CASE STUDY

WHOLE FOODS MARKET IN 2008: VISION, CORE VALUES AND STRATEGY

SUBMITTED BY: SABA ALAM

com .wholefoodsmarket.7000 fax FACTS & FIGURES More than 300 stores in North America and the United Kingdom.482.5566 voicemail 512.World Headquarters Whole Foods Market. 550 Bowie Street Austin.477. Inc. Team Members: 54.477. TX 78703-4644 512.000 Distribution Centers: 9 Regional Bake houses: 9 Commissaries: 5 Website: http://www.4455 512.

The team approach promotes strong corporate culture and motivation among employees. . They have their own model to analyze markets.800 square feet located in London. departmental operations and customer service.000 sq feet etc. Store Operations: Whole Foods follows a team approach to store operations. create wealth through profits and growth and care about communities and environment. Other store sizes are 71. most flavorful and naturally preserved foods available. Whole foods market has its own private label brands of organics. It bought their biggest rival wild oats and expanded their product offerings and reduced their prices which improved the sales immensely in three months. Their location strategy was to open stores in upscale areas of metropolitan centers. Store Layout & Merchandising Strategy: Whole Foods Market did not have a standard layout for stores. They increased the store sizes and now their biggest store is of size 99. Whole Foods Market aims to sell the highest quality natural and organic products. It employs between 85 and 600 team members organized into minimum 13 teams. Their merchandising strategy was to create an inviting and interactive store atmosphere. Growth Strategy: Till 2002 their growth strategy was to expand via a combination of opening its new stores and acquiring small stores that were located in desirable locations.000 initially. Each store’s layout is designed according to the particular site and building configuration. least processed. provide best quality of foods and customer service and maintain cleanliness everywhere.Question # 1 What are the chief elements of the strategy that Whole Foods Market is pursuing? Whole Foods Market was founded in 1980 as a local supermarket and has now become world’s largest retail chain of natural and organic foods supermarkets. They use bright colors for product displays. 77. Whole Foods offers the highest quality.000 sq feet. Their most stores were located in high traffic shopping locations. 55. some were in strip centers and some in high density mixed use projects. satisfy and delight its customers and team members.000 sq feet.000 square feet to 60. Each team is led by a leader. Whole Foods has given its team members full authority to make many decisions at the store level regarding merchandising. some were freestanding. 65. From 2002 the management decided to drive growth by opening 10 to 15 bigger stores in metropolitan areas.000 sq feet. Store Sizes & Locations Strategy: Whole Food’s store sizes range between 40.

It uses Economic Value Added to measure performance. regional and national wholesale suppliers and vendors.Product Line: The products and brands offered vary from store to store because stores are of different sizes and have different clientele. The corporate marketing budget is allocated to region wide marketing efforts. It also encourages stock ownership. nine regional bake houses and five commissary kitchens.000 natural. organic and gourmet food products. It operates nine regional distribution centers. Its salary limits the compensation of any team member to 19 times the average total compensation of all full-time team members in the company. However as it manages to provide customers the premium quality they are willing to pay higher price for it. Whole Foods has empowered its team members to do whatever they want to please the customers. classes. .5 percent of its revenue is assigned for advertising. Whole Foods have around 30. They prefer primarily on word-of-mouth recommendations. product sampling etc. Marketing & Customer Service: 0. Each of its stores has a separate budget for marketing of particular store through fairs. It owns two produce procurement centers that facilitated the procurement and distribution of majority of its products. The prices at Whole Foods are higher than conventional supermarkets. Purchasing & Distribution: Most of the purchasing of Whole Foods is from local. Compensation & Incentives: The company has a gain sharing program which is based on the profits of each store.

This has given empowerment to employees increasing their satisfaction level. it focuses the employees of the company and it also covers the social responsibility of the company. more pleasurable lives. 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. where it wants to go and what are the scopes of the company’s future. He wanted whole food’s market to set the standard for excellence in food retailing. 2008 . Whole Foods provide the best quality. It should mention the importance of customers for the company as customers should be the first priority of any company. However the company’s main motto does not mention the factor of customer satisfaction. It is also involved in promoting proper animal farming etc.1 John Mackey’s vision charts the company’s future strategic course. It has stopped using disposable plastic bags and has started converting its distribution fleet vehicles to biodiesel fuel. Question # 3 1 Arthur A. 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. These are not just the nice words written by the company to impress people. Whole People and Whole Planet” covers the three most important factors of success of food retail business. It focuses the quality of products being offered. The good thing about Whole Foods is that it follows its motto in running the business. The University of Alabama. The company’s motto “Whole Foods. 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. Whole Foods Market is also fulfilling its social responsibility by donating to educational organizations. It has fulfilled its commitment of team based management to its employees. least processed natural and organic food to its customers. It explains what the company wants to be. Each store of Whole Foods has as many as 13 teams each led by a leader. Thompson.Question # 2 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 “Whole Foods. Whole People. It has also established a not for profit Whole Planet Foundation. healthier. In its each store they have made teams and its employees are very satisfied with the respectful workplace. Whole Planet”? Do the motto and the principles underlying it really matter at this company or are they just nice words and cosmetic window dressing? Explain 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. 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.

824 114211 0.46 1.90 26 days 2007 34.6 million in 2007. Use the financial ratios present in table as a basis for doing your assessment of the company’s financial statement and financial condition.How well is Whole Foods Market performing from a financial perspective? Do some number crunching using the data in Exhibits 9 and 10 to support your answer.2290 0.0581 $1. Most of the capital expenditures of the company go into funding the development or acquisition of new stores and acquisition of property and equipment for existing stores.907 20 days We can see from the above given comparison that the performance of Whole Foods Market has somewhat declined in 2007.7 million in 2006 and $398.0998 $1.335 14.1252 0. 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 34.30 0.00609 17.8514 0.689% 0. However this decline is not major and threatening to the company’s performance.The reduction in working capital can be a problem to the company hence it should look .0277 0.0363 0. Sales return has decreased by 1% and the current ratio is also less than 2006.0042 0.94% 5. Whole Foods’ business generated cash flows from operations of $452.4842 (116530) 0.84% 4.504 0.224 0.14516 0.00612 0.512% 0.

into that. The inventory turnover per day has also decreased in 2007. and Whole Food’s product line. and marketing and for providing their customer most satisfactory service. The debt-to-equity ratio and the debt-to-capital ratio have increased which is not so beneficial for the company. Question # 4 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 performing exceptionally well from strategic perspective. their motto and their core values. As the gross profit margin is almost equal in both years the company is visibly performing well from financial perspective. All these strategies are in accordance with the company’s requirement and thus the company maintains a competitive advantage over its rivals due to its sustainable implementation of strategies for achieving its goals and managing the company. It follows the strategy of team based management for store operations. The company has made strategies for its stores. their location. the design of the stores. The company’s strategy has helped it in gaining the high position in the market. the product quality. It has made strategies for all major aspects of their business for example it had a growth strategy and when the need came for change they changed their growth strategy in 2002. It acquired one of it biggest rivals Wild Oats in 2007. All its work and doings are in accordance with the strategies they have made. It has also made strategies that are feasible for the purchasing and distribution of items. . Whole Foods makes sure that it makes the right strategies and decisions at the right time and also do necessary efforts to implement these strategies. It also offers compensation and rewards to its employees.

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