Environmental and Institutional Analyses of Whole Foods, Inc.

Strategic Review -- Whole Foods

Organizational diagnosis of Whole Foods, Inc. involved environmental and institutional analyses. The environmental analysis involved categories of political, economic, social, technological, geographical, community relation and informal sector network, seeking to discern opportunities and threats. The institutional analysis involved categories of organizational role & profile; membership; programs and services; resources and capabilities; management systems; and external links, seeking to discern strengths and weaknesses. The combined environmental and institutional analysis and their charted results the Company's nature and interactions for more fluid integration of Whole Foods, Inc. into ABC Company.

Body

Environmental Analysis

Analyzing the external forces affecting Whole Foods to see the options open to the Company (ffw.org.ph, n.d.), one can see significant opportunities and threats to the Company.

Political

Whole Foods Market, IP.LP is a U.S. based supermarket specializing in natural and organic foods and having 300+ stores in the United States, Canada and the United Kingdom (Whole Foods Market, IP.LP, 2014). Founded in 1980, it corporate headquarters are in Austin, TX and the majority of its income is derived from U.S. sales (Hill, 2013). Whole Foods' customer base is liberal, though its CEO, John Mackey, is a very vocal, conservative libertarian (O'Callaghan, 2009). The 2014 mid-term U.S. elections giving majorities in both Houses of Congress to Republicans, is deemed very favorable to business and to corporate interests, in particular. For example, Republican tax reform is expected to close corporate tax loopholes but lower corporate taxes (Merrill, 2014). Whole Foods is a non-union employer, choosing to provide good benefits and community to workers rather than entertain the possibility of unionization; consequently, it suffers from external union opposition to its business model (Shaywitz, 2013). In addition, the Corporation was sued by the Attorney General of California in 2008 for knowingly illegally selling carcinogenic products (Baldas, 2008) and in 2014 for deliberately overcharging California consumers (Li, 2014). It appears that the 2008 suit may still be pending; however, Whole Foods agreed to pay an $800,000 settlement for the suit involving overcharging Californians.

2) Economic

Whole Foods' position as a primarily U.S.-based corporation in the retail grocery industry means that it must pay a higher tax rate (sometimes as high as 35%) than, for example, tech industry corporations (Berman, 2013); however, as mentioned above, Republican tax reform is expected to close corporate tax loopholes but lower corporate taxes (Merrill, 2014), which is certainly favorable to Whole Foods. In addition, the stock market continues to rise and is predicted to keep rising, which is favorable to U.S. businesses (Merrill, 2014), such as the publicly traded Whole Foods

3) Social

Whole Foods' customer base is liberal (O'Callaghan, 2009) and has reacted strongly to statements by CEO Mackey by boycotting the store in 2009 in reaction to his statement that Obamacare is "socialist" and immediately reacting against his 2014 claim that Obamacare is "fascist" (Kavoussi, 2013) as well as his pro-corporate tax haven assertions (Berman, 2013). Simultaneously, the fact that both Congressional Houses have won Republican majorities in the 2014 mid-term elections bodes well for corporate interests (Merrill, 2014).

4) Technological

Technology has reached the point at which Whole Foods' 300+ stores in the U.S., Canada and the United Kingdom are able to obtain and sell fresh organic foods (Cuenllas, 2013); however, technology has not reached the point at which the retail food chain can successfully sell fresh organic foods online. The Company attempted to do so several years ago but failed in that attempt (Shaywitz, 2013).

5) Geographical

Whole Foods is the largest retailer of fresh organic foods, with 300+ stores in the U.S., Canada and the United Kingdom (Whole Foods Market, IP.LP, 2014); however, it does not have a worldwide presence at this point.

6) Community Relation

Whole Foods' customer base is liberal, which has been alienated and driven to boycotts of the Corporation at times, primarily due to its CEO's conservative, outspoken views regarding corporate taxes, Obamacare and capitalism (Shaywitz, 2013). Simultaneously, the Corporation has a well-deserved reputation as one of the most socially conscious and environmentally conscious Corporations in America (Whole Foods Market, IP.LP, 2014).

7) Informal Sector Network

There is a strong informal sector network "surrounding" Whole Foods, with a web presence and social media (Whole Foods Market, IP.LP, 2014), local communities benefiting from food donations and donations of 5% of Whole Foods' net profits donated to local nonprofit or educational organizations, as well as dedication to good nutrition and overcoming poverty in the global community (Whole Foods Market, IP.LP, 2014). Simultaneously, the informal sector network is harmed among the Corporation's liberal customer base due to its CEO's conservative, vocal opinions about capitalism, Obamacare and corporate taxes (Kavoussi, 2013).

Environmental Analysis

Categories

Opportunities

Threats

Political

Pro-business Congress

Antagonized liberal customer base; union opposition; opposed by labor unions; lawsuits for knowingly illegally selling carcinogenic products and for overcharging California consumers

Economic

Pro-business economy with steadily rising stock market; pro-business Congress expected to lower corporate tax rate

Retail grocery industry pays very high corporate tax, often as high as 35%; paid $800,000 settlement for overcharging California Consumers

Social

Republican majorities in both Congressional Houses indicate public approval of CEO's conservative stance

Alienation of liberal customer base by vocal, conservative assertions of CEO.

Technological

Capabilities of obtaining and marketing fresh organic produce in 300+ stores in the U.S., Canada and the UK

Inability to successfully sell fresh organic produce online, particularly after failed prior attempt

Geographical

Largest retail chain of fresh organic produce in 300+ locations in U.S., Canada and the UK

Not global at this juncture

Community Relation

Strong reputation for community involvement and environmental consciousness, as well as contributing to local and global communities.

Antagonism of liberal customer base by CEO's vocal, conservative opinions.

Informal Sector Network

Strong informal sector through well-known social consciousness, environmental consciousness, contributions to local and global communities, and web presence maintained by Corporation and through social media.

Antagonism of liberal customer base by CEO's vocal, conservative opinions

B. Institutional Analysis

Analyzing Whole Foods internally to determine its state of health and ability to respond to opportunities and threats (ffw.org.ph, n.d.), one finds significant strengths and weaknesses.

1) Organizational Role and Profile

Whole Foods' basic philosophy, values, beliefs, and adopted role in society (ffw.org.ph, n.d.) are all unique and strong. Its basic philosophy is not merely a 1-sentence euphemistic statement; rather, Whole Foods is dedicated to improving the health and all-around lifestyles of the corporation, its employees, and local and global communities (Whole Foods Market, IP.LP, 2014). Whole Food's core values are: to sell the highest quality natural and organic products available; to satisfy, delight and nourish its customers; to support team member happiness and excellence; to create wealth through profits & growth; to serve and support local and global communities; to practice and advance environmental stewardship; to create ongoing win-win partnerships with its suppliers; and to promote the health of our stakeholders through healthy eating education (Whole Foods Market, IP.LP, 2014). Within society, the Company has adopted the role of stewardship and facilitation of well-being for its organization, its employees and local/global community members through donations, loans, community involvement and environmental sustainability (Whole Foods Market, IP.LP, 2014). As admirable and effective as the organizational role and profile may be, the Corporation has been criticized and boycotted for its heavy-handed treatment of smaller competitors (Shaywitz, 2013), its unabashed pro-business conservative stance (Berman, 2013), its anti-unionism (Shaywitz, 2013), its knowing illegal sale of products high in carcinogens (Baldas, 2008) and for overcharging California customers (Li, 2014).