challenges over the long-term. (Burch, 2007) ("Annual Stakeholders Reports," 2012)