Whole Foods Strategic Management Of Whole Foods Chapter

Length: 12 pages Sources: 2 Subject: Business Type: Chapter Paper: #31011294 Related Topics: Food Delivery, Organic Farming, Sustainable Agriculture, Costco
Excerpt from Chapter :

Whole Foods

Strategic Management of Whole Foods

Strategic Management Definition

Company Background and the Core Values

Current Market Analysis

Whole Food Competitive Advantage

Elements of Strategy Whole Foods

Growth Strategy of Whole Food

Strategy Audit

Corporate Value Chain

Strategic Management of Whole Foods

Strategic Management Definition

Strategic management can be defined as the process of formulation and implementation of the company objectives and goals which are made keeping in mind the resources available with the company and the internal and external environment that the company is functioning in (David, 2005, p 31-33). Thereby strategy can be defined as the course of action that a company develops with the optimum use of resources with the aim of achieving its long-term goals. Strategy can also be defined as the process of providing guidance to the direction, focus the efforts and defining the organizational set up clearly so that a company can take steps to direct if resources and respond to a changing environment.

Every strategy needs a plan and the planning of a strategy is defined as strategic planning. This planning process involves the collection, assimilation and analysis of analytical data and such data is used as inputs in the process of strategic planning (Nag, Hambrick & Chen, 2007, p. 935-937). The first requirement for a strategy management process is to define the goals of the company. In the case at hand, it is first necessary to define the goals of the company both in the long-term and the short-term. The vision and the mission of the company are also important considerations in regards to the strategy of the company.

Company Background and the Core Values

Based in Texas, Whole Food products Inc. sells natural and organic food and is the first to do so on a large scale in America. Over the years the company has included almost every organic food in its menu. Its long list of organic food includes produce, seafood, grocery, meat and poultry, bakery, prepared foods and catering, beer, wine, cheese; in addition to whole body, floral, pet products, and household products. The company claims to have maintained the highest standards in the natural food industry since its inception in 1980 with its focus on sustainable agriculture.

Among the core values of the company are its commitment to sell the highest quality of natural and organic products that are available with the aim of satisfying and delighting the customers. The company also values the virtue of wealth creation through the acquiring profits and growth through the delivery of happiness and excellence of the team members. The core values of the company include their commitment to care for the community and the environment and work with the suppliers to achieve this aim.

The mission of the company is to cater to the entire natural food requirement of all the people on the planet. The slogan "Whole Foods, Whole People, Whole Planet," illustrates how the company values its mission. The company wants to provide food that is least processed and of the highest quality without any adulterations. The company actively supports organic farming by funding farmers through its Whole Planet Foundation's micro-lending operations. For its commitment to the society and nature the company supports food banks and sponsors neighborhood events and through donations to non-profit groups. Every year the CSR spending of the company is at least 5% of the total profits of the company.

Current Market Analysis

The organic and natural food segment has been increasing over the years at an average rate of 8% to 10% with the growing demand from customers to have healthy and ethically produced food. There has been consumer demand for a greater range and variety of organic food at the local grocery stores owing to this awareness increase. The growing popularity for organic food has given rise to what has now come to be known as the green movement in the U.S. This movement encompasses all the aspects of natural food and includes food processing, distribution and retail grocery stores as well...

...

This concept is based on the consumer demand of fresh, locally-grown food and the international organic food players are capitalizing on this by campaigning aggressively on this issue. These two movements combined have shaped the market and the demand for the organic and natural food. Such consumer demands, coupled with the chance to improve image through fulfilling social responsibility, every aspect of the supply chain of the market from the local produce to finished goods and the retail and foodservice sectors, have been included in the movement. The retail companies too are keen to ride on this wave and the market for organic food has thus blossomed.

By the addition of more local vendors and putting local products to its stores, Whole Foods has tried to take advantage of the market situation which favors those dealing in organic and natural foods. The supermarkets have also entered the bandwagon and are now keeping specialty items on their shelves and pursuing the policy of competitive pricing. Whole Foods Market's idea of providing fresher items, larger variety of organic products and more natural and organic choices is now being emulated by other grocery stores. The company's ploy of selling expensive prepared foods and promising an enjoyable shopping are also ideas that are being copied by other grocers and some supermarkets.

The primary competitors for Whole Foods include supermarket and retail companies as well as discount retailers. Such companies have now started to offer organic food. Wall-Mart, the largest retailer in the U.S. has now put organic and natural food in its stores in competition to Whole Food. The company is also facing competition from other supermarket discount retailers like Target, Sam's Club and Costco who are offering competitive prices to Whole Food and often selling organic products at prices lower than that of Whole Food. Trader Joe's, a Loss Angeles-based grocery dealing in organic and natural food. The competitor has been able to find a niche place in the market by high quality at low prices. It is one of the biggest competitors of Whole Food.

Whole Food Competitive Advantage

The company enjoys a competitive advantage through product differentiation. The key component to the success of the company is the very set up of the stores of Whole Food. Careful research goes behind the planning, decoration and setting of every store to ensure that they are meeting the demands of the local community. The locations are strategically chosen. The company chooses sites where there would be large space and heavy footfall at the stores. Several metrics are used to select cities. The primary cities chosen are predominantly metro areas and cities. The metrics upon which the company chooses a city or an area to set up a store includes the important factors like income levels, education and population density.

The shopping experience that the company offers is also the competitive advantage that the company offers; this is their differentiation. The shopping experience at a Whole Foods store begins with a welcome that is given by well trained employees of the company. Wine tasting, food sampling and in store chefs ready with numerous recopies are USPs of the company that provide them market leverage. The consumers can also get information about aspects related to their food from the "Take Action food centers" like legislations and environmental issues related to the food they consume and the food that are sold at the stores. There are some exclusive stores that provide services like home delivery, organizing cooking classes and other luxuries like massages and valet parking. The company offers all these extra services in its grocery stores with the aim of attracting the more than average customer to the stores.

Unlike their competitors, the company does not use price to gain competitive advantage. The company claims to have a niche market with exclusive customers and hence does not want to enter the price war. The company rather relies on quality products and services to provide a satisfying experience to its customer to stand out in the competition. In terms of marketing activities like advertisements, the company does not spend as much as its competitors.

The company utilizes the word of mouth campaign for their good will to spread from one customer to another within the local community. It wants that people keep talking about the exclusive shopping experience that they had while going grocery shopping in one of Whole Food's stores. However the company does advertise in some select health magazines and uses in house advertising at the stores. Their aggressive CSR campaign and the company's consciousness to animal treatment is another source of market leverage.

Elements of Strategy Whole Foods

The strategy and the elements that Whole Food Inc. banks on to gain strategic advantage can be better understood by deliberating the Porter's 5 forces in comparison to the resources and strengths of the company.

There are significant barriers…

Sources Used in Documents:

References

David, F. (2005). Strategic management (pp. 31-33). Upper Saddle River, N.J.: Pearson Prentice Hall.

Nag, R., Hambrick, D., & Chen, M. (2007). What is strategic management, really? Inductive derivation of a consensus definition of the field. Strat. Mgmt. J., 28(9), 935-937. doi:10.1002/smj.615

Pass, C. (2005). Collins dictionary of business (pp. 45-75). Glasgow: HarperCollins.

Walters, D., & Rainbird, M. (2004). The value chain (pp. 75-86). [Bradford, England]: Emerald Group Pub.


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