CASE STUDY

CENTENNIAL COLLEGE CRAFTING & EXECUTING STRATEGY GROUP ASSIGNMENT ± 2 CASE STUDY PROF.STEVEN H. LACHOWSKI GROUP MEMBERS NAMESTUDENT ID .

Texas. By 2006.´ Their rapid growth and success is primarily due to being highly selective about what they sell. The founders were John Mackey and Renee Lawson Hardy. It was an immediate success. Whole Food¶s stated mission statement was to ³promote vitality and well-being for all individuals by offering the highest quality. there were less than half a dozen natural food supermarkets in the United States.INTRODUCTION Whole Foods Market was founded in Austin. as well as being dedicated quality standards and core values. and Craig Weller and Mark Skiles. At the time. most flavourful natural and naturally preserved foods available. Whole Foods Market had evolved into the ³world¶s largest retail chain of natural and organic foods supermarkets.´ . when four local businesspeople decided the natural foods industry was ready for a supermarket format. owners of Safer Way Natural Foods. The original Whole Foods Market opened in 1980 with a staff of only 19 people. owners of Clarksville Natural Grocery. least processed.

The chief element of the strategy that whole food is pursuing is providing the finest quality of products in the market that is free from preservative and other genetically engineered products that reduce the quality of being organic. Whole food market strives to eventually dominate the local market and eventually the international market. which sets the framework for achieving success in a particular business. They promote the vision of the whole food. whole people and the whole planet.1. While business strategy often receives more attention than corporate strategy. in which companies decide which line or lines of business to engage in. There are two major types of strategy: (1) Corporate strategy. What are the chief elements of strategy that whole food is pursuing? Strategy formulation is vital to the well-being of a company or organization. This means that is has the least amount of processed product and are naturally preserved. . both forms of strategy involve planning. goal setting. and monitoring. and (2) Business or competitive strategy. industry/market analysis. commitment of resources.

and other genetically engineered products that could affect health. The merchandising skill that the company possessed was the prime factor in the success of luring shoppers back time and time again. and agriculture. Whole foods have happy and satisfied employees who also obtain shares in the company. The company is still expanding even in this poor market and acquiring new stores and companies. The company do not have much competition only on smaller scales or small areas in existing regular food markets. The quality products at Whole Foods have a flavourful taste and are preferred by the demands of health conscious consumers and the current trends of a healthy lifestyle. Whole Foods has tried to lower some of its pricing to compete with all of the other growing stores in the market. The company believed that the extensive and attractive displays appealed to a broader customer base.2. hormones. pleasurable experience. whole foods have good and healthiest products and without pesticides. community. . Is the strategy well matched to recent developments and conditions in the natural and organic foods segment of the food retailing industry? I am strongly agree with the statement that Whole foods strategy is well matched to recent developments and conditions in the natural and organic foods segment of the food retailing industry. Whole Food's merchandising strategy was to create an inviting and interactive store atmosphere that turned shopping for food into a fun.

He wanted whole foods market to set the standard for excellence in food retailing. The good thing about Whole Food is that it follows its motto in running the business. Do you think John Mackey has a good strategic vision for Whole Foods? Why or why not? What do you like/dislike about the company¶s motto ³Whole Foods. Personally I like the motto of ³Whole food. Whole people. He does not want to stop at just natural and organic food but also wants to capture the food retail business itself and at the same time considering the health and happiness of the people.3. His philosophy was that marketing high quality natural and organic foods to more and more customers in more and more communities would overtime gradually transform the diets of individuals in a manner that would help them live longer. When we see the popularity of the company in natural and organic food market we may realize that John Mackey¶s vision for Whole Foods is not unrealistic or unachievable. John Mackey¶s vision for Whole Foods was to become an international brand synonymous not just with natural and organic foods but also with being the best food retailer in every community in which whole food stores were located. It explains what the company wants to be. Whole Planet?´ Do the motto and the principles underlying it (Exhibit 1) really matter at this company or are they just nice words and cosmetic window dressing? Explain. John Mackey¶s vision charts the company¶s future strategic course. where it wants to go and what are the scopes of the company¶s future. These are not just . healthier. these elements play a huge role in the success of Whole Food. more pleasurable lives. Whole People. In my opinion if John Mackey follows the strategies made by the company and continue carrying out the wonderful business and pleasing the customers the chances of achieving the vision gets higher with time. Whole planet´.

It is also involved in promoting proper animal farming etc. Whole Planet means they are committed to help and take care of the world around and are active support of organic farming and sustainable agriculture that help to protect the planet.word. they are passionate about healthy food and healthy planet. . Whole People are the people of the company. So it provides the best taste and most nutritious foods.It has also established a not for profit Whole Planet Foundation. It has stopped using disposable plastic bags and has started converting its distribution fleet vehicles to biodiesel fuel. most favorable and natural foods. Whole Food provides highest quality least processed.

wild or aquaculture fish and products that are environmentally friendly. They have a high regard for quality and standards in what is offered to their customers. Whole Foods focus on the quality of their products selling organic. . Using this information. preservative free products.4. they are ³real´ towards their core values which are why their company has been successful in the market. Theiraim is to produce high quality products and supply thousands of organic food and gourmet products. Do Whole Foods Market¶s core values as presented in case Exhibit 3 really matter? Are they ³real´ or just cosmetic window dressing? What evidence can you cite to support your answer? Have Whole Foods¶ core values contributed to the company¶s success? Why or why not? The fact presented in case Exhibit 3 really matter to Whole Foods Market is totally acceptable.

0998 $1.0581 $1.907 20 days We can see from the above given comparison that the performance of Whole Foods Market has somewhat declined in 2007.6 million in 2007.5. 2006 Gross Profit Margin Return on sales Return on stockholders¶ equity Net return on sales Return on total assets Earnings per share Current ratio Quick ratio Working capital Debt-to-asset ratio Long term debt-to-equity ratio Long term debt-to-capital ratio Inventory Turnover Inventory Turnover per day 34.504 0.90 26 days 2007 34.689% 0.1 of Chapter 4 (pages 104-105) as a basis for doing your assessment of the company¶s financial statements and financial condition.84% 4.0363 0.00609 17.7 million in 2006 and $398.1252 0.0277 0.94% 5.224 0.46 1.Most of the capital expenditures of the company go into funding the development or acquisition of new stores and .4842 (116530) 0.00612 0.8514 0.335 14.30 0. Use the financial ratios presented in Table 4.0042 0.2290 0. Whole Foods¶ business generated cash flows from operations of $452. How well is Whole Foods Market performing from a financial perspective? Do some number-crunching using the data in case Exhibits 9 and 10 to support your answer.14516 0.512% 0.824 114211 0.

The inventory turnover per day has also decreased in 2007.Sales return has decreased by 1% and the current ratio is also less than 2006. As the gross profit margin is almost equal in both years the company is visibly performing well from financial perspective. The debt-to-equity ratio and the debt-to-capital ratio have increased which is not so beneficial for the company.acquisition of property and equipment for existing stores. .

How well is Whole Foods Market performing from a strategic perspective? Does Whole Foods enjoy a competitive advantage over its rivals? Does the company have a winning strategy? Whole Foods Market is preforming well from a strategic prospective as they are increasing their locations and markets. and hydrogenated oils. Minimum Governance. Whole Foods Market has been able to acquire the second largest competitor in their industry. which eliminates the competition. Whole Foods also has the advantage of a well-known name that¶s associated with a higher quality for supermarket products at more competitive prices In my opinion the company has the other competitive advantages apart from explained above over the competitors part of which is briefly explained below: Maximum Freedom. WFM operates under the belief stores should have the freedom to meet the needs of its unique customers and team members. Every store is a team. They continue to provide healthy high quality foods and brands that are good for consumers. And every . They have a competitive advantage to other supermarkets because of their high and fine products that they carry. flavours. These unwritten social rules come in the form of µbest practices¶ which its stores and regions openly share Small Pieces Loosely Joined WFM is comprised of entirely teams. and their own growth in the industry. The only governing rule all stores must dogmatically adhere to is all food sold at WFM must be free from artificial preservatives.6. However. unwritten social rules to govern stores. Every department in every store is a team. Every corporate/regional department is a team. sweeteners. Wild Oats Market. the environment. colours.

WFM believes in self-directed teams and its success is dependent upon the shared fate of all team members working together on every team. and flavourful foods so much so they will gladly pay more. authentic. Every small piece is loosely joined and requires interdependence to reach store level and company level team goals Getting Bigger by Acting Smaller WFM decentralizes nearly every business function. WFM operates 176 locations with 11 regions. WFM prices the products it sells to the value its customers have for the products.employee is a team member. Today. PR/marketing activities. As WFM gets bigger. The success of the company team is dependent upon the collective success of all the teams. . it actually gets smaller. By decentralizing decision-making to the increasing number of regions. training of store team members (store employees). and making business critical decisions. The regions are charged with procurement of product. WFM is able to reduce corporate bureaucracy. Price to Value WFM has no intentions to ever compete on low prices. a level closer to understanding the local shopper than a centralized corporate entity ever could understand. In 2002. WFM seeks to make as many decisions as possible at the regional level. Shoppers value WFM¶s values of pure. WFM operated 140 stores with 9 regions.

Because Wild Oats is big competitor of Whole Foods.. I think that the pros have outweighed the cons that have resulted in being more beneficial to Whole Foods. The pros of acquiring Wild Oats Market are that it eliminates the competition Whole Foods will be able to better compete against the behemoth Wal-Mart and the ever-nimble Joe¶ sand this merger allows for more locations in places where Whole Foods was not available. February whole foods made offer to acquire wild oats markets for about $565 million (which is prime competitor of whole food market). In weighing the pros and cons. as well as Florida. This is a huge possibility for growth on Whole Foods Vision of expanding and being dominant in the market. We personally believe that the acquisition of Wild Oats Market was a good approach to dominating the market. Do You Approve the Decision to Acquire Wild Oats Market? What Pros and Cons do you see? In 2007.7. Massive reductions in redundant corporate . This merger will reduce corporate expenses. Government regulators filed a formal complaint against whole foods and claimed that the merger would result in a monopoly of the natural foods industry that would ultimately hurt consumers. places like the Pacific Northwest and Rocky Mountain regions.

etc. . Another terrible thing to account for is the unpredicted recession. two Human Resources VPs. As with any loyalty. This will take time but if Whole Foods can win their loyalty by offering what they need they will be able to better flourish. another acquisition con is the conversion of the clientele of Wild Oats to Whole Foods Market.G&A overhead expenses will take place as Whole Foods doesn¶t need two CFOs. As consumers stop shopping and spending more often. two Procurement VPs. there is hostility when one loses what they love. two CIOs. The cons associated with the acquisition are that it accounts for the rather large long-term debt that Whole Foods picked up. Lastly. Whole Foods Market as with every other business took a devastating blow to the business.

Were John Mackey¶s Internet postings unethical or in any way inappropriate? What actions. and many more. From my point of view he stepped over the line when he could not keep certain business dealings confidential. should the company¶s board of directors take with regard to his Internet posting and blogs? It is true from my belief that Mackey¶s internet postings were very unethical and inappropriate as there are expectations from the public for every business including CEO¶s. the public.8. if any. It is important that a CEO is a good businessman and it seems as if he were controlled by his emotions rather than keeping the good business standards. According to me the directors revoke his title or force a public apology to the FTC and all the stakeholders so that they can have a positive image again. Mackey¶s bad behaviour gives a negative image to the stakeholders that are involved. the investors. These include the business itself. do you disapprove of? What actions. . if any.

The future is still unpredictable and economy can go either way and it is important that every business especially the one we are talking about here to able to adjust and make changes to unpredictable factors. No the company should not vigorously contest the reopening of the FTC¶s challenge to the Wild Oats acquisition. What recommendations would you make to John Mackey regarding the actions that Whole Foods¶ management needs to take to get through the recession that began in earnest in 2008? Should the company severely cut back on opening so many new stores? Should the company vigorously contest the reopening of the FTC¶s challenge to the Wild Oats acquisition? Are any other strategy changes needed? It is the phase of economic downfall so I recommend to Markey for Whole Foods¶ management are to create a new strategy that enables them reaching out to new and current clientele given the new economic situations.They should be focusing on keeping the businesses that they and wait till there is a rise in this economic downfall. .9. As it is phase of economic downturn the firm should use the conservative approach rather than the aggressive one and should not for any acquisitions which might result in the financial leverage and also company should cut back on opening until the economy gets better .

 Raise capital through Equity share.  Increase private label meat and seafood offering.  Expand service offering like store event and online order and many more.over market from the restaurant industry.  Continue long run expansion.  Reduce capital expenditure.RECOMMENDATIONS  Create a new strategy in reaching out to new and current client.  Target the cross. .

CONCLUSION .

Sign up to vote on this title
UsefulNot useful